WHAT IS HRM?
MEANING OF HRM
HRM is a management function that helps organisation to recruit, select, train, develop and manage its members. Simply stated, HRM is all about management of people in the organisation from Recruitment to Retirement. HRM refers to set of programs, functions, and activities designed and carried out in order to maximise both employee as well as organisational effectiveness.
Definition 1
“HRM is planning, organizing, directing and controlling of the procurement, development, compensation, integration, maintenance and separation of human resources to the end that individual, organizational and social objectives are accomplished.”
Definition 2
“HRM is concerned with the people dimensions in management. Since every organization is made up of people, acquiring their services, developing their skills, motivating them to higher levels of performance and ensuring that they continue to maintain their commitment to the organization are essential to achieving organizational objectives. This is true, regardless of the type of the organization – government, business, education, health, recreational, or social action.”
OBJECTIVES OF HRM
1. Organizational Objectives: To assist the organization to achieve its primary objectives, whether it is profit making or charity or social agenda.
2. Societal Objectives: To be responsive to the needs and challenges of the society while minimizing the negative impact, if any, of such demands upon the organization.
3. Functional Objectives: To maintain department’s contribution and level of services at a level appropriate to the organization’s needs.
4. Personal Objectives: 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 and satisfaction for the purpose of maintaining, retaining and motivating the employees in the organization.
SCOPE OF HRM
From Entry to Exit or Recruitment to Retirement of an employee in the organization
Following are the areas of operation of HRM:
1. Human Resource Planning
2. Job Analysis
3. Job Design
4. Recruitment & Selection
5. Orientation & Placement
6. Training & Development
7. Performance Appraisals
8. Job Evaluation
9. Employee and Executive Remuneration
10. Motivation
11. Communication
12. Welfare
13. Safety & Health
14. Industrial Relations
Based on the above activities, we can summarize the scope of HRM into following seven different categories:
1. Introduction to HRM
2. Employee Hiring
3. Employee and Executive Remuneration
4. Employee Motivation
5. Employee Maintenance
6. Industrial Relations
7. Prospects of HRM
ROLE OF HRM
1. Advisory Role: HRM advises management on the solutions to any problems affecting people, personnel policies and procedures.
(a) Personnel Policies: Organization Structure, Social Responsibility, Employment Terms & Conditions, Compensation, Career & Promotion, Training & Development and Industrial Relations.
(b) Personnel Procedures: Relating to manpower planning procedures, recruitment and selection procedures, and employment procedures, training procedures, management development procedures, performance appraisal procedures, compensation procedures, industrial relations procedures and health and safety procedures.
2. Functional Role: The personnel function formulates personnel policies in accordance with the company’s doctrine and management guidelines. It provides guidance to managers to help them ensure that agreed policies are implemented.
3. Service Role: Personnel function provides personnel services. These services constitute the main activities carried out by personnel department, like payroll, disciplinary actions, etc, and involve the implementation of the policies and procedures described above.
ROLE OF HR MANAGERS
1. Humanitarian Role: Reminding moral and ethical obligations to employees.
2. Counsellor: Consultations to employees about marital, health, mental, physical and career problems.
3. Mediator: Playing the role of a peacemaker during disputes, conflicts between individuals and groups or management.
4. Spokesman: To represent the company in Media and other forums because he has better overall picture of his company’s operations.
5. Problem Solver: Solving problems of overall human resource management and long-term organizational planning.
6. Change Agent: Introducing and implementing institutional changes and installing organizational development programs
7. Management of Manpower Resources: Broadly concerned with leadership both in the group and individual relationships and labour-management relations.
OBJECTIVES V/s FUNCTIONS OF HRM
HRM Objectives Supporting HRM Functions
Social Objectives (3) (a) Legal Compliance
(b) Benefits
(c) Union Management Relations
Organizational Objectives (7) (a) Human Resource Planning
(b) Employee Relations
(c) Recruitment & Selection
(d) Training & Development
(e) Performance Appraisals
(f) Placement & Orientation
(g) Employee Assessment
Functional Objectives (3) (a) Performance Appraisals
(b) Placement & Orientation
(c) Employee Assessment
Personal Objectives (5) (a) Training & Development
(b) Performance Appraisals
(c) Placement & Orientation
(d) Compensation
(e) Employee Assessment
MANAGERIAL FUNCTIONS OF HRM
1. Planning: Research and plan about wage trends, labour market conditions, union demands and other personnel benefits. Forecasting manpower needs etc.
2. Organizing: Organizing manpower for the achievement of organizational goals and objectives.
3. Staffing: Recruitment & Selection
4. Directing: Issuance of orders and instructions, providing guidance and motivation to managers and employees.
5. Controlling: Regulating personnel activities and policies according to plans. Observations and comparisons of deviations
OPERATIONAL FUNCTIONS OF HRM
1. Procurement: Planning, Recruitment and Selection, Induction and Placement
2. Development: Training, Development, Career planning and counselling.
3. Compensation: Wage and Salary determination and administration
4. Integration: Integration of human resources with organization.
5. Maintenance: Sustaining and improving working conditions, retentions, employee communication
6. Separations: Managing separations caused by resignations, terminations, lay offs, death, medical sickness etc.
CHALLENGES OF HRM IN INDIAN ECONOMY
The job of HRM department in India has never been so challenging. Last decade has witnessed tectonic shift in Job market. From being an employer’s market, it has suddenly turned into employee’s market, especially in the most crucial segment, ie middle management. Globalisation and India’s growing stature in the world has seen demand for Indian managers soaring. From the state of plenty, there is a stage of scarcity of the right talent. The biggest challenge is to retain the talent one has so assiduously hunted and trained. The attrition rate has reached alarming proportions. It has reached such proportions that certain segments of Industry are maintaining bench strengths to fill in the sudden gaps due to resignations. In addition, there are following new issues:
1. Globalization: Growing internationalization of business and workforce has its impact on HRM in terms of problems of unfamiliar laws, languages, practices, attitudes, management styles, work ethics and more. HR managers have a challenge to deal with more and more heterogeneous functions and more involvement in employee’s personal life.
2. Corporate Re-organizations: Liberalisation has led to largescale reorganization of businesses in terms of expansions, mergers and acquisitions, joint ventures, take overs, and internal restructuring of organizations. In circumstances as dynamic and as uncertain as these, it is a challenge to manage employees’ anxiety, uncertainties, insecurities and fears.
3. New Organizational Forms: Exposure to international business and practices have led to change in the organisational structure and HR policies of the local companies. Take for instance, the hierarchical structure of Indian companies. Suddenly, Indian companies have begun to adopt flat hierarchical management structure. But to implement and grout such fundamental changes in management philosophy of any company is never easy. The challenge for HRM is to cope with the implications of these new relations in place of well established hierarchical relationships that existed within the organizations for ages in the past.
4. Changing Demographics of Workforce: Changes in workforce are largely reflected by dual career couples, large chunk of young blood with contrasting ethos of work among old superannuating employees, growing number of women in workforce, working mothers, more educated and aware workers etc. Thus, changing demography of workforce has its own implications for HR managers and a true challenge to handle.
5. Changed Employee Expectations: With the changes in workforce demographics, employee expectations and attitudes have also transformed. Traditional allurements like job security, house, and remunerations are not much attractive today. Rather, employees are demanding empowerment and equality with management. Hence, it is a challenge for HRM to redesign the profile of workers, and discover new methods of hiring, training, remunerating and motivating employees.
6. New Industrial Relations Approach: In the changed industrial climate, even trade unions have realised that strikes and militancy have lost their relevance and not many workers are willing to join them and disrupt work. However, the problems faced by workforce now have different dimension for the management. They manifest in the form of increased attrition rate. Unsatisfied employees instead of approaching the management for resolution, often take up the new job. The challenge before the HRM is find ways and means to feel the pulse of employees and address the issues on proactive basis.
7. Renewed People Focus: “Man behind the machine is most important than the machine”. This is an old doctrine of the Armed Forces. However, this doctrine has begun to gain acceptance in the corporate world and thus all out efforts to grab the best talent at what ever cost.
8. Managing the Managers: Managing the managers is most difficult. Armed with inside information, they can not be lured with rosy promises. They are in great demand too with growth in economy. These are the people who are most mobile, attrition rate being highest for the junior and middle management level. The challenge of HRM is how to manage this tribe?
9. Weaker Section’s Interests: Another challenge for HRM is to protect the interest of weaker sections of society. The dramatic increase of women workers, minorities and other backward communities in the workforce, coupled with weakening of trade unions, has resulted in the need for organizations to re-examine their policies, practices and values. In the name of global competition, productivity and quality, the interests of the society around should not be sacrificed. It is a challenge of today’s HR managers to see that these weaker sections are neither denied their rightful jobs nor are discriminated while in service.
10. Contribution to the Success of Organizations: The biggest challenge to an HR manager is to make all employees contribute to the success of the organization in an ethical and socially responsible way. Because society’s well being to a large extent depends on its organizations.
STRATEGIC HUMAN RESOURCE MANAGEMENT
Strategy:
“Strategy is a way of doing something. It includes the formulation of goals and setting of action plans for accomplishment of that goal.”
Strategic Management:
“A Process of formulating, implementing and evaluating business strategies to achieve organizational objectives is called Strategic Management”
Definition of Strategic Management
“Strategic Management is that set of managerial decisions and actions that determine the long-term performance of a corporation. It includes environmental scanning, strategy formulation, strategy implementation, evaluation and control.”
The study of strategic management therefore emphasizes monitoring and evaluating environmental opportunities and threats in the light of a corporation’s strengths and weaknesses.
STEPS IN STRATEGIC MANAGEMENT
1. Environmental Scanning: Analyze the Opportunities and Threats in External Environment
2. Strategy Formulation: Formulate Strategies to match Strengths and Weaknesses. It can be done at Corporate level, Business Unit Level and Functional Level.
3. Strategy Implementation: Implement the Strategies
4. Evaluation & Control: Ensure the organizational objectives are met.
IMPORTANCE & BENEFITS OF STRATEGIC MANAGEMENT
1. Allows identification, prioritization and exploration of opportunities.
2. Provides an objective view of management problems.
3. Represents framework for improved co-ordination and control
4. Minimizes the effects of adverse conditions and changes
5. Allows major decisions to better support established objectives
6. Allows more effective allocation of time and resources
7. Avoids ad hoc decisions
8. Helps to integrate the individual behaviours
9. Encourages forward thinking
10. Encourages favourable attitude towards change.
ROLE OF HRM IN STRATEGIC MANAGEMENT
Role in Strategy Formulation: HRM is in a unique position to supply competitive intelligence that may be useful in strategy formulation. Details regarding advanced incentive plans used by competitors, opinion survey data from employees, elicit information about customer complaints, information about pending legislation etc. can be provided by HRM. Unique HR capabilities serve as a driving force in strategy formulation.
Role in Strategy Implementation: HR Manager helps strategy implementation by supplying competent people. Additionally, HRM facilitates strategy implementation by encouraging proactive thinking, communicating goals and improving productivity and quality.
HUMAN RESOURCE DEVELOPMENT
Human Resource Development is a process to help people to acquire competencies and to increase their knowledge, skills and capabilities for better performance and higher productivity.
Definition 1:
HRD is a process of enhancing the physical, mental and emotional capacities of individuals for productive work.
Definition 2:
HRD means to bring about the possibility of performance improvement and individual growth.
PROACTIVE HRD STRATEGIES FOR LONG TERM PLANNING AND GROWTH
Like quoted earlier, employee retention has become bigger challenge than employee hiring today. With trade unions breathing their last, and easy job availability, employees have developed propensity to switch jobs for minor reasons without voicing their protest. Thus, HRD has to take a proactive approach, that is, to seek preventive care in human relations. By using HRD strategies, maximization of efficiency and productivity could be achieved through qualitative growth of people.
Long-term growth can also be planned by creating highly inspired groups of employees with high aspirations to diversify around core competencies and to build new organizational responses for coping with change.
A proactive HRD strategy can implement plans directed at improving personal competence and productive potentials of human resources.
Following strategic choices can be considered which would help today’s organizations to survive and grow.
Change Management: Manage change properly and become an effective change agent rather than being a victim of change itself.
Values: Adopt proactive HRD measures, which encourage values of trust, autonomy, proactive approach and experimentation.
Maximize Productivity and Efficiency: Maximize productivity and efficiency of the organization by helping qualitative growth of people
TEAM EFFECTIVENESS
Definition:
A team is a small group of people who agree to work together for achieving a clear and identifiable set of goals.
Teams Can be Very Effective.
The benefit of teams lie in Synergy which means – The whole is greater than sum of its parts. Thus, a team is able to produce more than the sum of individuals working separately. A team benefits from complementing and some times contrasting abilities of its members. Teams can bring to bear a wider range of skills and experience to solve a problem. Teams often lead to better quality decisions as individual whims and prejudices are kept in check. Further, members of team have an obligation to each other and thus there is a moral force/binding to perform.
TEAM EFFECTIVENESS
For a team to be effective, following are the prerequisites:
1. Harmony and trust among the team members
2. Effective leadership
3. Shared goals
4. Diverse skills and experience - technical, problem solving and interpersonal skills
5. Creativity and risk taking ability
6. Freedom to voice views
7. Ability to self-correct
8. Interdependent work
9. Effective decision making process
10. Ability to resolve conflict
11. Clear communication channels
Synergy among the team members is very important. The team needs a clear sense of direction which the leader provides. Harmony and trust among the group members is utmost essential. In any group, conflicts are inevitable, how ever harmonious it may be. There has to be a well formulated policy for conflict management. Decision making is a source of potential conflicts. A well charted course for decision taking will be able to minimise such conflicts.
HUMAN RESOURCE PLANNING (H R P)
Human Resource Planning, as the name suggests, is the process of identification/ forecasting a firm’s future requirement of type and number of people in order to meet the organisational goals and objectives. It is a continuous process either due to fresh requirement of manpower owing to change/growth/diversification of business or due to attrition of manpower due to retirement, termination, death, disability or resignations.
Definition 1:
“HRP includes estimation of how many qualified people are necessary to meet the future business requirement, how many people will be available, and what, if anything, must be done to ensure availability of personnel equals the demand at all times in the future.”
Definition 2:
“HRP is a Process, by which an organization ensures that it has the right number of right kind of people at the right place, at the right time, capable of effectively and efficiently completing those tasks that will help the organization achieve its overall objectives.”
NEED & IMPORTANCE OF HRP
Human Resource comes at a cost and generates profits. While excess of human resource will lead to unproductive costs, shortages of same will lead to idling of other resources and impede profit generation. Having the people is not enough. Each job needs specific skills and experience and only a certain trained personnel can do it effectively. Therefore, it is necessary that right kinds of people are hired for each job.
Personnel requirement is never static. Manpower wastages in the organisation keep taking place regularly due to retirement, injury, resignations, termination, etc. In addition, changes in the business environment, business model and plan, capacity/product changes, diversifications, etc, also generate need to review the human resource requirement of the organisation.
Changes in the Business Environment in the past one and half decade have led to relative scarcity of talented people. Right kinds of people are no more available at short notice. There is considerable time gap between identifying the need for manpower and filling the vacancy, some times stretching between 6 months to one year. Thus, it will help the company if the requirement is forecasted adequately in advance to enable hiring of right kind of personnel just in time so that neither the machines/other resource idle for want of manpower nor do the people idle. At the same time, there could be situations when there is spare manpower in the company. Company may have changed over to a new technology productions and therefore all personnel trained in old machines may have become redundant and surplus. The “Exit Policy” for workers is not easy and they can not be released at short notice. Re-training or retrenchment of personnel has to be planned in advance.
In India services is growing at a fast pace. It has already overtaken agriculture and Industrial production sectors to become the biggest contributor to GDP. In service industry, human capital is the most important asset. HRP bears a disproportionate importance in this industry.
Foundation of Personnel Functions: HRP provides for not only front line manpower but also caters for support staff requirement which are called Personnel “Functions” like recruitment, selection, personnel development, training and development etc. Large scale changes in frontline staff will have proportional changes in requirement of support staff as well which can be planned alongside.
HRP SYSTEM
HRP System as such includes following elements or sets for planning.
• Business Environment
• Overall Organization Objectives
• Forecasting Manpower Needs
• Assessing Manpower Supply
• Matching Manpower Demand-Supply factors
Based on these elements we can draw “HRP System Architecture” as under.
HRP PROCESS
Organizational Objectives & Policies:
Organizational objectives and policies give a clue to future requirement of manpower. A company planning expansion would require more manpower in near future. Kind of people required would be dictated by technology being planned for expansion. HRP needs to align hiring of people with these elements. In addition, company’s policies towards its manpower policies, like using internal resources for promotion or external resources or dependence on certain caste or region for some jobs have also to be catered for. Gujarati companies in diamond business hire only gujaraties. Similarly, certain Business Houses from Rajasthan prefer Rajasthanies. So, HRP process will be dictated by following organisational policies:
1. Internal Hiring or External Hiring?
2. Training & Development plans
3. Union Constraints
4. Job enrichment issues
5. Rightsizing organization
6. Automation needs
7. Continuous availability of adaptive and flexible workforce
Manpower Demand Forecasting: It is the process of estimating the future quantity and quality of people required. The basis should be long term corporate plans. Demand forecasting should be based on following factors.
Internal Factors: -
• Production levels
• New products and services
• Organizational structure
• Employee separation
• Budget constraints
External Factors:
• Economic climate
• Laws and regulatory bodies
• Technology changes
• Social Factors
• Legal requirements with regards to reservations
Manpower Supply Forecasting: This process measures the number of people likely to be available from within and outside the organization after making allowance for absenteeism, internal movements and promotions, wastages, changes in hours and other conditions of work.
Supply Analysis covers:
Existing Human Resources: HR Audits facilitate analysis of existing employees with skills and abilities. The existing employees can be categorized as skills inventories (non-managers) and managerial inventories (managers).
Skill inventory would include the following;
• Personal data
• Skills
• Special Qualifications
• Salary
• Job History
• Company data
• Capabilities
• Special preferences
Management inventories would include the following:
• Work History
• Strengths
• Weaknesses
• Promotion Potential
• Career Goals
• Personal Data
• Number and Types of Subordinates supervised
• Total Budget Managed
• Previous Management Duties
Internal Supply Assessment:
• Inflows and outflows (transfers, promotions, separations, resignations, retirements etc.)
• Turnover rate (No. Of separations p.a. / Average employees p.a. X 100)
• Conditions of work (working hours, overtime, etc.)
• Absenteeism (leaves, absences)
• Productivity level
• Job movements (Job rotations or cross functional utilizations)
External Supply Assessment: External sources are required for following reasons
• New blood,
• New experiences
• Replenish lost personnel
• Organizational growth
• Diversification
External sources can be colleges and universities, consultants, competitors and unsolicited applications.
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