Subject: Human Resource Management

Module 01:

Notes By: Prof. Vinayak, IEMS B-School

INTRODUCTION :

Human Resource management is the most happening function as of now. This is so

because people offer competitive advantage to a firm and managing people is the
domain of HRM. An organization enjoys competitive advantage when it is the only
one which can offer a product at a price and at quality while its competitors cannot
do so.

Fast changes are taking place in the business environment. An organization must
have the ability to absorb these changes at a fast rate than in the past, not simply to
prove its competency alone but to justify its existence in the dynamic business world
as well. All organizations, whether large or small must ensure themselves that they
have the competent people capable of accepting this challenge.

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,

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 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 basisof 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 organisation. It also covers - joint consultation, collective bargaining,
grievance and disciplinary procedures, and dispute settlement.

IMPORTANCE OF HUMAN RESOURCE MANAGEMENT

Human Resource Management is related with effective utilization of human
resources. Theimportance of HRM can be discussed as:
1. Importance concerned with individual organization
Human Resource Management can help an organization to achieve to its
objective moreefficiently 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 an 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 theirpersonnel 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 andsocial satisfaction of employees.
(c) Helps to provide reasonable compensation to workers, which leads them
to have a goodstandard 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 theemployees.
4. National Importance

Effective management of human resources will speed up the economic growth of nation.
Thisin 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.
• 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, team work and inter-team collaboration.
Human Resource Activities
In order to achieve the above objectives, Human Resource Management
undertakes thefollowing 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

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,
(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:
1. 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 toboth labour market conditions and the strategic posture and goals of the
organisation.
Secondly, net shortage and excess of personnel by job category are projected for a
specific timehorizon.
Finally, plans are developed to eliminate the forecast shortages and excess of
particular categories ofhuman resources.
2. Organizing:
Once the human resource manager has established objectives and developed plans
and programs toreach them, he must design and develop organisation 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.

3. 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 organisation 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 whenold ones are satisfied.
4. 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
organisation. 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
organisation.
The operative functions of human resource or personnel department are discussed
below:
1. 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 organisation. 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.
2. 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 organisation. 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.
3. Compensation:
This function is concerned with the determination of adequate and equitable
remuneration of the employees in the organisation of their contribution to the
organisational 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 personnel department can make use of certain techniques like job
evaluation and performance appraisal.
4. 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 well- being of the employees. These may include provision of
cafeteria, rest rooms, counseling, group insurance, education for children of
employees, recreational facilities, etc.
5. 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.
6. 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
behaviour of personnel like absenteeism and labour turnover and the personnel
programs and policies of the organisation.
7. 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 organisation 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.

8. 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 organisation 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.
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:
1. 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.
2. 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 man power 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 watertight 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.
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
 EVOLUTION OF HUMAN RESOURCE MANAGEMENT

Evolution of Human Resource Management – From 19th Century till Recent Times:

Different Eras ofHuman Resource Management

Identification of evolution of HRM over the period of time is important for understanding the
philosophy, functions, and practices of HRM that are followed in different situations so that relevant
HRM practices are evolved in the present situation. HRM, being a part of management discipline, has
followed the pattern of development of management because of the interrelationship of the problems of
both the fields.

Though HRM as a field of study has relatively recent origin, history of management of people in the
organizations particularly in state administration, is quite old. However, these ancient developments
could not create much impact on the recent development of literature and practices of HRM as these
developments were concerned primarily to state administration.

Some serious thoughts were applied towards the effective utilization of labour force in industrial
organizations after the industrial revolution that started in 19th century. Since then, organized practices
relating to management of people, initially labour force and subsequently managerial personnel also,
started taking place and literature describing these practices started emerging.

From industrial revolution era to the present era, various stages to development of management of
human resource practices may be classified as follows:

1. Industrial revolution era— 19th century

2. Trade union movement era — close to the 19th century

3. Social responsibility era — beginning of the 20th century

4. Scientific management era— 1900-1920s

5. Human relations era— 1930s-1950s

6. Behavioural science era— 1950s-1960s

7. Systems and contingency approach era – 1960 onwards

8. Human resource management era — 1980 onwards

The classification of various stages of development of management of human resources in terms of

period shows the beginning of that era. In each era, emphasis has been put on a particular approach of
managing people at work. A succeeding era does not mean the complete end of preceding era but there
has been overlapping in these.
 Main features of these eras and the type of practices related to managing human resources are as
follows:

1. Industrial Revolution Era:

The systematic development of HRM started with industrial revolution that started during 1850s in
Western Europe and USA. The industrial revolution consisted, essentially, the development of
machinery, the use of mechanical energy in production processes, and consequently the emergence of
the concept of factory with large number of workforce working together.

The factory system replaced the old cottage system. Industrial revolution brought out a number of
changes like centralized work locations with large number of workers working together, mechanized
production process, migration of workers from their place of origin, and indirect contact between
factory owners and workers.

In order to manage people in the factory system of industrial revolution, three systems of HRM were
developed- recruitment of workers, training for workers, and control of workers. However, the basic
philosophy of managing workers revolved around master-servant relationship.

2. Trade Union Movement Era:

Shortly after the emergence of factory system, workers started to organize themselves based on their
common interests to form workers’ associations which were subsequently known as trade unions. The
basic objectives of these associations were to safeguard interest of their members and to sort out their
problems which arose primarily because of employment of child labour, long hours of work, and poor
working conditions.

Later, other aspects of work such as economic problems and wages, employee benefits and services,
etc. also became issues. These trade unions started such weapons as strikes, slowdowns, walkouts,
boycotts, etc., for the acceptance of their demands.

These activities of the trade unions forced owners and managers to adopt employee grievance handling
systems, arbitration as a means of resolving conflicts between owners/managers and workers,
disciplinary practice, expansion of employee benefit programmes, holiday and vacation time, clear
definition of job duties, job rights through seniority, and installation of rational and defensible wage
structures.

3. Social Responsibility Era:

In the first decade of 20th century, some factory owners started adopting a more humanistic and
paternalistic approach towards workers. Paternalistic approach to labour management is based on the
philosophy that labour is just like a child and owner is just like a father and the owner should take care
of his labour just like a father takes care of his children.

Those industrialists who adopted paternalistic approach offered a number of concessions and facilities to
labour force like reduced number of work hours, improved facilities at workplace, model villages to
workers, etc. All these practices led to the development of social welfare aspect of labour management.

Many critics to paternalistic approach viewed that this approach was adopted to overcome the problems
posed by labour union movement as plenty of trade unions emerged which frequently interrupted work
 performance. Employers observed that workers were going out of their control and to overcome this
problem, they implemented welfare scheme. Thus, this was a compulsion rather than a philosophy.

4. Scientific Management Era:

Around the beginning of 20th century, Taylor started to find out ‘one best way of doing thing’ based on
time and motion studies. On the basis of his experiments, he was able to increase workers’ productivity
considerably and wrote many papers based on these experiments and a book on scientific management.

The main principles of scientific management are:

(i) Replacing rule of thumb with science, (ii) harmony, not conflict, (iii) cooperation, not
individualism, and (iv) development of each and every person. Scientific management techniques
relevant to management of workers are- functional foremanship, standardization and simplification of
work, and differential piece wage system.

5. Human Relations Era:

Around 1920s, management researchers gave a close look at the human factor at work and the variables
that affected people’s behaviour. Before that, Hugo Munsterberg wrote a book on ‘Psychology and
Industrial Efficiency’ which suggested the use of psychology in the field of personnel testing,
interviewing, attitude measurement, learning, etc.

This brief period was termed as ‘Industrial Psychology Era’. In 1924, a group of professors from
HarvardBusiness School, USA, began an enquiry into the human aspects of work and working
conditions at Hawthorne plant of Western Electric Company, Chicago.

They conducted researches from 1924 to 1932 and arrived at the conclusions that productivity of
workers depended on- (i) social factors at the workplace, (ii) group formation and group influence, (iii)
nature of leadership and supervision, and (iv) communication.

They concluded that in order to have better productivity, management should take care of human
relations besides the physical conditions at the workplace. Consequently, the concepts of social system,
informal organization, group influence, and non-logical behaviour entered the field of management of
personnel.

6. Behavioural Science Era:

In contrast to human relations which assume that happy workers are productive workers, the behavioural
scientists have been goal and efficiency- oriented and consider understanding of human behaviour to be
the major means to that end. They have tried several sophisticated research methods to understand the
nature of work and the people in the work environment.

The contribution of behavioural scientists to management practices consists primarily of producing new
insights rather than new techniques. It has developed or expanded a useful way of thinking about the role
of the manager, the nature of organizations, and the behaviour of individuals within organizations. As
against human relations model, they have given the concept of human resource model.

Major conclusions of the contributions made by behaviouralists are as follows:

i. People do not dislike work. If they have been helped to establish objectives, they will want to achieve
them. In fact, job itself is a source of motivation and satisfaction to employees.

ii. Most people can exercise a great deal of self-direction and self-control and generate more creativity
than required in their current job. Therefore, their untapped potential remains unutilized.

iii. Managers’ basic job is to use untapped human potential in the organization.

iv. Manager should create a healthy environment wherein all persons can contribute to the best of their
capacity. The environment should provide a healthy, safe, comfortable, and convenient place to work.

v. Managers should provide opportunity for self-direction by their subordinates and they must be
encouraged to participate fully in all important matters.

vi. Operating efficiency can be improved by expanding subordinate influence, self- direction, and self-
control.

vii. Work satisfaction may improve as a ‘by-product’ of subordinates making full use of their potential.

Behavioural science era led to the development of two-way communication, participation of employees
in decision making, joint goal-setting, group dynamics, management development, and management of
change in the organization. These contributions of behavioural science era are backbone of behavioural
approach of human resource management even in the present context.

7. Systems and Contingency Approach Era:

Systems and contingency approach has attracted maximum attention of thinkers in management in the
present era. It is an integrated approach which considers management of human resources in its totality
based on empirical data. The basic idea of this approach is that analysis of any object must rely on a
method of analysis involving simultaneous variations of mutually-dependent variables. This happens
when systems approach is applied in managing human resources.

8. Human Resource Management Era:

When the factory system was applied in production, large number of workers started working together. A
need was felt that there should be someone who should take care of recruiting, developing, and looking
after welfare of these workers. For this purpose, industrial relations department came into existence in
most of the large organizations which was concerned mostly with workers.

However, as the time passed and the complexity of managing human resources in large business
organizations increased, the scope of industrial relations department was extended to cover supervisory
staff and subsequently managerial personnel. Industrial relations department was named as personnel
department.

With the increasing competition for market share, competition for resources including human talents, and
increased knowledge in the field of managing human resources, people were not treated merely as
physiological beings but socio-psychological beings as a prime source of organizational effectiveness and
 large organizations changed the nomenclature of their personnel department to human resource
‘department to reflect the contemporary view.

Even the American Society for Personnel Administration, the largest professional association in the field
of human resource management, changed its name to the Society for Human Resource Management in
1990. At the academic level, similar pattern was followed and the title of personnel management course
was changed to human resource management. Since then, the expression is gradually replacing the
hackneyed term ‘personnel management’.

History of Modern Human Resource Management

1. Early Philosophy (Before 1900):

The history of modern Human Resource Management began with the efforts of Robert Owen. Owen is
called the founder of Human Resource Management. In 1813, he wrote a book, A New View of Society.
In it he propounded the need for better industrial relations and improvements in the service conditions.
His attitude towards workers was very cordial, liberal and paternalistic.

He got good houses constructed for his workers by the side of his factory. He eliminated child labour and
provided healthy working conditions. J.S. Mill, Andrew Yule and Charles Bewarage, contemporaries of
Robert Owen, developed Human Resource Management as a science and supported the idea of wage
incentives, profit sharing and labour welfare, etc.

2. Efficiency and Productivity Movement (1900-1920):

During the last year of the 19th century arrived the age of efficiency and productivity movement. The
two decades from 1900 to 1920 were the years of scientific management movement. Taylor’s Scientific
Management Thought was accepted during this period. Taylor opposed the idea of trade unionism and
workers’ organization.

The main contribution of these two decades has been the increase in the size of units, introduction of
scientific thinking into actions, job analysis, standards costing, scientific selection and training of workers
and the idea of mental revolution.

3. Period of Welfarism and Industrial Psychology (1920- 1930):

Up to 1925, the Human Resource Management had taken a definite form. Staff line organization became the
basis of Human Resource Management. The opposition of scientific management movement by workers
introduced the need of industrial psychology.

Industrial psychologists developed many new techniques like psychological testing, interviewing,
workers training and non-financial incentives. They helped to give a professional form to Human
Resource Management. The Human Resource Management began to be realized as a profession and a
specialist’s function.

4. Period of Human Relations (1930-1950):

When Prof. Elton Mayo and his companions conducted Hawthorn experiments, it was the beginning of
recognition of the fact that human resources have greater influence on production than other psychical
resources. A worker must be treated as a human being. His social, psychological and moral instincts
should be fully recognized by the management.
Due to these experiments the commodity concept of labour changed to social concept. The decade of
1940-1950 was very important for the development of Human Resource Management. During that
decade, many new techniques were developed for the selection, training and induction of workers. The
human resource philosophy became people-oriented. Trade unions flourished and provision of fringe
benefits for the workers became common.

5. Modern Times (After 1950):

The history of Human Resource Management since 1950 up to current times is the age of modern
developments. It is the period of the citizenship concept of labour where the workers have full right to
be consulted in determining the rules and regulations under which they work.

The concept of industrial democracy has imposed many new responsibilities upon the human resource
managers of industrial houses. In modern times, Human Resource Management is widely accepted as an
independent discipline. One finds two important developments during this period, after 1960, the Human
Resource Management began to be realized as a behavioural science which centred completely on human
elements with the study of organizational behaviour as its main crux.

After 1970s the belief of ‘open social and industrial system’ became very popular for business
organizations. In modern times, Human Resource Management is fully recognized as a profession
dealing with the management of human resources. These developments widened the scope of Human
Resource Management.

Evolution of Human Resource Management – 3 Stages for the Growth of Human Resource Management

Historically, the beginning of HRM from the writing of Robert Owen, Charles Babbage and Henry
Towde. Especially, the HRM growth was particularly marked in the inter-war era. It has branched out
specificallyalong the domains of applied psychology and sociology. The latter in turn has evolved around
the concept of the “welfare state”. While the former has proceeded as the behavioural science movement.

Human Resource Management (HRM) is relatively a very recent term considered for managing human
resources in an organisation. HRM is still evolving to become an amalgam of organisational behaviour,
personnel management, industrial relations and labour legislation.

HUMAN RESOURCE MANAGEMENT IN INDIA

References about Personnel management in Arthasastra which indicates job description of supervisor
and performance linked pay foR gold smiths • Tradional craftsman goods shipped to Europe • Master
servant relationship in 17th centuary

1828-Robert Owen father of co-operative movement wrote a book titled as “New view society”-
Improving working conditions and work life of labourers

• After 1850 British rulers institutionalized for running the government which leads to personnel
management system

1931-Role of Royal commission of labour • Industrial revolution • Awakwning of labour • Government

attitude towards labour

1941-First tripartite labour conference

1948-Factories Act, Cultural and social changes. Changes in social value of labour Changes in
managerial value 1950-1969

III five year plans-Private and public sector projects

1990- Personnel management and IR in public sector undertakings

After 1990 the emphasis is shifted to human values and productivity through people • Role of Public
sector companies like BHEL, SAIL and SBI

• 1995 Progressive efforts of in HR

• 1997- Focus on product and customer • Leading to customer satisfaction, bench marking, core
competence, empowerment and learning organization.

• Transition of HR Labour relations,

•Personnel management

• Human resources management

• Human capital management

• Strategic HRM
HRMs Role in 21st Century:

Human Resources have never been more indispensable than today. The competitive forces

that we face today will continue to face in the future demanding organizational excellence.

In order to achieve this extended quality, organization’s need to focus on learning, quality

Development, teamwork, and reengineering. These factors are driven by the way

Organizations implement things and how employees are treated.

1. HR Can Help in Dispensing Organizational Excellence:

To achieve this paradigm shifting the organization excellence there is a need for organizations to
reform the way in which work is carried out by the Human Resource department. By designing an
entirely new role and agenda that results in enriching the organization’s value to customers,
investors and employees, HR can help in delivering organizational excellence. This can be carried
out byhelping line managers and senior managers in moving planning from the conference
roomto the market place and by becoming an expert in the way work is organized and executed.

HR should be a representative of the employees and should help the organization in improving its
Capacity for change. HR will help the organizations in facing the competitive challenges such as
globalization, profitability through growth, technology, intellectual capital, and other competitive
challenges that the companies are facing while adjusting to uncontrollably challenging changes in
business environment. The novel role of HR is to rapidly turn strategy into action; to manage processes
intelligently and efficiently; to maximize employee contribution and commitment and to construct
favorable conditions for flawless change.

2. Human Resource Should be a Strategy Partner: HR should also become a partner in

strategyexecutions by propelling and directing serious discussions of how the company

should be organized to carry out its strategy.

Creating the conditions for this discussion involves four steps. First HR need to define an

Organizational architecture by identifying the company’s way of doing business. Second, HR must

be held responsible for conducting an organizational audit. Third, HR as a strategic partner needs

to identify methods for restoring the parts of the organizational architecture that need it. Fourth

and finally, HR must take stock of its own work and set clear priorities. In their new role as

administrative experts they will need to shed their traditional image and still make sure all routine

work for the company is done well.

3. HR Accountability Should be Fixed to Ensure Employee Commitment: HR must be

Held accountable for ensuring that employees feel committed to the organization and

Contribute fully. They must take responsibility for orienting and training line management

about the importance of high employee morale and how to achieve it. The new HR should be

the voice of employees in management discussions. The new role for HR might also involve

Suggesting that more teams be used on some projects or that employees be given more control

over their own work schedules.

[Link] New HR Must Become a Change Agent: The new HR must become a change agent,

whichis building the organization’s capacity to embrace and capitalize on change. Even

though they are not primarily responsible for executing change it is the duty of the HR

manager to make sure that the organization carries out the changes framed for

implementation.

5. Improving the Quality of HR: The most important thing that managers can do to drive the

newmandate for HR is to improve the quality of the HR staff itself. Senior executives must get

beyond the stereotypes of HR professionals as incompetent support staff and unleash HR’s full

potential

6. Change in Employment Practices: The balance sheet of an organization shows human

resource asan expense and not as a Capital. In the information age, it is perceived that the

machines can do the work more efficiently than most people however; technology to work is

dependent on people. The challenges for Employment Practice in the New Millennium will require that
there

should be strategic involvement of the people and labour-management partnerships as

they both have to take organization ahead.

7. Benchmarking Tool Must be Mastered by HR Professionals: HR professionals must

master benchmarking, which is a tool for continuous improvement- directing the human side

associated with the strategic path adopted by the organization. Through this, HR department
will start appreciating the changes happening within and outside the environment while

expanding the knowledge about how to add value to decision making at the highest level of the

organization.

8. Aligning Human Resources to Better Meet Strategic Objectives: Too often organizations

craft their strategy in a vacuum. Some organizations don’t even include key people during strategy

Formulation resulting in lacunae between the actual problems and the solutions implemented- as

critical inputs are not sought from those individuals who are supposed to implement the new

strategies. A past CEO of Sony once said that organizations have access to the same technology and the

same information. The difference between any two organizations is the “people”- the human

resource. Empowering the workforce is an essential tool for aligning human resources with

the achievement of corporate objectives. It is the duty of HR manager to hire talented human

resource and to provide them with a positive environment where they will be able to utilize

their skills and potentials and to create an environment in which these individuals are

comfortable taking risks.

9. Promote From Within and Invest in Employees: Promoting employees from within sends a

powerfulmessage that the organization’s employees are valued. New blood and fresh ideas often

come from newcomers to the organization. To avoid stagnation of the firm, new ideas and

approaches are critical. Yet to improve employee morale, promoting individuals from within the

organization is essential. This communicates that the organization values their employees and

invests in their human resources.

10. Review the Recruitment and Selection Process: A key element of human resource planning

isensuring that the supply of appropriate employees (with the right skill mix) is on board when

needed. This requires a proactive approach whereby the organization anticipates its needs well in

advance. It is important to identify the competencies being sought. That is, the criteria upon which

selection decisions are to be made should be decided in advance. A firm must identify those skill

sets required by employees to be successful. Charles O’Reilly suggests that companies should hire
for attitude (perhaps even more so than technical skills). That is, the fit of the individual with the

values of the organization and the culture of the firm should also be considered when selecting

employees. This has been referred to as the person-organization-fit. It is no longer enough to

simply consider the person’s fit (and technical skill set) with the job. Part of the employee’s fit with

the organization should focus on the core values and beliefs of the organization. This will increase

employees’ contributions to the overall success of the organization if they already embrace the

core values of the organization prior to their selection

11. Communicate Mission and Vision: If employees are expected to contribute to the

attainment of theorganization’s strategic objectives, they must understand what their role is.

This can be achieved in part by clearly communicating the mission and vision statements of

the firm. The old adage is certainly true. If a person does not know where he or she is going,

any road will get him or her there.

The mission communicates the identity and purpose of the organization. It provides a

statement of who the firm is and what their business is. Only those employees who understand

this purpose can contribute to the fullest extent possible. The vision statement provides a

picture of the future state of the firm. It should be a stretch to attain. This keeps all the

organization’s employees pulling in the same direction with a common end point. It is much

easier to align human resources with corporate objectives when these employees are familiar

with the mission and vision of the [Link] the mission and vision statements are articulated,
organizational members begin to

more closely embrace their very meaning on an individual level. These statements provide

a road map leading employees down the road to achieve organizational objectives.

Employees then identify how they can contribute their unique talents toward the

attainment of these goals.

12. Use Teams to Achieve Synergy: Synergy can be concisely defined as “two plus two equals five”.In

other words, the whole is greater than the sum of the parts. So much more can be achieved as people
work together. Through the effective use of teams, organizations can often achieve synergy. Team goals,

however, must be aligned with the organization’s strategic objectives. Aligning team objectives with

overall
Point: Current Classification of HR roles

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.

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.

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.

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.

Point: Primary Responsibilities of Human Resource Managers:

 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 involve 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
 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.