1.3 What is Human Resource Management?
HRM is the study of activities regarding people working in an organization. It is a managerial
function that tries to match an organization’s needs to the skills and abilities of its employees.
Definitions of HRM Human resources management (HRM) is a management function
concerned with hiring, motivating and maintaining people in an organization. It focuses on
people in organizations. Human resource management is designing management systems to
ensure that human talent is used effectively and efficiently to accomplish organizational goals.
HRM is the personnel function which is concerned with procurement, development,
compensation, integration and maintenance of the personnel of an organization for the
purpose of contributing towards the accomplishments of the organization’s objectives.
Therefore, personnel management is the planning, organizing, directing, and controlling of the
performance of those operative functions (Edward B. Philippo).
Nature of HRM
HRM is a management function that helps managers to recruit, select, train and develop
members for an organization. HRM is concerned with people’s dimension in organizations.
The following constitute the core of HRM
1. HRM Involves the Application of Management Functions and Principles. The functions and
principles are applied to acquiring, developing, maintaining and providing remuneration to
employees in organization.
2. Decision Relating to Employees must be Integrated. Decisions on different aspects of
employees must be consistent with other human resource (HR) decisions.
3. Decisions Made Influence the Effectiveness of an Organization. Effectiveness of an
organization will result in betterment of services to customers in the form of high-quality
products supplied at reasonable costs.
4. HRM Functions are not Confined to Business Establishments Only but applicable to
nonbusiness organizations such as education, health care, recreation and like. HRM refers to a
set of programs, functions and activities designed and carried out in order to maximize both
employee as well as organizational effectiveness.
Scope of HRM
The scope of HRM is indeed vast. All major activities in the working life of a worker – from the
time of his or her entry into an organization until he or she leaves the organizations comes
under the purview of HRM. The major HRM activities include HR planning, job analysis, job
design, employee hiring, employee and executive remuneration, employee motivation,
employee maintenance, industrial relations and prospects of HRM.
These are given below:
Human Resource Planning
Design of the Organization and Job
Selection and Staffing
Training and Development
Organizational Development
Compensation and Benefits
Employee Assistance
Union/Labor Relations
Personnel Research and Information System
a) Human Resource Planning: The objective of HR Planning is to ensure that the organization
has the right types of persons at the right time at the right place. It prepares human resources
inventory with a view to assess present and future needs, availability and possible shortages in
human resource. Thereupon, HR Planning forecast demand and supplies and identify sources of
selection. HR Planning develops strategies both long-term and short-term, to meet the man-
power requirement.
b) Design of Organization and Job: This is the task of laying down organization structure,
authority, relationship and responsibilities. This will also mean definition of work contents for
each position in the organization. This is done by “job description”. Another important step is
“Job specification”. Job specification identifies the attributes of persons who will be most
suitable for each job which is defined by job description.
c) Selection and Staffing: This is the process of recruitment and selection of staff. This involves
matching people and their expectations with which the job specifications and career path
available within the organization.
d) Training and Development: This involves an organized attempt to find out training needs of
the individuals to meet the knowledge and skill which is needed not only to perform current job
but also to fulfil the future needs of the organization.
e) Organizational Development: This is an important aspect whereby “Synergetic effect” is
generated in an organization i.e. healthy interpersonal and inter-group relationship within the
organization.
f) Compensation and Benefits: This is the area of wages and salaries administration where
wages and compensations are fixed scientifically to meet fairness and equity criteria. In
addition, labor welfare measures are involved which include benefits and services.
g) Employee Assistance: Each employee is unique in character, personality, expectation and
temperament. By and large each one of them faces problems every day. Some are personal
some are official. In their case he or she remains worried. Such worries must be removed to
make him or her more productive and happier.
h) Union-Labour Relations: Healthy Industrial and Labor relations are very important for
enhancing peace and productivity in an organization. This is one of the areas of HRM.
i) Personnel Research and Information System: Knowledge on behavioral science and industrial
psychology throws better insight into the workers expectations, aspirations and behavior.
Advancement of technology of product and production methods have created working
environment which are much different from the past. Globalization of economy has increased
competition many folds. Science of ergonomics gives better ideas of doing a work more
conveniently by an employee. Thus, continuous research in HR areas is an unavoidable
requirement. It must also take special care for improving exchange of information through
effective communication systems on a continuous basis especially on moral and motivation.
“HRM is a broad concept; personnel management (PM) and Human resource development
(HRD) are a part of HRM”
Objectives of HRM: The primary objective of HRM is to ensure the availability of competent and
willing workforce to an organization
The specific objectives include the following:
1) Human capital : assisting the organization in obtaining the right number and types of
employees to fulfill its strategic and operational goals
2) Developing organizational climate: helping to create a climate in which employees are
encouraged to develop and utilize their skills to the fullest and to employ the skills and abilities
of the workforce efficiently
3) Helping to maintain performance standards and increase productivity through effective job
design; providing adequate orientation, training and development; providing performance-
related feedback; and ensuring effective two-way communication.
4) Helping to establish and maintain a harmonious employer/employee relationship
5) Helping to create and maintain a safe and healthy work environment
6) Developing programs to meet the economic, psychological, and social needs of the
employees and helping the organization to retain the productive employees
7) Ensuring that the organization is in compliance with provincial/territorial and federal laws
affecting the workplace (such as human rights, employment equity, occupational health and
safety, employment standards, and labor relations legislation). To help the organization to
reach its goals
8) To provide organization with well-trained and well-motivated employees
9) To increase the employee’s satisfaction and self-actualization
10) To develop and maintain the quality of work life
11) To communicate HR policies to all employees.
12) To help maintain ethical polices and behavior.
The above stated HRM objectives can be summarized under four specific objectives: societal,
organizational, and functional and personnel.
1) Societal Objectives: seek to ensure that the organization becomes socially responsible to the
needs and challenges of the society while minimizing the negative impact of such demands
upon the organization. The failure of the organizations to use their resources for the society’s
benefit in ethical ways may lead to restriction.
2) Organizational Objectives: it recognizes the role of HRM in bringing about organizational
effectiveness. It makes sure that HRM is not a standalone department, but rather a means to
assist the organization with its primary objectives. The HR department exists to serve the rest of
the organization.
3) Functional Objectives: is to maintain the department’s contribution at a level appropriate to
the organization’s needs. Human resources are to be adjusted to suit the organization’s
demands. The department’s value should not become too expensive at the cost of the
organization it serves.
4) Personnel Objectives: it is to assist employees in achieving their personal goals, at least as
far as these goals enhance the individual’s contribution to the organization. Personal objectives
of employees must be met if they are to be maintained, retained and motivated. Otherwise,
employee performance and satisfaction may decline giving rise to employee turnover.
Table 1.1 HRM Objectives and Functions
HRM Objectives Supporting Functions
1. Societal Objectives Legal compliance
Benefits
Union- management relations
2. Organizational Objectives Human Resource Planning
Employee relations Selection
Training and development
Appraisal Placement
Assessment
3. Functional Objectives Appraisal
Placement
Assessment
4. Personal Objectives Training and development
Appraisal
Placement
Compensation
Functions of HRM
Human Resources management has an important role to play in equipping organizations to
meet the challenges of an expanding and increasingly competitive sector. Increase in staff
numbers, contractual diversification and changes in demographic profile which compel the HR
managers to reconfigure the role and significance of human resources management. The
functions are responsive to current staffing needs, but can be proactive in reshaping
organizational objectives.
The functions can be grouped as follows:
Strategic HR Management: As a part of maintaining organizational competitiveness,
strategic planning for HR effectiveness can be increased through the use of HR metrics and HR
technology. Human resource planning (HRP) function determine the number and type of
employees needed to accomplish organizational goals. HRP includes creating venture teams
with a balanced skill-mix, recruiting the right people, and voluntary team assignment. This
function analyzes and determines personnel needs in order to create effective innovation
teams. The basic HRP strategy is staffing and employee development.
Equal Employment Opportunity: Compliance with equal employment opportunity (EEO)
laws and regulations affects all other HR activities
Staffing: The aim of staffing is to provide a sufficient supply of qualified individuals to fill jobs
in an organization. Job analysis, recruitment and selection are the main functions under
staffing. Workers job design and job analysis laid the foundation for staffing by identifying what
diverse people do in their jobs and how they are affected by them. Job analysis is the process of
describing the nature of a job and specifying the human requirements such as knowledge, skills,
and experience needed to perform the job. The end result of job analysis is job description. Job
description spells out work duties and activities of employees. Through HR planning, managers
anticipate the future supply of and demand for employees and the nature of workforce issues,
including the retention of employees. So HRP precedes the actual selection of people for
organization. These factors are used when recruiting applicants for job openings. The selection
process is concerned with choosing qualified individuals to fill those jobs. In the selection
function, the most qualified applicants are selected for hiring from among the applicants based
on the extent to which their abilities and skills are matching with the job.
Talent Management and Development: Beginning with the orientation of new employees,
talent management and development includes different types of training. Orientation is the
first step towards helping a new employee to adjust himself to the new job and the employer. It
is a method to acquaint new employees with particular aspects of their new job, including pay
and benefit programs, working hours and company rules and expectations. Training and
Development programs provide useful means of assuring that the employees are capable of
performing their jobs at acceptable levels and also more than that. All the organizations provide
training for new and in experienced employee. In addition, organization often provide both on
the job and off the job training programs for those employees whose jobs are undergoing
change.
Likewise, HR development and succession planning of employees and managers is necessary to
prepare for future challenges. Career planning has developed as result of the desire of many
employees to grow in their jobs and to advance in their career. Career planning activities
include assessing an individual employee’s potential for growth and advancement in the
organization. Performance appraisal includes encouraging risk taking, demanding innovation,
generating or adopting new tasks, peer evaluation, frequent evaluations, and auditing
innovation processes.
This function monitors employee performance to ensure that it is at acceptable levels. This
strategy appraises individual and team performance so that there is a link between individual
innovativeness and company profitability. Which tasks should be appraised and who should
assess employees’ performance are also taken into account.
Total Rewards: Compensation in the form of pay, incentives and benefits are the rewards
given to the employees for performing organizational work. Compensation management is the
method for determining how much employees should be paid for performing certain jobs.
Compensation affects staffing in that people are generally attracted to organizations offering a
higher level of pay in exchange for the work performed. To be competitive, employers develop
and refine their basic compensation systems and may use variable pay programs such as
incentive rewards, promotion from within the team, recognition rewards, balancing team and
individual rewards etc. This function uses rewards to motivate personnel to achieve an
organization’s goals of productivity, innovation and profitability. Compensation is also related
to employee development in that it provides an important incentive in motivating employees to
higher levels of job performance to higher paying jobs in the organization. Benefits are another
form of compensation to employees other than direct pay for the work performed. Benefits
include both legally required items and those offered at employer’s discretion. Benefits are
primarily related to the area of employee maintenance as they provide for many basic
employee needs.
Risk Management and Worker Protection: HRM addresses various workplace risks to
ensure protection of workers by meeting legal requirements and being more responsive to
concerns for workplace health and safety along with disaster and recovery planning.
Employee and Labor Relations: The relationship between managers and their employees
must be handled legally and effectively. Employer and employee rights must be addressed. It is
important to develop, communicate, and update HR policies and procedures so that managers
and employees alike know what is expected. In some organizations, union/management
relations must be addressed as well. The term labor relation refers to the interaction with
employees who are represented by a trade union. Unions are organization of employees who
join together to obtain more voice in decisions affecting wages, benefits, working conditions
and other aspects of employment. With regard to labor relations the major function of HR
personnel includes negotiating with the unions regarding wages, service conditions and
resolving disputes and grievances.