Unit I: Human Resource Management (Concept and Context)

Concept
HRM is concerned with people dimension in mgmt. Since, every orgn. is made up of people acquiring their
services, developing their skills, motivating them to high levels of performance and ensuring that they continue to maintain
their commitment to the orgn. and it is essential to achieving organizational objectives. Getting and keeping good people is
important to the success of every orgn. whether profit or non-profit , public or private.
Its main purpose is to ensure that the employees of an orgn. are used in such a way that the employer obtain the
greatest possible benefit from their abilities and the employees obtain both material and psychological rewards from their
work.
The mgmt. of employees is one of the key elements in the coordination and general mgmt. of a work orgn. The
word HRM has been increasingly used in work orgn. The essence of the concept of HRM is that the people working in an
orgn. are viewed as a valuables resources. This means that they should be well managed to increase the productivity of
the global market. Employees are a valuable resources, it should be properly managed and treated, boost productivity
through their full commitment and capability. HRM involves the idea that it’s important to communicate well with employees
to involve them in what is going on and to foster their commitment and identification with the orgn.
The term HRM is the improved version of the older personnel mgmt. PM is concerned with personnel function such
as recruitment and selection, reward, appraisal, development, industrial relation, grievances and disciple, retirement,
resignation and dismissal including this HRM lays special emphasis on the important of the integration of these personnel
function into the overall strategic mgmt. of the orgn.
This involves the integration of HR outcomes such as top quality recruits, appropriate compensation, effective
training and development with business strategy. For e.g. If a business enterprise needs to develops products or services
different from those of the other competitors, then employees must be developed, deployed, motivated and controlled to
take advantage of the competition in the market.
Definition
According to Decenzo and Robbins “ HRM is a process consisting of four function of acquisition, development, motivation
and maintenance of human resources”
According to Wendell French “ HRM is the systematic planning development and control of a network of interrelated
processes affecting and involving all members of an orgn.”
According to Fisher, Schoenfeldt and Shaw “ HRM involves all mgmt. decision and practices that directly affect or influence
people who work for the orgn.”
Conclusion
HRM can be defined as a process concerned with the mgmt. of human effort and competences to ensure competent
and committed workforce to achieve organizational goals in a changing environment.

Functions of HRM

A. Managerial Functions B. Operative Functions

A. Under Managerial Function

a. Planning: Manpower planning, forecasting of future manpower, planning for selection, training.
b. Organizing: grouping activities, Designing structure, establishing authority and responsibility relationship.
c. Directing: Instruction for network system, integrating workers, supervising.
d. Motivating: Financial/ Non-financial incentives, rewards, promotions.
e. Controlling: Establish standard of performance, measuring actual performance, analyze definition, taking
corrective actions.
 B. Operative (Routine) Functions:
a. Procurement of personnel: Human resources planning, forecasting, recruitment and selection, placement
and induction of employees.
b. Development: Training, mgmt development, career development, promotion, performance appraisal,
transfer.
c. Compensation: Wages, salaries, bonus, financial incentive, insuarance.
d. Integrate: Maintaining balance between individual, social and organizational goal. Democratic mgmt to
reduce conflict, morale and motivation.
e. Favorable work environment: Labour welfare workers, participation in mgmt.

Personnel Mgmt Vs. HRM

Personnel mgmt: Personnel mgmt focus of personnel administration, compensation, employees welfare and labour
relation. It is regarded as the staff function in orgn. Hence it is a traditional approach to administration.
HRM: HRM is a systematic approach to the mgmt of human abilities and capabilities, it is concerned with acquisition
development utilization and maintenance function. It is regarded as the concern of managers. It is a part of strategic mgmt
and it tries to change the mgmt with long term perspective.
Personnel Mgmt HRM
1. People are input in the production process. 1. People are valuable resources.
2. It is concerned with personnel department. 2. It is concerned with all levels of Managers
3. It is a routine function. 3. It is a strategic function
4. It is a traditional approach. 4. It is a modern approach.
5. It is a division of labor based on job design. 5. It is team work based on job design.
6. In PM interest of orgn is upper most. 6. In HRM there is mutuality of interest.
7. It places importance on rules, regulation, 7. It places emphasis on development and
collective bargaining etc. Utilization of human resources.
8. It is confined to discipline, control and 8. It is the mgmt of utilization of human
direction to the employees. resources potential to achieve objective and goal.
9. It is the system oriented with supporting environment for
9. It is confined to discipline, control and growth performance and involvement.
direction to the employees. 10. It is integrated approach mgmt of human energy and
capabilities i.e. proactive approach.
10. It is a piece-meal approach labor mgmt i.e. it 11. The result of HRM is an committed, empowered HR with
is a reactive approach. increase production.
11. PM results in satisfied personnel and 12. HRM regards people as social capital capable of
increase production. development.
12. PM regards people as a valuable cost. 13. HRM concerns itself with developing through training
means fully and long term potential of individual
13. PM aims to increase the skills of employees employees.
through teaching and learning.

Changing Dimensions of HRM

Orgn. are human associations for achieving goals. Managers work with and through people. They must ensure that
the human side of the enterprise works effectively at all levels. Since 1990s, the important and interest in HRM has been
rising. The foundation for modern HRM rests on various factors, stages and functional focus. HRM is a dynamic subject or
field of study and practice. It has passed several development stages or dimension. We can explain the changing
dimension of HRM by going through two view point:
1. Changing Dimension in term of growth stages.
2. Changing Dimension in term of functional focus:

1. Changing Dimension in term of growth stages:

 Concept of HRM has changing over the period of time. Since 1990s, the important and interest in HRM has been
rising. Changing dimension of HRM in term of growth Stages can be studied in following heading:
i. Welfare Management (Dimension): The First stage is called as the “Welfare management Stages” which is in
between 1900 onward to before 1920s. this stage is the pre-stage or dimension of evolution of personal mgmt. its
focus was only toward avoiding child labor, emphasizing human needs, setting work hours, cleanliness and
providing basic facilities etc.
ii. Personnel management (Dimension): The second stage is regarded as “personnel Management” stage, which is
in between 1920s to 1940s. Personnel management is traditional in nature. It is focused with simple planning in
the orgn. Its basic function is to derive better performance through people. It is basically, routine in nature.
Personnel mgmt. is directed mainly at the employees of the orgn. in selecting and training them, arranging their
pay and contacts of employments, explaining what are expected of them, justifying what the mgmt. is doing and so
on.
iii. Human resource management (Dimension): The third stage is popularly known as “HRM stage”. There are several
differences in between ‘PM’ and ‘HRM’. HRM is strategy focused, long term oriented in nature. The foundation for
HRM is derived from personnel mgmt. The concept of HRM has gained popularity especially from 1940s onwards.
HRM starts with demand for HR rather than the supply. HRM is proactive than reactive. It is system wide than
piecemeal, treats employees as human capital rather than as variable cost, and it is based on commitment rather
than compliance.
iv. Strategic HRM Dimension (SHRM): The fourth stage is regarded as ‘strategic HRM’ stage i.e. 1980s onward till
date. There is relationship between strategic planning and SHRM. Every orgn. Needs its HRM activities to be in
line with strategic goals and objectives. SHRM means formulating and implementing HR policies and practices that
develop the employees competencies and behaviors the company needs to attain its strategic plans.

2. Changing Dimension in term of functional focus:

As period of time the attention towards the works of HRM is changing or what are its priority areas or dimensions.
To support the orgn. growth and competitiveness has several dimensions in the orgn. These dimensions are
changing over the period of time. In the past major dimensions of HRM were recruitment to retirement functions.
But the business world and its requirement are changing. So, to cope with that situation HR mgmt. dimensions are
also changing. The new or changing dimensions of HRM are as follows:
i. HR practices and performance dimension: The performance and HR practices are very important for the
competitiveness of the marketplace. Any weakness in this aspect greatly harms the orgn. The changing focus here
is that HR measurement has to be designed in such a way that the mgmt. gets exact information. The priority of
HRM is towards performance systems and standard.
ii. Re-engineering of orgn. Dimension: The second growing dimension of HRM is the organizational design, redesign
and re-engineering. For that purpose HR has to gain the knowledge and expertise in the above areas. Most of the
successful and competitive orgn. analyze work processes continuously. Thereby they introduce improvements by
making processes short, simple and understandable. This activity helps to reduce the double work and introduce
clear roles and responsibilities. So HR has to be a leader in the organizational design initiative.
iii. Leadership dimension: One of the most important dimensions of HRM is leadership development. This programs
focus should be on the current leadership practices and the leadership development for the future of the orgn.
leadership development is a long term dimension of HR. the duty of HRM is to cooperate with the top mgmt. to
identify successors and high potentials in the orgn.
iv. Workplace learning dimension: This is the recently emerged dimension of HRM. Its objective is to provoke
managers and employees to do their job better every day. Its concern is towards spreading the know-how of the
orgn. and improving it. The responsibility of HRM is to design programs to support innovations. So, HRm has to
support the introduction of innovation into the daily practice. Hence, HRM has to show living examples of
successful innovations.
v. The relationship with employees dimension: It is a highly important dimension of HRM. The relationship pattern is
also dynamic in nature. HR represents the orgn. and the mgmt. HRM has to deal and understand the interest of
the employees. HR mangers must receive trust from employees. Though it is a difficult role of HR but it has to be
 successfully performed. All decisions made by HRM should consider the opinions from the employees. HR
managers have to protect their interests during the strategic meeting.

Changing role of HR Managers

In present day, HR is speeding it activities in the today’s dynamic environment and HR role is shifting from
protector and screener to strategic planner and change mgmt. the changing roles of HR manager are as follows:
1. The changing scenario: The HR manager today has to recognize the talent and groom them carefully. Talent
mgmt. is necessary to achieve optimum productivity growth over a period of time. Technological development,
globalization, competition, workforce diversity, information revolution and new trends in the key areas of key
sector have changed the rules game significantly. In such scenario, orgn. with similar set of resources gain
competitive advantage only through effective and efficient mgmt. of HR. The trend of HRM can be listed as
follows:
i. The role of HR is shifting from protector and screener to strategic planner and change management.
ii. In a growing number of orgn. HR are now viewed as an ultimate source of competitive advantage.
iii. Increasingly it is being recognized that competitive advantage ca be obtained with a high quality work force.

2. The changing roles: Changing roles of managers are as follows:

i. HR and improving productivity: Productivity is the quantity or volume of product or service that an orgn.
provides. Improvement in productivity is highly important in today’s globally competitive market environment. In
this respect, HR managers can play a vital role in reducing costs and improving quality of product or services.
HR managers of today know that people are the most essential factor in any productivity improvement
program. The changing roles of HR managers towards productivity improvement are:
 Implementing employee participation programs,
 Fostering better communication system,
 Developing better labour-mgmt relations,
 Increasing training and development programs,
 Selection and retention of highly talented and skillful employee communities.

ii. HR and corporate strategy: Strategy is a policies of the orgn. to achieve the goal of the orgn. strategy is the
responsibility of the company executive team of which HR manager is a member. HR manger must initiate and
participate in serious discussion. HR manger must take the responsibility for defining organizational structure
to implement the strategy. Whatever framework the HR mangers define, it is essential that it should be
comprehensive and the component should be defined clearly. Success of a company strategy is highly
dependent on:
 Strengthening organizational responsiveness,
 Building committed work teams,
 Involve HR manger in the earliest stages of developing and implementing the firm’s strategic plan, rather than
letting HR just react to it.

iii. HR and employee commitment: Commitment is a psychological state that characterizes the employees
relationship with the orgn. committed employees are more likely to remain in the orgn than uncommitted
employees. HR manager has to play a key role in building employee commitment. High commitment firm aim
to ensure their employees have the every opportunity to fully utilize their skill at work and become all they can
be. So, HR manager should have following roles:
 Establish career oriented performance appraisal procedures,
 Open job-posting and job transfer practices,
 Create the feeling that organization cares them,
 Offer training program
iv. HR and transferring knowledge: HR manager should play a vital role to accumulate and disseminate
knowledge quickly and efficiently throughout the orgn. training and development plays an important role in
promoting transfer of knowledge. Various HR programs (training and development) play crucial roles in
developing employees and managers skill and expertise. Finally, learning orgn are successful at learning
knowledge.

v. HR and service orgn.: Technological advances, globalised competition, demographic changes, information
revolution and trends toward service have brought a change in the system of mgmt. Employee behavior is
highly important in service orgn. like insurance companies, hotels, banks, retail stores and consulting. The
very success of those orgn. dependent on their employees motivation, skills and attitude and on HR mgmt.
Therefore, HR managers play a vital role in service orgn. Proper Hr Practices help to improve employees
customer service and quality delivery. Satisfied employees deliver high quality service and high service
generates more profits.

vi. HR and responsiveness: The roles of HR manages are changing every day. One of the change is creating
responsive employees. HR managers should play an important role in accomplishing this. Responsive
employees can adopt with organizational change effectively. They also can create new ideas and deliver high
quality services to both orgn and its customers. The benefits of creating highly responsive employees are as
follows:

 They are more productive and innovative.

 They accept change mgmt. programs easily and quickly.
 They are less prone to the conflict.
 They respond quickly to their customers need and their competitors challenges.
The role of HR manager in changing world as follows:
1. Staff role: This was the traditional advisory role. HR managers performed the staff specialist role. They assisted
and advised line managers on HRM matters and top mgmt. in formulation of HR policies and plans. HR mangers
assisted and advised line mangers for acquisition, development, utilization and maintenance of HR.
2. Line role: This was the decision making role. HR managers performed the line mangers within the HR
Department. They made decisions. They direct the work of subordinates. They performed planning, organizing,
directing and controlling functions HRM department.
3. Integrative role: HR managers performed the integrative role by coordinating all activities related to HRM. They
ensured that HR objectives, policies, procedures and programs were consistently carried out by line managers
throughout the orgn.
4. Strategic role: This is the new role of HRM. HR managers formulate the implement people strategies. Such
strategies are integrated with overall organizational strategies. Strategies role of HRM of two types:
 Follower role: Top mgmt. formulate overall organizational strategies. HR managers prepare program to implement
such strategies.
 Partner role: HR manager is an equal partner in the formulation and implementation of organizational strategies.

Challenges of HRM managers

Business environment is changing accompanied by the frequently changing the work and the role of HR
professionals often the process of globalization is equated with the movement of capital but hardly a thought is given to
the changing faces of labor with the coming of the knowledge orgn. and knowledge workers, having information as the
basic source of power, it is very difficult to discard the differences that exist now between work, worker and HR
professionals.
In the last two decades both the concept and practice of human resource. Mgmt. have changed tremendously.
Especially in Anglo-American countries, HRM is taken as more action, individual and future oriented. However, some
important transformation is taking place in the sphere of labor mgmt. and work of HR professional. They are:
1) More work from few people: The arrival of flexible technology has helped to mass production. The mass production
system introduced a system of division of labor whereby a task is divided into a minute work to be performed by a
specialist. The flexible technology requires “multiple skilling” meaning a person capable enough to perform a variety
of jobs. A good eg. of flexible technology is computer. The use of computers has made it possible to address
impossible tasks. The flexible technology demands more skilled and knowledge workers to handle up-to-date
technology. So, now employees has to be specialized with knowledge of different work with increased productivity
the company can afford high wages and salaries to the skilled workers.
2) Demise of permanent workforce: now, there is no permanent workforce due to flexible technology which is changing
the concept of permanent workforce. What we have now is contract, temporary, daily and piece wage system has
comes as the basic mode of employment. The flexible technology contributes to flexible working hours what is now
called “flexi-time system”. With e-mail, internets, mobile phones and wide spread use of computers, the traditional
nine to five working hours is slowly coming to an end. Now people can work from their home. With flexible working
hours there is also flexible payment because of this worker has to change their working habit also. The workers are
paid not just in terms of monthly wages and salaries, various options like share ownership, different types of
retirement schemes are now made available.
3) Increase in the entry of working women: Female work force is tremendously increasing all over the world. A number
of factors account for this. First there is an increase in service industry. The increased use of machines has
drastically cut the use of muscle power. Now most of the jobs are performed on the table and with the computers.
Even the manufacturing industry is taking the shape of a service industry. Secondly, the flexible working hours is
very much suited to women who have to take care of the family and the job. Thirdly, the inventions birth-control
technology has also freed women to join work force. Now HR professional has prepared themselves this transition.
4) Entry of old aged workers: The increase in life expectancy has put a question mark on retirement age. Now, we find
retirement age increased and re-employment of retire people. More and more companies are attracting the retired
workers and senior citizens because they do not need to go early to take care of children. So HR professional has to
make the environment in which this workforce can work.
5) Labor mobility: The globalization phenomenon has made capital to be highly mobile. With the globalization we saw
global movement of multinational companies, that is the movement skilled worker are carried on to developed
countries. As more and more workforce are joining the workplace this is expected to be increasing in coming days.
6) Emergence of Trade Union and fall: During 1920’s we saw the emergence of trade union but all over the world, trade
unions are undergoing an identity crisis. The fall of hand operated mass production technology and the rise of
professional workers has dramatically cut down trade union membership in the west. The development of a distinct
branch of mgmt called “HRM” has made the role and function of trade union less useful. The proactive mgmt has
literally kicked out trade union from the companies. The useness of trade union has reduced because in professional
world every individual can bargain for himself. So, he does not need to join trade union. These trade unions are also
changing their strategies for their survival, like focusing to student problems, gender discrimination, unemployment,
training etc.
7) Outsourcing of HR activities: A trend that is seen regularly and has become popular is outsourcing of HR activities.
Outsourcing is the process by which ogrn. Transfer routine work to another orgn that specializes in that work send
can perform it more efficiently. HR dept. are also shifting themselves from routine activities to focus more on
strategies role.
8) Balancing work life and family life: Balancing work with life has become a hot issue to the both HR managers and
employees. But this is not an easy issue in the modern times. This issue has become more serious when both
husband and wife are employed. It is also becoming a major challenge to the managers of HR department since
more numbers of women is entering into the orgn. to reduce the level of stress, anxiety and depression. Hr
managers need to introduce work- life balance programs.
9) Making HR activities ethical: This major problem facing modern HR manager. HR manager’s role in building an
ethical environment in the orgn is highly important. HR manager need to show them as an example for ethical
behavior. A dishonest HR manager cannot make others honest.
10) Change in employees expectation: What motivated employees yesterday do not motivate today. Employees
expectation are changing everyday. With the changes in workforce demographics, employees expectations and
attitudes also have shifted.
11) Corporate reorganizations: Reorganization of big business in the form of mergers, acquisitions, takeovers,
diversification, and takeovers has posed a greater challenge for HRM these days. Many orgn. have adapted
fundamental business changes. It has becomes very difficult for HR managers to imagine the circumstances. This
reorganization will have impact on both employees and orgn.
12) Loss of joy an pleasure: HR managers of today are not as fortunate as they were in the past. In the recent years
they are facing brick/ stones, strikes, lockouts, vehicles being burnt, executives being tortured, throwing of name
plate etc, by employees leaders. The HR managers of today have a poor legacy of the one lived in the past.
13) Changing qualities of HR professionals: This is the most important challenge among others. HR executives’ are in
the cross roads. They are caught between the conflicting interests. Hence HR managers do not have one permanent
responsibility and quality. The qualification skills and conceptual requirements of HR managers are ever changing
and becoming tough.

Essential skills for HR Managers

All managers need different skills to perform the given tasks. In simple term a skill in an ability or proficiency in
performing a particular task. Skills can be learned and developed. The field of HRM is changing day-by-day. Traditional
types of skills alone are not sufficient enough for the modern HR managers. So they need a list of key skills essential for
their job. Essential skills that are required by today’s HR managers are as follows:
1. Organizational skills: The mangers must follow orderly and systematic approach in the orgn. Organized records,
strong time mgmt skills and personal efficiency are key to HR effectiveness. Success of any orgn. highly depends
upon a high level of cooperation and collaboration from HRM dept. So, HR managers have to organize their
departmental functions according to need of the orgn. efficiently and effectively. So, orgn. skill is one of the important
skill that every HR manager must have.
2. Multi-tasking: HR managers jobs are composed of multi-tasks. In a typical office day manager has to face different
kinds of problems and issues. A typical HR manager have to solve personal of employees, recruitment program,
attending the collective bargaining meeting, salary issues, promotion, interview related activities in the orgn. This
situation requires multitasking skills because different problems and programs demand different kind of skill at a time.
3. Negotiation skills: A negotiation is agreement or contract between two or more parties. HR managers have to deal
with other departments, employees, managers and even outsiders. Orgn. are composed of multi-interest groups. So,
conflict of interest is quite common. So, the goal of negotiation is to end conflict with two parties that are satisfied with
the outcome. Therefore, an important skill required by HR manager is negotiation skills.
4. Communication skill: One of the important tool that helps to run the orgn. is communication. The communication. The
communication system used by HRM department is called “HR communication”. Every Day HR managers
communicate with top managers, other type of managers, present employees and outsider. And they have to do it in
writing and speaking. HR managers have to be convincing, caring, believable too. All these require proper
communication skills.
5. Dual focus (Balancing) skills: HR managers are the bridge between top mgmt. and employees. Employees expect
HR managers to favor their concern. At the same time HR managers must also enforce top mgmt. policies. The HR
managers has to handle balancing work. On the one hand, HR managers must make decisions to protect the orgn.,
its culture and values. All these activities require dual focus or balancing skills.
6. Discrete and ethical skills: It is well known its us that HR manager are the conscience of the company, as well as the
keepers of confidential information. When HR managers delivers the needs of top mgmt., they also monitor their
actions toward employees to be sure that policies and regulations are properly and never expose it to any
unauthorized person or party. So, they also need to have discrete and ethical skills.
7. Conflict mgmt. and problem solving skills: No orgn. in this world is totally free from problems and conflict. Problems
and conflict may be seen inside the HR department and other department also. Some of the problems and conflict
are solved by HR department alone. So, HR managers cannot be effective without conflict mgmt. and problem
solving ability or skills.
8. Change mgmt. skills: Modern orgn. are learning to cope with unexpected rate of internal and external change.
Change has created both opportunities and threats to the orgn. and the HR managers. People often resist change.
Change mgmt. of change has become a main focus of HR managers. To implement change programs successfully
there is a strong need of creating a culture for change. In this context, HR managers have to take a major
responsibility than other departmental managers in the orgn. HR department has to help everyone cope with the
constant change. So, HR managers must acquire or learn change mgmt. skills.
9. Compensation and benefit skill
10. Recruitment and hiring skill
11. Performance/ employees evaluation
12. Training and staff development

Purpose and Structure of HR Department

Purpose of HR department
There are different purposes of HR dept.
1. Safety: It is the foremost purpose of HR dept. which relate with the providing the safe working environment to
employees in the orgn. Safe environment make employees motivate work energetically. Safety has become the
prime responsibility of the HR managers in the orgn. Safety refers to the absence of accident. In othe word, safety
refers to the protection of workers from the danger of accident.
2. Recruitment: The main thrust of the recruitment function is to staffing activities. Here, through recruitment HR dept.
announce job seekers in such a way that a way that a good number of suitable people will apply for them. recruitment
is the process to discover the sources of manpower to meet the requirements of the staffing schedule and to apply
effective measure for attracting that manpower in adequate numbers to facilitate effective selection.
3. Selection: Another purpose of HR dept. is to select the employees for the vacant post. Selection is essentially a
process of choosing right applicant best suited for the orgn. requirement. Here HR dept. through the selection chose
individual who possess the necessary skills, ability and personality to successfully fill specific jobs in the orgn.
4. Training and Development: Training and development section of an orgn is responsible for employees maximize their
potential. Their focus is to enhance employee’s personal qualities that lead to greater organizational productivity.
 Employees training emphasize skills development and the changing of attitudes among workers.
 Mgmt. development focus is acquiring knowledge and the enhancing managerial conceptual abilities.
5. Compensation: Compensation another purpose of HR dept. Compensation refers to all forms of financial rewards
received by employees. It arises from employment. It occupies important place in the life of the employees and
employees look for the reward before they do anything. So HR dept. has to properly look after compensation in the
orgn.
6. Disciplinary procedures: Employees discipline is an important job of HR managers today. HRM is far more important
when people are being punished or fined rather than hired. Discipline means orderliness. Orderly behavior is
essential for achieving the orgn. objective. But all employees do not accept norms of responsible employee behavior.
These employees will require some degree of disciplinary action. But disciplinary action should be fairly used.
7. Equality: It is another job of HR dept. It refers to the attempt to ensure that all individuals have an equal chance for
employment. The chance must be equal regardless of race, color, religion, sex, age, or national origin.
8. Policies: Policies related to the making of policy of the HRM subject so orgn. can function effectively, without proper
policy of the HRM it is very difficult to function.

Structure of HR Department
Structure of HR department differs greatly in different orgn. depending upon their size and other factors. Major
structures of HR department are as follows:
1. HR structure in a small company: The internal structure of HR department differs widely in different orgn. depending
upon their size and other factors. In small companies HR functions are discharged by line executives. Below figure
show the structure of small orgn where there is no separate HR managers.
 President

Production manager Sales manager Treasurer

Employment supervisor Employee Insurance Accounting

Shop Supervisor

2. HR structure in big orgn.: But in a large orgn. where HR activities are generally of a complex nature therefore,
separate HR department is organized for the purpose. He is generally leaded by the HR manager or HR director or
vice president. His position is under the president or general manager of the company. A lot of different units are
created under him. The subordinates working in this HR activities units are assigned different HR activities. In a
medium or large size orgn. HR department may be organized on each basis has its own purpose. The basic purpose
of any structure is to help the orgn. to achieve its objective effectively and efficiently. The goals and activities of the
orgn determine the structure of HR dept. commonly followed basis are shown below:
i. Functional Basis: According to this basis the structure of the HR dept. is grouped into different functions. Each
division would be influenced by such variables as size, abilities of HR staff and top mgmt. philosophy towards the
role of personnel, which can shown by following figure:

President

Vice-President Marketing Vice-President Production Vice-President HR Vice-President Finance

Marketing Marketing Marketing

duction manager
es manager
Health and Safety Labor Relation
Employment Training and development Wage and Salary
aAccounting

ii. Service basis: This structure takes into account the services to be provided or the purpose to be achieved. The
structure based on this basis tries to prevent dissatisfaction through hygienic maintenance and promotion of
satisfaction through motivators. This idea evolved by Herzberg. This can explained by following figure:

HR Director

Hygiene needs Motivator need

program program
Employment Education
Training
Job Design
Pay
Motivation
Industrial Relation

Services
 iii. Clientele based HR structure: The idea behind this structure is that different requirement of different types of
employees need specializations. Its purpose is to offer special service to the specific type or group of employees.

HR Director

Evaluation and Organization

Manpower Planning and Research

Managers for

Scientific and Technical Personnel

Integration of new workers

Handicapped/ Protected Persons

Management Develop

Compensation mgmt.

Women Employees

Industrial Relation

HRM as the shared function

HRM is concerned with people at work and their relationship within the orgn. The major aim of HRM is to create a
balance between:
 Economic value of the orgn.
 Taking into account the well being of individual and working groups.

HRM does it to achieve the highest level of efficiency and productivity. For that HRM manager has to:
 Line managers are encouraged to take part in HRM functions and deliver the responsibilities.
 HR managers are strongly encouraged to participate in formulation of business strategies in the orgn.
It signifies the importance of involvement of both the HRM manager and line manager are included in the active
execution of operational task of orgn i.e. acquisition, development, utilization and maintenance function of HRM as per
requirement.

Possible problem and prospect of sharing HRM function:

In some orgn., at the initial stage HRM managers can be reluctant(unhappy) to share power of HRM dept. to the line
managers since it can be perceived as a loss of power. There can be unhappiness along line mgmt. to take HRM
responsibilities assigned to them. The logic behind is that the line manager are already under pressure, taking time for
additional functions can be troublesome.
But in recent years line managers have formally accepted the HRM role without pointing out any problems of time,
ability and skills. Collaboration between HR managers need to work together to operate and establish system of
consultation with regards to HRM functions and matte of common concerned need to be identified. A better way ahead
is to form consultative committees where line managers and their HR dept. managers explore ways of injecting new
ideas. It may even include the extending the range of discussion and methods of accessing the effectiveness of HR
policies.

External and Internal context of HRM

Organization are goal orientated composed of people, structure and technology. They operate in a rapidly changing
environment. Environment consists of forces that influence the orgn. ability to achieve goals. Mgmt. of HR is
dependent on environmental influences. Environments forces determine the effectiveness of an orgn. understasnding
of environment is more important to HR managers today than ever before. It is due to:
 Faster rate environmental changes
 Expanding dimensions of environmental forces.
Environment may be understood as all those forces which have bearing on the functioning of the HR dep. IT is
therefore, desirable that we know what the environment is and how it influences HR functions in an orgn. So, HR
manager need to be proactive to analyze the environment that is useful for them. Present business environment is full
of competition and change. So, proactive initiations are essential for any orgn. if it wants to succeed in the market.
Component of HRM environment/ context
The components of HRM environment can be classified into two broad categories:
1. Internal environment/context: An orrgn. Has several components operating within its internal system. Forces
together determine the internal environment of HRM. These factors are internal to the orgn. which influences HR
activities. Internal environment is within the control of the orgn. Important internal forces are as follow:
i. Employees: Organizations hire employees and they become the major forces within the internal environment.
They tend to differ in terms of belief, attitude, education and capabilities. They have to adopt with the
organizational culture to achieve the goal and smooth functioning of the organization
ii. Strategy of the orgn: A strategy is the company plan for how it will match its internal strength and weakness with
external opportunities and threats in order to achieve a competitive advantage. To achieve the long term objective
orgn. invest more in HR. organizational strategy provide guidelines for HRM activities and decision making. HRM
activities should be designed according to the corporate strategy.
iii. Organizational structure: Organizational structure is dependent on its strategy. A good structure is that which
changes according to changing environment. In simple words, structure provides the overall framework for HR
roles, hierarchy, relationship and authority. Organizational strategy influences HR strategy, policy and practices.
iv. Organizational culture: Every orgn. has its own culture. Culture is the values, traditions and behaviors a company
employees share. Managing HR and their desired behavior, depends on framing the values they use as behavioral
guides. Orgn. culture is the product of all the organization’s features its people, its successes and its failure. It is
the job of HR manager to adjust employees to the culture of the orgn. Organizational culture has a powerful
influence on the process of HR activities and change mgmt.
v. Labour unions: They represent the problem, feeling and demands of their members to the mgmt. orgn HRM
activities are influenced by its union. Most of the HR activities are implemented with the consent of union leader.
To manage employees properly they are also given opportunities to participate in HR decisions.
vi. Organizational activities: It determines the job that an employees is expected to do. A task is the work that an
employees is expected to do. Several tasks constitute a job. These factors have implication on employees
motivation, satisfaction and compensation.these job factors affect HRM decisions in several.
vii. Owners/share holders: The owners or share holders are the people who invest the money and have a legal
property right to that business. Nowadays more and more share holders are taking active role in influencing the
management of company.
viii. BOD: The management of organization is concerned with BOD who retains the right of ownership, management
and power of functioning of organization. The actual management of organization is in the hand of elected BOD. It
has great influence on mission, objective and strategies of the organization.

2. External environment: One of the most important factors for the success of an orgn. is its external environment.
The success of a business greatly depends on how effectively the company deals with external environment. It is
 outside the orgn. and is not within the control of single enterprise. It offers opportunity and threats to an enterprise.
Some of the component of external environment of HRM as follow:
i. Physical/ geographical: IT represent an orgn. location, topography and climate. It affects several HR activities like
recruitment and selection, compensation and so on. In Nepal special allowances are given to employees who work
in remote areas of the country. Terms and conditions of work and working hours may also be affected by physical
location and climate of an enterprise.
ii. Economic environment: The economic environment of a business enterprise is highly determined by the economic
environment of the country where it operates. Major elements of the economic environment are economic policies
like fiscal, monetary and industrial, condition existing in industrial, service and agricultural sectors and other
economic activities. Economic environment of HRM constitutes all the above factors which have impact on the HR
functions and policies. HR manager direct concern is towards economic growth rate, productivity, population, per
capita income etc. They are highly significant to determine HR activities and policies.
iii. Socio-cultural environment: IT is composed of social orgn., class structure, expectation, beliefs, customs and
desires of citizen in a given society. Next important components or element closely linked with social environment
is cultural environment. It covers values, norms and approved behavior styles of people. These components of a
society directly influence HRM activities and policies. HR managers need to understand socio-cultural environment
of the orgn. society and develop HR policies and practices accordingly.
Influences of socio-cultural elements on HRM are as follow:
 They create the type of people who become member of an orgn.
 It affect attitude of employees toward work.
 It affect time dimension of employees.
 They affect work ethics, need for achievement and effect-reward expectation.
 They make employee confine themselves to certain occupations and region.
iv. Political-Legal environment: It is another vital component that affects HRM policies and practices.
 Political: It refers to the political structure, degree of bureaucracy, ideology of ruling party, political stability,
public-opinion and govt.-business-society relations and trust. The investment climate of a country is
determined by the degree of political risks prevailing on that country.
 Legal: It is another important component to the HR managers. Legal environment mainly refers to the
composition of laws, regulation, verdict of courts and decisions by the govt. They are directed to promote,
maintain and control business activities. Some of them are directed to promote, maintain and control business
activities. They are directed to control the behavior and decisions of managers and their subordinates in
business and social orgn.
Some of the influence of political-legal environment to HRM activities:
 Almost all activities of HRM are affected in one way or the other by those environment.
 Recruitment ot retirement function and policies of HRM are influenced by legal provision.
 They check and control on the way employees are recruited, promoted, compensated and treated.
v. Technological environment: The technological environment of the general environment refers to the method
available for converting resource to product or services. Technology is a systematic application of organized
knowledge to practical tasks or problem. It provides a lot leisure and comfort to the employees. It consists of
innovations, techniques, knowledge and methods of doing thing. Technology has presented both opportunity and
threat to the HR managers. Employees activities behaviors and performance have been dramatically influenced by
technological development. So HR managers must understand the technological activities of the orgn.
How does technology affect the HRM function and policies?
 Employees requirement training to run those technologies.
 Technology may displace the employees or dislocate the employees.
 It may increase employee’s productivity.
 It may reduce the face-to-face interactions and may harm social needs of employees.
 Misuse of modern technology may create severe problem to both employers and employees.
vi. Labour market environment: Activities prevailing in the labor market environment significantly affects HRM policies
and activities. Labor market is a physical location within which people looking for the jobs interact with HR
 managers looking for the employees. In the recent past, lotof changes have taken place in labor market due to
migration, globalization and unionization.
HR managers are facing a lot of changes emerged inn this sector namely, protective legislation, ILO directive,
employment pattern, rising status of general workers etc. therefore HRM managers has to consider power shift in
the work place. These changes naturally demand a lot of changes in the activities, policies and practices.
vii. Trade union environment: This environment represents the general federation of employee unions prevailing at
national level based on craft, ideology and other characteristics. There are some objective of trade union which are:
 Security of union at national level.
 Improved wages, hour of working, working condition and benefited for their members.
 Seeking a role of HR activities (recruitment, selection, promotion, and compensation and discharge
employees).
viii. Global environment: Globalization of business has attracted need and involvement of HR manager’s consideration
in conducting HRM activities. Globalization is a free movement of goods and services, people, capital and
information across national boundaries. It creates the both opportunities and threat in the areas of HRM activities.
Employee’s acquisition, training, motivation, compensation, and maintenance are influenced by the global market.

HRM in the Nepalese context

In Nepal the pace of industrialization is very slows, industrial revolution started after the establishment of Biratnagar
Jute mill in the year 1936, however, HRM was confined to personal mgmt. and labor relation only.
But after 1959 it was changed little bit with the formation of factory and factory worker act. This act a provision for
appointing one welfare officer in factories was employees are more than 250 workers. It also made provision for leave,
pension, provident fund, compensation for disability or death, first aid, clinic facility, provision for health and safety for
workers including the working hour.
Factory and factory workers act was substituted by labor act in 1992. Similarly trade union act was enacted in the
year 1992 and child labor act was passed in the year 2000. However, these are personnel mgmt. oriented features of
the acts:
1) They are personnel mgmt. oriented.
2) They focus discipline, control and direction.
3) They are rules regulation and labor relation oriented.
HRM in Nepal is least concerned with developing human competencies and potential power for growth of employee. It
focus on organizational goals but ignores employees personal goals.
According to study made by Dev Raj 1999, barrier to human resource mgmt. are:
i) Lack of good relation between mgmt. and line managers.
ii) Over centralization of power at the top mgmt.
iii) Frequent change of CEO (Chief Executive Officer).
iv) Over staffing.
v) Obsession with feeling of status.
vi) Lack of budget for HRM.
vii) Under utilization of HR.
viii) Lack of performance based HRM practices.
But, in the last two decades of the HRM concept is gradually developing.
The brief scenario of HRM in Nepal is as follows:
1) HR issues: In Nepal PM is still pre-occupied rather than HRM. Although numerous HR related problems exist, such
as low production and productivity, decreasing employee’s motivation, satisfaction and morale, adverse union-
mgmt. relation and hierarchical mgmt. practices but very little research has been undertaken to the area to explore
relation between HR environment and roles.
2) Mgmt. culture: Mgmt. culture of the Nepal can be defined as instability at top mgmt., lack of emphasis on planning,
undue emphasis on prestige and status, highly centralized decision making and failure of formal structure to
provide for the needs of the employees. There is no proper communication system between employees. Managers
failed to understand the need of their employees.
3) HRM in public undertaking: HRM in these orgn. face a highly uncertain environment due to unstable political
situation and short-term approach of the politician. Chairman and GM of public corporation allege that the govt. into
their day-to-day decision making, such as transfer and promotion of employees in which they pressured into
rewarding employees for their political belief rather than their job performance and govt. accuses the top manager
of avoiding responsibility for failure of public sector unit.
4) Long time taken for transition: Until 1990 the nature of personnel activities were followed by social, economic and
political structure and content of the single party i.e. panchayat regime. However, even after the restoration of
multiparty system in 1991 and adaptation of market economic system no change has been noticed in the traditional
cultural.
5) Industrial relation: After 1990, the nature and function of the industrial relation system have changed specially in
public undertaking employees became free to join unions which are organized from the national to the local level
and are affiliated to one or other national political party.
6) The dynamics of HR in Orgn.: HRM is a dynamic discipline. Nepalese HR managers are facing with changing work
setting. It is basically characterized by people having varied culture, social and religious backgrounds, multiple and
conflicting goals ever rising expectations and work attitudes.
7) Changing conditions and external pressure: Govt. regulation, competitive pressures, unionization of employees and
several other factors have exerted a strong influence on the way the HR function is carried out in various orgn. In
the recent past employees have become more complicated in their demand for the quality of work life, adequate
pay and benefits, proper training and career growth opportunities. But productivity of workforce is low and
indiscipline is very high. However, HR administration in Nepalese orrgn is highly traditional, legalistic and short-term
focused.
8) Changing role of HRM in relation to social factor: Number of environmental factor have influenced the works of
Nepalese HR managers. The jobs of HR manager in Nepal are to balance the demands and expectation of the
External groups with the internal requirement. Actions of business are being monitored and evaluated closely then
in the past. Today, HR managers in Nepalese orgn. are bound to evaluate social impacts of their business and HR
decisions.
9) Governmental and local factors: The emergence of problems on the business society in the form of trade union
movement, failure of many employers to deal fairly with workers, non-fulfillment of bargaining agreements so, have
forced the Govt. to intervene in HRM matters. As a result govt. has come out with a set of rules and regulations on
the employment policy of the orgn.
10) Changing employee standards and professionalism: To attract, retain talent and professional employees, HR
managers have to institute appropriate HR and industrial relations policies. They must offer attractive compensation
offers. These changes in work force have naturally complicated tasks of HRM.
11) Changes in employee role and values: Generally in Nepalese orgn., employees were expected to follow the
commands of Boss without posing any question. They used to hire yes man instead of right man. Now, the scenario
has changed a lot. Moreover, the changing structure of the workforce has led to the introduction of new values in
orgn.

END OF THE CHAPTER