Chapter 1- Introduction

(HRM and its functions)

PHYSICAL RESOURCES HUMAN RESOURCES refer to the
refer to materials, money knowledge, education, skills, training and
and machines pre-arranged proficiency of the members of the organization.
Physical Human
by the organization for Resources Resources
(HR)
production or trade.

ORGANIZATIONS are managed by people and

through people. Without people, organizations can
never exist. Indeed, people who make up the human
resources of a company are unique and they can make
Organisation or break an organization, depending upon their level of
commitment, contribution and cooperation.

All organizational resources are important for achieving the objectives of an organization. In fact, the
effectiveness of an organization lies in the judicious blending of the two resources to achieve optimum competency.
 However, for a long time, it was felt that the efficient utilization of physical resources was primary for
developing an organization. This was so because the acquisition of physical resources resulted in a huge outflow
of funds and those assets carried a definite value. On the contrary, it was felt that hiring employees never cost
anything substantial for a firm and it was also quite easy to replace them. This made human resources less
important for employers.

 But, in the past decade, employers have realized that intellectual capital is critical to business success. The main
reasons for this change are due to the understanding that

1. Product innovation and marketing strategy, which are crucial for market survival and growth in a competitive
environment, are possible only when a good and creative workforce is present.

2. The challenge, opportunities and even disputes of creating and managing organizations arise mostly from
people-centred problems.

3. People are not alike and they cannot be treated identically. They differ physically and psychologically. These
differences require individual attention in order to achieve the optimum productivity.

There is a growing realization that the
flexibility of an organization depends more
on people than on any technical factors.
Modern equipment may ensure quality and
cost competitiveness but the operational
flexibility, which is core to product
modification and innovation, is provided
only by the employees. This is so since
humans alone could grasp the situation
adequately and respond suitably.
Flexibility of
an organization
depends more
on People
Human resources are the only assets that appreciate over a period while
physical resources just depreciate with years.
Appreciate
over Time
HR can produce an output larger than the
input. This is possible due to the creative
skills of humans.
Creative thinking is the process of
Distinct predicting, envisioning and then inventing
Features of Output an idea, concept or insight along innovative
larger than and alternative lines. People in the
Human the Input
organization are the only basis for such
Resources creativity and there is no obvious limit to
their imagination. .
Provide
utility value to Organizations require human resources of different types to operate
each one of all physical resources. Thus, they provide utility value to each one
the physical of the physical assets.
assets In fact, the real worth of a physical asset depends on the quality and
calibre of the people working with it. An incompetent workforce
will spoil the physical resources available to it.
 Human Resource Management
The effective utilization of human resources is a complex task. It requires greater foresight and strategic
consideration on the part of the management. This is where Human Resource Management (HRM) comes into role.

What is Human
HRM, as a field of study, makes a sincere effort to provide
Resource
knowledge, skills and ability for managing human resources more
Management?
effectively.

 The basic task of HRM is the selection of the right person for
What is the basic task
the right job at the right time to carry out the activities of an
of HRM ?
organization in the most efficient way.
 It also aims to enhance the satisfaction, morale and productivity
of employees, control labour turnover, and help organizations
increase their performance by providing the necessary training
and development opportunities, suitable working conditions and
appropriate career growth to employees.
 Definitions of Human Resource Management
 Human resource management is concerned with the people dimension in management. Since every organization is
made up of people, acquiring their services, developing their skills, motivating them to higher levels of
performance and ensuring that they continue to maintain their commitment to the organization are essential to
achieving organizational objectives. This is true, regardless of the type of organization—government, business,
education, health, recreation, or social action.”
–David A. Decenzo and Stephen P. Robbins “
 Human resource management is a series of integrated decisions that form the employment relationship; their quality
contributes to the ability of the organizations and the employees to achieve their objectives.”

–George T. Milkovich and John W. Boudreau

Although different authors have defined HRM differently, they have all emphasized the effective utilization of the workforce for
accomplishing the organizational and individual goals and objectives. To sum up, we can say that HRM is concerned with policies
and practices that ensure the best use of the human resources for fulfilling the organizational and individual goals.
Functions Managerial Functions Planning
of HRM are the basic functions performed by Organising
the HR managers in their capacity as
managers or heads of their own Staffing
departments.
Directing
Controlling

Operative Functions Procurement

Development
are specialized activities
performed exclusively by the Compensation
HR managers, usually for all Maintenance and motivation
the departments.
Integration
Industrial Relations
 Managerial Functions of HRM
PLANNING ORGANIZING STAFFING DIRECTING CONTROLLING
• It is an effective tool to • Organizing is a • It deals with the creation & • It is the sum of several • It is the process of
deal with the future. It process through which maintenance of HR through activities like checking the efficiency
involves the process of the firm establishes its employment, compensation, communication, of the individuals and
predetermining the structure and benefits, training & leadership and the groups in fulfilling
personnel programmes determines the development, & industrial motivation. the plans and goals
that are necessary to authority, relations measures. • Directing, as a through follow-up
attain the responsibility and • It aims to put in place HR function, aims at measures.
organizational goals. accountability of each policies in order to deal with securing willing • It is essential for
• The steps involved in member in relation to wage fixation, working cooperation from the continuous
planning are the job. Thus, conditions, & promotional individuals and the improvement in the
• Establishing goals and organizing involves opportunities for prospective groups to achieve the managerial activities.
objectives to be • Giving each member a employees. The steps predetermined goals. It The processes
achieved specific tasks involved are includes the following involved in
• Developing rules and • Establishing • Determining the type of activities: controlling are:
procedures departments & people to be hired • Getting work done • Establishment of
• Determining plans and divisions • Recruiting prospective through subordinates standard performance
forecasting techniques • Delegating authority to employees & selecting the • Ensuring effective two- • Measurement of actual
• Once the plans are the members best ones from them way communication performance
formulated, the next • Establishing channels • Compensating the employees for the exchange of • Comparison of actual
step is to organize the of authority & • Training & developing the information with the performance with the
men and material in communication employees subordinates standard one to find
order to accomplish • Creating a system to • Setting performance standards • Motivating the deviation
those plans. coordinate the works & evaluating the employees’ subordinates to strive • Initiation of corrective
of the members performance for better performance actions, if there are any
• Counselling the employees • Maintaining the group deviations
morale
 Operative Functions of HRM
MAINTENANCE &
PROCUREMENT DEVELOPMENT COMPENSATION INTEGRATION
MOTIVATION
• It refers to a series of • It refers to both • It refers to the • It aims at retaining • It consists of industrial
activities undertaken by employees’ training & determination of the pay efficient & relations & aims at
the HR managers for management scale and other benefits experienced employees ensuring good
filling the present & future development. for the employees. in the organization. relations between the
vacancies of the • HR managers are • Establishing & This calls for creative management & the
organization. responsible for maintaining the pay HR practices. employees.
conducting and
• Job analysis refers to both
supervising such system of an organization • In this regard, HR • HR managers have to
the determination of specific is one of the principal jobs managers are implement industrial
tasks & responsibilities programmes for
employees in order to of the HR managers. They responsible for relations programmes
connected to a job & must devise ways to offering a wide range that would ensure
identifying the skills, increase the employees’
competencies in their job ensure fair and equitable of HR programmes ethical & fair treatment
knowledge and abilities pay rates. In addition, HR covering occupational in disciplinary action,
required for the job holder. by improving their
HR planning involves knowledge, skills and managers should regularly safety, health grievance redressal, &
choosing and placing the abilities. manage the performance promotion & physical career management
right person at the right job • Training & development evaluation system of the fitness, canteen processes. They should
and at the right time. is widely accepted as a organization, and facilities, recreation also counsel the
Recruitment involves method for enhancing continuously design activities, employees & the
gathering a pool of the employee skills, reward systems such as transportation management to
applicants from which increasing the individual performance linked programmes, prevent &, when
suitable employees may be & organizational incentive plans and bonus employee suggestion necessary, resolve
selected. Selection involves performance, improving and flexible work schemes, career disputes over labour
screening, testing, the employee morale, schedules. counselling & growth agreements or other
interviewing and hiring the and achieving the
business growth and
for creating a positive labour relation issues.
most suitable employees for work environment.
the organization. success.