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Subject COMMERCE

Paper No and Title 9: HUMAN RESOURCE MANAGEMENT

Module No and 1: NATURE CONCEPTS AND FUNCTIONS OF HRM

Title
Module Tag COM_P9_M1

COMMERCE PAPER NO. 9: HUMAN RESOURCE MANAGEMENT

MODULE NO, 1: NATURE CONCEPTS AND FUNCTIONS OF HRM
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TABLE OF CONTENTS
1. Learning Outcomes
2. Introduction –Human Resource Management
3. Definition of Human Resource Management
4. Concept of HRM
5. Nature of HRM
6. Objectives of HRM
7. Functions of HRM
8. Summary

COMMERCE PAPER NO. 9: HUMAN RESOURCE MANAGEMENT

MODULE NO, 1: NATURE CONCEPTS AND FUNCTIONS OF HRM
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1. Learning Outcomes
After studying this module, you shall be able to:
 Know about the basic meaning, concept of HRM
 Know about the nature and objectives of HRM
 Identify the objectives of HRM
 Appreciate about managerial and operative functions of HRM

COMMERCE PAPER NO. 9: HUMAN RESOURCE MANAGEMENT

MODULE NO, 1: NATURE CONCEPTS AND FUNCTIONS OF HRM
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2. Introduction – Human Resource Management

One of the most important resources of an organization is the human resource. Any
organization, having non human resources in the form of machinery, raw material, money
etc can only be of purpose and can only be utilized, if human resources are combined
with it. Organizations get their work done through people only in the organizations. The
coordination of human as well as non human resources helps in achieving organizational
objectives.
In organizations, human resource is characterized as “people at work”. These people have
different skills, capabilities and potentialities to grow and to grow and they are dynamic
in nature. Any organization can survive and grow only if it has the right number of
people with right qualifications desired. So, one can say it is both the qualitative and
quantitative aspect of human resource that has to be seen at workplace and one cannot
afford to ignore it. Keeping in view this dynamism and potentials of a person, it is
required to manage them also so that they can get the right job according to their skills,
i.e., matching a right job with the right person is the foremost and the most important
aspect to survive as organization in the competitive world.

3. Definition of Human Resource Management

Edwin Flippo defies 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.”

According to Graham, the purpose of HRM is to ensure that the employees of an

organization are used in such a way that the employer obtains the greatest possible
benefit from their abilities and the employees obtain both material and psychological
rewards from their work.

Storey defines “HRM is a distinctive approach to employment management which seeks

to achieve competitive advantage through the strategic deployment of a highly committed
and capable workforce, using an array of cultural, structural and personnel techniques.”

COMMERCE PAPER NO. 9: HUMAN RESOURCE MANAGEMENT

MODULE NO, 1: NATURE CONCEPTS AND FUNCTIONS OF HRM
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4.Concept of Human Resource Management

One aspect of managing is to manage and get things done from people. In organizations,
in order to achieve goals, employees have to be managed effectively in terms of their
skills, aptitude, potentialities and talents. So HRM is a set of policies and programs
designed to maximize both personal and organizational goals. Proper utilization of human
resource skills and its retention is the main purpose of human resource management.
According to National Institute of Personnel management of India, “personnel
management is that part of management concerned with people at work and with their
relationships within the organization. It seeks to bring men and women together who
make an enterprise, enabling each to make his own best contribution to its success both as
an individual member of a working group.

5.Nature of Human Resource Management

The main objective for which organization is created can only be accomplished when
there is an integration of the goals of both the individual as well as organizational
objectives. Human resource in the organization is heterogeneous, dynamic and behaves
differently and managing them in such a diverse culture is not a difficult task. The nature
of human resource management is stated as follows:
Comprehensive Function
Human resource management is concerned with managing all types of people at work,
i.e., workers, supervisors, mangers, etc at all levels is middle, top and lower level of
management.
Pervasive Function
HRM is related with people in all organizations whether big, middle or small enterprises.
Action Oriented
Instead of keeping the records and procedures related to human resources, human
resource management is related with action, i.e., what to do and focuses upon situations
to problems.
Development Oriented
In human resource management, development of human resource is considered as
important. Organizations take care by providing them with training to improve their skills
so that they can give their best efforts in the organization. For this purpose, they are
rotated in jobs to get exposure of different working environment, organization climate,
etc related to that workplace and also to maximize their job satisfaction.
Interdisciplinary Function
HRM has come up with the disciplinary approach from various fields such as
psychology, sociology, anthropology, etc. In all these areas, employee behavior and
attitude are concerned. HRM has become speculated area nowadays. Human resources
are considered as an important resource and managing them is done by professional and
trained managers in this field.
Future Oriented

COMMERCE PAPER NO. 9: HUMAN RESOURCE MANAGEMENT

MODULE NO, 1: NATURE CONCEPTS AND FUNCTIONS OF HRM
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HRM is future oriented because organizations have to

achieve organization goals in the future and for that
purpose, it needs well motivated and dedicated employees who can take up assignments
and projects and complete them on time; so managing human resource is considered to be
one of the most important aspects of the organization for its survival and future growth.
Continuous Function
HRM is continuous and never ending process rather than one action performed once. It
has to be continuously performed in the organization in order o get alertness and
awareness of human relations from time to time.

6. Objectives of HRM
The primary objective of the organization is divided into various secondary objectives
and objectives are the basis of the creation of any organization. The objectives of the
organization determines its character and to attain these objectives, human resource
management contributes as an important aspect of integrating employers and employees
interest in the form of individual and organizational goals. In this context, the objective
of human resource management is stated as follows:
 Attainment of organizational goals
 Getting the right personnel for various jobs in the organization
 Matching of right person with the right job so that individual and organizational
objectives both can be achieved
 Directing employees to be productive in terms of performance
 Enhancing job satisfaction
 Providing monetary and non monetary incentives to realize ones full potential
 Development as individual members and groups via training and development
courses and also career planning of its employees
 Integrating goals- individual as well as organizational goals with an effort and
targeting towards primary objectives.
 Maintaining high morale and good human relations
 Aiming towards attaining economically effective goals of individuals,
organizations and promote the welfare of the society

COMMERCE PAPER NO. 9: HUMAN RESOURCE MANAGEMENT

MODULE NO, 1: NATURE CONCEPTS AND FUNCTIONS OF HRM
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7.Functions of Human Resource Management

Management Operative

Planning Procurement

Organising Development

Directing Compensation

Controlling Integration

Maintenance

Figure1: functions of Human Resource Management

The functions of human resource management are broadly classified into two categories
stated as follows:

1) Managerial Functions
2) Operative Functions

The managerial functions of human resource management include planning, organizing,

directing and controlling. The functions are stated as follows:

Planning
To plan is to determine a course of action to achieve desired goals of the organization. It
is done through people. Planning involves forecasting and conducting research.
Everything needs to be planned for an effective management; be it a home or workplace.
Human resource planning involves a plan related to the requirement of human resource.
Forecasting human resource for the organization is planning. Employees are required in
terms of quality and quantity. If planning is done properly, then no chance left between
present and future requirements of human resources.
COMMERCE PAPER NO. 9: HUMAN RESOURCE MANAGEMENT
MODULE NO, 1: NATURE CONCEPTS AND FUNCTIONS OF HRM
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Human resource planning fills the gap between where we

are and where we want to reach. Planning is the means to
manage the change and adapt the change. If no planning is done, then it might result in
crisis for tomorrow.

Organizing
Designing and developing an appropriate structure for the people to work and accomplish
goals is organizing.
a) It involves groping of activities and its allocation among individual and group
members.
b) Establishing authority responsibility relationships.
c) Integrating activities to accomplish organizational goals.
If organization structure is defined properly when it is clear who is responsible to whom
and everyone has defined authorities, then it is easier to achieve organizational goals.

Directing
Directing employees means to guide and motivate the employees to attain desired results.
Directing is related with initiating and influencing action of subordinates. It is the
manager who can tap the maximum potential of his employees through proper guidance
and appropriate action. Such an act of manager also helps building good interpersonal
relationships and friendly organizational climate in the organization.

Controlling
Control can only be exercise if there is proper planning. No planning is of any use if there
is no control, i.e., if there is no check. It means checking, verifying and regulating to
ensure that everything is moving accurately to plans that were taken up initially. In HRM
, controlling involves auditing, training programs, analyzing performance of employees,
evaluating absents and labor turnover.

Operative Functions
Human resource managers perform operative functions related with specific activities of
procurement, development, compensation, etc. these functions are stated as follows:

I) Procurement Functions

Procurement function is related with getting right kind and right number of personnel in
the organization. For doing this, first of all, the following steps may be followed:
a) Job analysis (a detailed study of the job is done including job description and job
specification,
b) Based on detailed job study, requirements of human resource is determined for
each and every department of the organization and an action plan is created for
recruiting them

COMMERCE PAPER NO. 9: HUMAN RESOURCE MANAGEMENT

MODULE NO, 1: NATURE CONCEPTS AND FUNCTIONS OF HRM
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c) Once, human resource planning is done

recruitment process starts. It is a searching process
for the required human resource and making them to apply for jobs in the
organization.
d) All those candidates who have applied for the jobs through recruitment process
are judged according to their suitability at the right place in the organization and
choosing the most appropriate people.
e) Once suitable candidates are appointed and they join the organization, they are
familiarized or oriented with the organization as a whole, about its climate, rules,
policies and regulation and conduct require of them in the organization and may
be much more.

II) Development Function

Development function is concerned with how to enhance the skills, aptitudes and values
of employees in the organization. Development deals with the overall development of the
employees from time to time by concentrating on overall growth of the employees. This
function deals with the following activities to be performed for doing so:
a) Observing and evaluating the performance of the employees on the job and also to
know about their potentials for development.
b) Training is one way to enhance their skills that leads to employee’s development.
Trainings from time to time may be imparted to the employees as per the
requirement to meet the specific need, thereby adding to their skills. Training is a
need of the organization, required form time to time based on different demands
arising such as job complexity, internal changes, technology, global competition,
etc.
c) A development function for executives may also be conducted. This is training
for managers of the organization. Executive development is a systematic process
of learning and growth by which managerial personnel gain and apply knowledge,
skills, and attitudes and insights to manage the work in their organisations
efficiently and effectively in an organised manner. The aim is to improve their
behaviour and performance for their present jobs as well as to the next higher
level jobs.
d) Career Planning is deciding and opening career opportunities for employees in the
organization. It is a process of developing human resources in the organization so
that a right job can be matched with the right kills. This can be thought of by the
organization.

COMMERCE PAPER NO. 9: HUMAN RESOURCE MANAGEMENT

MODULE NO, 1: NATURE CONCEPTS AND FUNCTIONS OF HRM
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III) Compensation Function

A proper wage and salary structure is designed in the organization to make payments to
the employees for the job performed. A fair and equitable salary structure is must and
doing this may involve the following activities:
a) The first thing is to pay on the basis of the worth of the job, so an organization
should conduct job evaluation i.e., to find the relative worth of the job.
b) A suitable wage program offering higher packages to employees is designed to
motivate employees to perform better in their jobs.
c) Since compensation is a cost to the organization, it must be carefully designed
in order to fulfill the needs of the individual employees plus benefits also in
addition to the normal salary. Further it would also be a way to build a right kind
of organization in the future.
d) Compensation is a way of providing incentive after receiving a wage or a salary.
e) Compensation is a way to satisfy employee in terms of their job and additional
benefits in the form of insurance, medical claim, etc helps relieving employees
from certain inherit fears.
f) Employees gain a sense of social security also.
g) Compensation also includes Bonus to be given to the employees as a set norm
under the payment of Bonus Act, 1965.

IV) Integration Function

To integrate is to integrate the objectives of the individual employees with the

organizational objectives. It is only through this integration, the main objectives of the
organization are achieved. There are various ways to integrate employees such as various
financial and non financial incentives, proper grievance mechanism for redressing any
problems etc of the employees with the organization, collective bargaining methods,
workers participation in management, solving conflicts of various types at different levels
in the organization, employee counseling, etc.

V) Maintenance Function

Maintenance function is concerned with thinking and developing various parameters

relating to health and welfare of the employees. It may include various health benefits
scheme, medical claim, and health insurance for its employees, etc. This function aims at
maintaining the health of the employees physically as well as mentally. Social security
method includes providing employees with provident fund, secured jobs, pension,
gratuity, etc.

The functions of HRM as stated above may vary from organization to organization. It
means that some organizations are smaller and some are big. Smaller organizations may
use only procurement and compensation functions and only some part of development
function and not necessary development of executives, etc. they may also not be having

COMMERCE PAPER NO. 9: HUMAN RESOURCE MANAGEMENT

MODULE NO, 1: NATURE CONCEPTS AND FUNCTIONS OF HRM
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maintenance function. But this may not be so in case of

big organizations. They may have all the functions
starting from procurement till maintenance.

8. Summary

 In organizations, human resource is characterized as “people at work”.

 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.”
 Proper utilization of human resource skills and its retention is the main purpose of
human resource management.
 Comprehensive Function is concerned with managing all types of people at work
 Pervasive Function is concerned with people in all organizations whether big, middle
or small enterprises.
 Action Oriented means instead of keeping the records and procedures related to
human resources, human resource management is related with action, i.e., what to do
and focuses upon situations to problems.
 Development Oriented means development of human resource is considered as
important. Organizations take care by providing them with training to improve their
skills so that they can give their best efforts in the organization. for this purpose, they
are rotated in jobs to get exposure of different working environment, organization
climate, etc related to that workplace and also to maximize their job satisfaction.
 Interdisciplinary Function, a disciplinary approach from various fields such as
psychology, sociology, anthropology, etc. In all these areas, employee behavior and
attitude are concerned. HRM has become speculated area nowadays. Human resources
are considered as an important resource and managing them is done by professional
and trained managers in this field.
 Future Oriented HRM to achieve organization goals in the future and for that purpose,
it needs well motivated and dedicated employees who can take up assignments and
projects and complete them on time. So managing human resource is very important.
 Continuous Function of HRM is continuous and never ending process rather than one
action performed once. It has to be continuously performed in the organization in
order o get alertness and awareness of human relations from time to time.
 The objectives of the organization determines its character and to attain these
objectives, human resource management contributes as an important aspect of
integrating employers and employees interest in the form of individual and
organizational goals.
 Broadly, human resource management functions are categorized into two parts:
managerial functions and operative functions.
 Managerial functions include planning, organizing, directing and controlling.
 Operative functions include procurement, development, compensation, integration and
maintenance.

COMMERCE PAPER NO. 9: HUMAN RESOURCE MANAGEMENT

MODULE NO, 1: NATURE CONCEPTS AND FUNCTIONS OF HRM
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COMMERCE PAPER NO. 9: HUMAN RESOURCE MANAGEMENT

MODULE NO, 1: NATURE CONCEPTS AND FUNCTIONS OF HRM