CHAPTER ONE

An over view
After completing this unit, students will be able to:
 Define and understand the notion of HRM
 Identify the importance of HRM
 Point out the objectives of HRM
1.1. Background
Every organization, large or small, uses a variety of capital to make the business work.
Capital includes cash, valuables, or goods used to generate income for a business. For
example, a retail store uses registers and inventory, while a consulting firm may have
proprietary software or buildings. No matter the industry, all companies have one thing in
common: they must have people to make their capital work for them. This will be our focus
throughout this course: generation of revenue through the use of people’s skills and
abilities.

1.2. Concepts of HRM

HRM is concerned with the human beings in an organization. The management of man is a
very important and challenging job because of the dynamic nature of the people. No two
people are similar in mental abilities, tacticians, sentiments, and behaviors; they differ
widely also as a group and are subject to many varied influences. People are responsive,
they feel, think and act therefore they cannot be operated like a machine or shifted and
altered like template in a room layout. They therefore need a tactful handing by
management personnel.
HRM is the process of managing people of an organization with a human approach. Human
resources approach to manpower enables the manager to view the people as an important
resource. It is the approach through which organization can utilize the manpower not only
for the benefits of the organization but for the growth, development and self satisfaction of
the concerned people. Thus, HRM is a system that focuses on human resources
development on one hand and effective management of people on the other hand so that
people will enjoy human dignity in their employment.

HRM is involved in providing human dignity to the employees taking into account their
capacity, potentially, talents, achievement, motivation, skill, commitment, great abilities,
and so on. So, that their personalities are recognized as valuable human beings. If an
organization can trust, depend and draw from their bank account on the strength of their
capital assets, they can trust, depend and draw more on their committed, talented, dedicated
and capable people. This is what the HRM is involved in every business, managerial
activity or introduction.

The principal component of an organization is its human resource or ‘people at work’.

According to Leon C. Megginson from the national point of view Human Resources as,
“the knowledge, skills, creative abilities, talents and aptitudes obtained in the population;
whereas from the view point of the individual enterprise, they represent the total of
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inherent abilities, acquired knowledge and skills as exemplified in the talents and aptitudes
of its employees.”

Human resource has a paramount importance in the success of any organization because
most of the problems in organizational setting are human and social rather than physical,
technical or economical failure. In the words of Oliver Shelden, “No industry can be
rendered efficient so long as the basic fact remains unrecognized that it is principally
human.

Human Resources 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 high level of performance and ensuring that they continue to
maintain their commitment to the organization are essential to achieve organizational
objectives. This is true regardless of the type of organization, government, business,
education, health, recreation or social action. Getting and keeping good people is critical to
the success of every organization, whether profit or non-profit, public or private.

1.3. Definitions of HRM

There are two different definitions. The first definition of HRM is that “It is the process of
managing people in organizations in a structured manner.”This covers the fields of staffing
(hiring people), retention of people, pay and perks setting and management, performance
management, change management and taking care of exits from the company to round off
the activities. This is the traditional definition of HRM which leads some experts to define
it as a modem version of the Personnel Management function that was used earlier.
The second definition of HRM encompasses “The management of people in organizations
from a macro perspective, i.e. managing people in the form of a collective relationship
between management and employees.” This approach focuses on the objectives and
outcomes of the HRM functions. It means that the HR function in contemporary
organizations is concerned with the notions of people enabling, people development and a
focus on making the “employment relationship” fulfilling for both the management and
employees.
In simple words, Human resource management is management function that helps
manager to recruit, select, train and develop organization members. Or HRM is a process
of making the efficient and effective use of human resources so that the set goals are
achieved.
In general terms, 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 high levels of performance and ensuring that
they continue to maintain their commitment to the organization are essential for achieving
organizational objectives. This is true regardless of the type of organization government
business, Education, Health, regression or social action.”
1.4. Importance of HRM
The importance of human resource management can be discussed by Yodder, Heneman
and others, from three standpoints, viz., social, professional and individual enterprise.

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 1. Social Significance: Proper management of personnel enhances their dignity by
satisfying their social needs. This is done by: (i) maintaining a balance between the
jobs available and the jobseekers, according to the qualifications and needs; (ii)
Providing suitable and most productive employment, which might bring them
psychological satisfaction; (iii) making maximum utilization of the resources in an
effective manner and paying the employee a reasonable compensation in proportion
to the contribution made by him; (iv) eliminating waste or improper use of human
resource, through conservation of their normal energy and health; and (v) by
helping people make their own decisions, that are in their interests.

2. Professional Significance-. By providing healthy working environment it promotes

team work in the employees. This is done by: (i) maintaining the dignity of the
employee as a ‘human-being’; (ii) providing maximum opportunity for personal
development; (Hi) providing healthy relationship between different work groups so
that work is effectively performed; (iv) improving the employees’ working skill and
capacity; (v) correcting the errors of wrong postings and proper reallocation of
work.

3. Significance for Individual Enterprise: It can help the organization in

accomplishing its goals by: (i) creating right attitude among the employees through
effective motivation; (ii) utilizing effectively the available goals of the enterprise
and fulfilling their own social and other psychological needs of recognition, love,
affection, belongingness, esteem and self-actualization.
Dynamic and growth - oriented organization do require effective management of people in
a fast - changing environment. Organizations flourish only through the efforts and
competencies of their human resources. Employee capabilities must continuously be
acquired, sharpened, and used. Any organization will have proper human resource
management (i) to improve the capabilities of an individual; (ii) to develop team spirit of
an individual and the department; and (Hi) to obtain necessary co - operation from the
employees to promote organizational effectiveness.
1.5. Evolution and Recent development of HRM
With the changing trends of industry in the competition oriented environment of open
markets, human resource management becomes a significant variable for the efficient
growth of any organization. Manpower planning was the very first concept used in ancient
eras and as the time went on the trends changed dramatically and the concept of manpower
planning changed and turned in to personal management. Today personal management is
known as Human resource management.
Some of the factors or significant variables mentioned by the American writers, Terrey and
Franklin(1996), termed as six “M” of management including men, material, women,
money, method and market. Out of all these, the productive management and development
of these human and non- human resource is done by the living beings, men and women.
Managing human resource is a meticulous process and complex one also. According to
Harzing and Ruysseveldt “A better way to understand the philosophy of human resource

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management demands a thorough understanding about the evolution of the concept itself
from the ancestral of personnel management.
PERSONNEL MANAGEMENT VS HRM

Recent development of HRM

Recent developments in the area of human resources management include treating the
employees as economic, social, psychological and spiritual men and women. The important
aspects of development of human resources management year wise is shown below:

 In the year 1995, emphasis has been shifted to human resources development
(HRD).
 In the year 1998, emphasis on HRD, cultural diversity, teamwork and participative
management has been continuing. Further, the emerging areas are total quality in
management in HRM, empowering the employees and developing empowered
teams and integrating HRM with strategic management as the top management,
realized that HRM is the core of competencies of the 21st century corporations.
 In the year 1999, second National Commission on Labor was setup to study the
labor conditions.
 In the year 2001, emphasis has been on 'smart sizing of the organizations'.
 In the year 2002, emphasis has been shifted to positive attitude of the
candidate/employee rather than skill and knowledge.
 In the year 2003, shift from intelligence quotient (IQ) to emotional quotient (EQ).
 In the year 2004, shift from skilled workers to knowledge workers.
 In the year 2005, shift from hierarchical structure to flexible and virtual structures.
 In the year 2006, HRM has become the core of strategic management level.

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  In the year 2007, the concept of HRM has been relegated to human capital
management.
 In the year 2008, emphasis has been on retention management and development of
own human resources by companies through alliances with universities/colleges. In
the same year, there was decline in business operations due to global economic
recession and crisis.
 In the year 2009, continuation of job cuts, pay costs and lay-offs due to prolonged
global recession and crisis.
 In the year 2014, emphasis is shifted to talent management and flexible human
resource policies and practices.
1.6. HRM objectives
The primary objective of HRM is to ensure the availability of competent and willing
workforce for an organization. Beyond this, there are other objectives too. Specifically,
HRM objectives are four fold: Societal, Organization, Functional and personal.

Personal Objectives:
To assist Employees in achieving their personal goals, at least in so far as these goals
enhance the individual’s contribution to the organization. Personal objectives of employees
must be maintained, retained and motivated.
Functional Objectives:
To maintain the contribution of department at an appropriate level organization should
fulfill the needs. Resources are wasted when HRM is either more or less sophisticated to
suit the organizations demands.
Organizational Objectives:
To recognize the role of HRM in bringing about organizational effectiveness, HRM is not
an end in itself but it is only a mean to assist the organization with its primary objectives
organization.
Societal Objectives:
To be ethically & socially responsible for the needs and challenges of society while
minimizing the negative impact of such demands upon the organization to use their
resources for society’s benefits in ethical ways may lead to restriction.
Other objectives:
 Accomplish the basic organizational goals by creating and utilizing an able and
motivated workforce.
 To establish and maintain organizational structure and desirable working
relationships among all the members of the organization.
 Develop co-ordination among individual and group within organization to secure
the integration of organization.
 To create facilities and opportunities for individual or group development so as to
match it with the growth of the organization.
 To attain an effective utilization of human resources in the achievement of
organizational goals.
 To identify and satisfy individual and group needs by providing adequate and
equitable wages, incentives, employee benefits and social security and measures for
challenging work, prestige, recognition, security, status.

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 To maintain high employees morale and human relations by sustaining and
improving the various conditions and facilities.
 To strengthen and appreciate the human assets continuously by providing training
and development programs.
 To consider and contribute to the minimization of socio-economic evils such as
unemployment, under employment, inequalities in the distribution of income and
wealth and to improve the welfare of the society by providing employment
opportunities to women and disadvantaged sections of the society.
 To provide an opportunity for expression and voice management.
 To provide fair, acceptable and efficient leadership.
 To provide facilities and conditions of work and creation of favorable atmosphere
for maintaining stability of employment.
 To create & utilize an able & motivated work force Establish & maintain sound
organizational structure Create facilities attain an effective utilization Identify &
satisfy individual & group needs.
 Maintain high employee morale Training & development Opportunity for
expression Provide fair, acceptable and efficient leadership Facilities and
conditions.