Human Resource Management

BBA/BBA (BI), Third Year, Fifth Semester

Unit -1
1. Human Resource Management Concept and Context 5 hours
The concept of HRM; Functions of HRM; Changing Dimensions of HRM, Changing Roles and Challenges of HRM;
essential skills of HRM Managers; purpose of Structure of HR Departments; HRM as a shared function; external and
Internal Context of HRM; HRM in the Nepalese context.

The Concept of human Resource Management

Human Resource Management refers to the policies and practices one need to carry out the ‘people’ or human
resource aspects of a management position, including recruiting, screening, training, rewarding and appraising.
Gary Dessler

“Human resource management is concerned with the “people” dimension in management”.

DeCenzo & Robbins
Human Resource Management is the process of accomplishing organizational objectives by acquiring, retaining,
terminating, developing and properly using the human resources in the organization.”
Ivancevich, Donnely
Human resource management is the process of acquiring, training, appraising, and compensating employees, and
of attending to their labor relations, health and safety, and fairness concerns.

It is a subject related to human. For simplicity, we can say that it is the management of humans or people. HRM is a
managerial function that tries to match an organization’s needs to the skills and abilities of its employees. Human
Resource Management is responsible for how people are managed in the organizations. It is responsible for bringing
people in organization helping them perform their work, compensating them for their work and solving problems that
arise.

Human Resource Management is a process of bringing people and organizations together so that the goals of each
are met. It tries to secure the best from people by winning their wholehearted cooperation. In short, it may be
defined as the art of procuring, developing and maintaining competent workforce to achieve the goals of an
organization in an effective and efficient manner.

NATURE/FEATURES OF HRM
1) Pervasive force: HRM is pervasive in nature. It is present in all enterprises. It permeates all levels of management in an
organization.
2) Action oriented: HRM focuses attention on action, rather than on record keeping, written procedures or rules. The
problems of employees at work are solved through rational policies.
3) Individually oriented: It tries to help employees develop their potential fully. It encourages them to give their best to
the organization. It motivates employees through a systematic process of recruitment, selection, training and
development coupled with fair wage policies.
4) Future-oriented: Effective HRM helps an organization meet its goals in the future by providing for competent and well-
motivated employees.
5) Development oriented: HRM intends to develop the full potential of employees. The reward structure is tuned to the
needs of employees. Training is offered to sharpen and improve their skills. Employees are rotated on various jobs so
that they gain experience and exposure. Every attempt is made to use their talents fully in the service of organizational
goals.
6) Integrating mechanism: HRM tries to build and maintain cordial relations between people working at various levels in
the organization. In short, it tries to integrate human assets in the best possible manner in the service of an organization.
7) Comprehensive function: HRM is, to some extent, concerned with any organizational decision which has an impact on
the workforce or the potential workforce. The term ‘workforce’ signifies people working at various levels, including
workers, supervisors, middle and top managers. It is concerned with managing people at work. It covers all types of
personnel. Personnel work may take different shapes and forms at each level in the organizational hierarchy but the basic
objective of achieving organizational effectiveness through effective and efficient utilization of human resources,
remains the same. “It is basically a method of developing potentialities of employees so that they get maximum
satisfaction out of their work and give their best efforts to the organization”.
8) Inter-disciplinary function: HRM is a multi-disciplinary activity, utilizing knowledge and inputs drawn from
psychology, sociology, anthropology, economics, etc. unravel (to explain) the mystery surrounding the human brain,
managers, need to understand and appreciate the contributions of all such ‘soft’ disciplines.

1 Management of Human Resource, BBA and BBA (BI), Fifth Semester/Dhruba P. Aryal
9) Continuous function: According to Terry, HRM is not a one shot deal. It cannot be practiced only one hour each day or
one day a week. It requires a constant alertness and awareness of human relations and their importance in every day
operations.
OBJECTIVES OF HRM
1) Achieve high productivity: The extent to which an organization is able to get productivity goal is achieved, depends
largely on how effectively it uses its human resources. HRM continuously develops employees through training and
other opportunities. Better quality of human resources results in improved productivity through team work.
2) To help the organization reach its goals: HR department, like other departments in an organization, exists to achieve
the goals of the organization first and if it does not meet this purpose, HR department (or for that matter any other unit)
will wither and die.
3) To employ the skills and abilities of the workforce efficiently: The primary purpose of HRM is to make people’s
strengths productive and to benefit customers, stockholders and employees.
4) To provide the organization with well-trained and well-motivated employees: HRM requires that employees be
motivated to exert their maximum efforts, that their performance be evaluated properly for results and that they be
remunerated on the basis of their contributions to the organization.
5) To increase to the fullest the employee’s job satisfaction and self-actualization: It tries to prompt and stimulate every
employee to realize his potential. To this end suitable programme have to be designed aimed at improving the quality of
work life (QWL).
6) To communicate HR policies to all employees: It is the responsibility of HRM to communicate in the fullest possible
sense; tapping ideas, opinions and feelings of customers, non-customers, regulators and other external public as well as
understanding the views of internal human resources.
7) To develop and maintain a quality of work life: It makes employment in the organization a desirable, personal and
social, situation. Without improvement in the quality of work life, it is difficult to improve organizational performance.
8) To be ethically and socially responsive to the needs of society: HRM must ensure that organizations manage human
resource in an ethical and socially responsible manner through ensuring compliance with legal and ethical standards.
9) Increase workforce commitment: Increasing level of commitment means people are interested to be involved in work
mentally and physically in order to achieve organizational objectives. This is achieved by the people commitment
for increase in efficiency and productivity.
10) Providing supporting environment for employee for employees’ creativity: For this purpose HRM focuses on
effective management mechanisms such as team work, management by objectives and total quality management.
11) Making organizational system flexible: HRM aims to train and develop workforce in order to adjust in a quickly and
frequently changing environment. It follows other flexible HR practices to motivate workforce to work to keep
organization more flexible to respond changing elements of the environment.
12) Management of organizational culture: Organization culture refers to the widely shared beliefs, values and norms of
organizational members and other stakeholders. It guides the behavior of people working organization. By knowing
these cultures, which also represent unwritten feeling part of the organization, workforce can learn on how to behave,
respond, and react in different situations.

FUNCTIONS OF HRM
Basic functions that all managers perform: planning, organizing, staffing, leading, and controlling. HR
management involves the policies and practices needed to carry out the staffing (or people) function of
management.

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1) STAFFING: Activities in HRM concerned with seeking and hiring qualified employees. Obtaining such people
involves job analysis, human resource planning, recruitment, and selection.
a) Job analysis is the systematic process of determining the skills, duties, and knowledge required for performing
specific jobs in an organization. Through JA process, HRM identifies the essential qualifications for a particular
job.
b) Human resource planning (HRP) is the process of systematically reviewing human resource requirements to
ensure that the required numbers of employees, with the required skills, are available when needed.
c) Recruitment is the process of attracting such individuals in sufficient numbers and encouraging them to apply for
jobs with the organization.
d) Selection is the process through which the organization chooses, from a group of applicants, those individuals
best suited both for open positions and for the company.

2) TRAINING AND DEVELOPMENT

Activities in HRM concerned with assisting employees to develop up-to-date skills, knowledge, and abilities. Activities
involves in training and development are as,
a) Training is designed to provide learners with the knowledge and skills needed for their present jobs. It is a
continuous process by which employees learn skills, knowledge, abilities and attitudes to further
organizational and personal goals. The focus of training is on current job skill requirements.
b) Employment development is designed to help the organization ensure that it has the necessary talent
internally for meeting future human resource needs. It is essential because people, technology, jobs, and
organizations are always changing.
c) Career development programs are designed to assist employees in advancing their work lives. The focus of
career development is to provide the necessary information and assessment in helping employees realize their
career goals.
(Career: The sequence of positions that a person has held over his or her life).
d) Organization development deals with facilitating system wide changes in the organization. The focus of OD
is to change the attitudes and values of employees according to new organizational strategic directions.

3 Management of Human Resource, BBA and BBA (BI), Fifth Semester/Dhruba P. Aryal
3) MOTIVATION
Activities in HRM concerned with helping employees exert at high energy levels.
− Motivation Theories and job design: JD is the way in which job tasks are organized into a unit of work.
− If job are poorly designed, inadequately or improperly described, employees will perform below their
capabilities.
− Consequently, HRM must ask has the latest technology been provided to permit maximum work efficiency.
Is the office setting appropriate? Are the necessary tools readily available for employee use?
− Without such planning, the best intentions of organizational members to motivate employees may be
lost or significantly reduced.
− Must understand the implication of motivation theories.
− Performance appraisal system is designed to provide feedback to employee regarding their past performance,
while simultaneously addressing any performance weaknesses the employee may have.
− A link should be established between employee compensation and performance.

4) MAINTENANCE
Activities in HRM concerned with maintaining employee’s commitment and loyalty to the organization. Help to retain
productive employee.
− HRM must ensure a safe and healthy working environment; caring for employees’ well beings has major
effect on their commitment.
− HRM must realize that any problem an employee faces in his or her personal life will ultimately brought into
the workplace. This calls for employee wellness program. Such programs that help individuals deals with
stressful life situations.
− To protect employee’ welfare, HRM must operate communication programs (provide information to
employees) in the organizations.
− Employee relations programs should ensure that employees are kept well informed – through the
company’s bulletin boards, meetings or teleconferencing – and foster an environment where employee voices
are heard.

CHANGING DEIMENSIONS OF HRM

The foundation of modern HRM rests in various factors, stages and functional focus. It has passed several
development stages or dimensions. Changing dimensions in terms of growth stage as follows.
1) Welfare Management
− This stage is in between 1900 onwards to before 1920s.
− This stage is the pre stage or dimension of evolution of personal management.
− Its focus was only towards avoiding child labor, emphasizing human needs, setting work hours, cleanliness and
providing basic facilities etc.
2) Personnel management
− This stage is in between 1920s to 1940s.

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 − It is traditional in nature and focused with simple planning in the organization.
− It is basically, routine in nature, directed mainly at the employees of the organization-selecting and training them,
arranging their pay and contracts of employments, explaining what are expected of them.
3) Human Resource Management (Dimensions)
− HRM is strategy focused, long-term oriented in nature.
− The concept of HRM has gained popularity especially from 1940’s onwards.
− HRM starts with demands for HR rather than the supply.
− HRM is proactive than reactive.
− It is system wide rather than piecemeal; treats employees as human capital rather than as variable cost; and it is a
based on commitment rather than compliance.
4) Strategic HRM Dimension
− SHRM stage, which is 1980s onwards till date.
− Strategic human resource management means formulating and executing human resource policies and practices that
produce the employee competencies and behaviors the company needs to achieve its strategic aim.
− HR manager partnering with their top managers in both designing and executing their organizations’ strategies.
− The relationship between strategic planning and strategic human resource management has been discussed in this
book in many.

Essential skills for HR Managers

− A skill is an ability or proficiency in performing a particular task. The field of HRM is changing day by day.
− Traditional types of skills alone are not sufficient enough for modern HR managers.
− Essential skills that are required by HR managers of today are as follows.
1) Organization Skills
− The need for this skill makes sense, given that you are managing people’s pay, benefits, and careers.
− Having organized files on your computer and good time-management skills are crucial for success in any job, but
especially if you take on a role in human resources.
− Organized records, strong time management skills, and personal efficiency are key to HR effectiveness.
− So HR managers have to organize their departmental functions according to need of the organization efficiently and
effectively.
2) Multitasking Skills
− In a typical office day he/she has to face different kinds of problems and issues.
− For example, HR manager may have to solve personal issue of an employee, recruitment program finalization,
attending the collective bargaining meeting, salary review, promotion interview in the same day.
3) Communication Skill
− The ability to communicate goes along with people skills.
− The ability to communicate good news (hiring a new employee), bad news (layoffs), and everything in between,
such as changes to policy, makes for an excellent manager and human resource management (HRM) professional.
− HR managers have to be convincing, caring, and believable too.
− All these require proper communication skills.
4) Dual focus (or balancing) Skill
− HR managers are the referees between top management and employees.
− Employees expect HR managers to advocate their concerns.
− At the same time HR managers must also enforce top management’s policies.
− HR managers must make decisions to protect the individual and on the one hand, they also need to protect the
organization, its culture and values.
− All these activities require dual focus or balancing skills.
5) Ethical skills
− Ethics and a sense of fairness are also necessary in human resources.
− Ethics is a concept that examines the moral rights and wrongs of a certain situation.
− Consider the fact that many HR managers negotiate salary and union contracts and manage conflict.
− In addition, HR managers have the task of ensuring compliance with ethics standards within the organization.
− Many HR managers are required to work with highly confidential information, such as salary information, so a
sense of ethics when managing this information is essential.
6) Change management
− Organizations are learning to cope with unexpected rate of internal and external change.
− Change has created both opportunities and threats to the organization and HR managers.
− To implement change programs successfully there is strong need of creating a culture for change.

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 − In this context, HR managers have to take a major responsibility than other departmental managers in the
organization.
− So HR managers must acquire or learn change management skills.
7) Negotiation Skills
− Negotiation is an agreement or contract between two or more parties.
− HR managers have to deal with departments, employees, managers and even outsiders.
− Organizations are composed of multi-interest groups.
− Conflict of interest is quite common.
− We know that the goal of negotiation is to end up with two parties that are satisfied with the outcome.
− Therefore, an important skills required by HR managers is negotiation skills.
8) A strategic mind-set
− A Strategic mind set as an HR professional is a key skill as well.
− A person with a strategic mind-set can plan far in advance and look at trends that could affect the environment in
which the business is operating.
− Too often, managers focus on their own area and not enough on the business as a whole.
− The strategic HR professional is able to not only work within his or her area but also understand how HR fits into
the bigger picture of the business.

Challenges of HR Managers
At present managing people with diverse skills and background is providing to be a difficult issues for HR managers.
Employees in organizations differ from each other in terms of age, education, religions, gender, and ethnicity. Besides rapid
development in transportation and communication network, innovation of new knowledge, globalization of business etc.
bring complexity in human resource management.
Following are the major challenges for human resource managers
1) Globalization
− Organizations are no longer constrained by national borders. The world has become a global village – producing and
marketing goods and services worldwide.
− Organizational members need to adapt to cultures, systems, and techniques different from their own.
− The rise of multinational and transnational corporations places new requirements on human resource managers.
− HR managers must ensure that employees with the appropriate mix of knowledge, skills, and cultural adaptability
are available to handle global assignments.
− HR managers must take cultural values into account when trying to understand the behavior of people from different
countries
− All countries have different values, morals, customs, political and economic systems, and legal systems.
− HRM need to understand societal issues, such as status, that might affect operations in another country.
− Flexibility & adaptability are key components for employees going abroad.
− To make this a reality, human resource managers must have a thorough understanding of the culture of the areas
around the globe in which they may send employees.
 HR managers must take cultural values into account when trying to understand the behavior of people from different
countries as well as those in different countries
2) Technology Advancement
− Technology has had a positive effect on internal operations for organizations, but it also has changed the way human
resource manager work.
− Knowing the effect of technology, helps manager better facilitates human resource plans, makes decision faster,
more clearly defines jobs, and strengthen communication with both the external community and employee.
− In order to cope with efficient technology and to ensure quality and innovation, organizations require skilled,
innovative and motivated workforce.
− The role for HR manager is to plan for education, training and development of workforce to upgrade their
existing level of knowledge, skill, and decision making capacity to adapt to technology changes.
3) Managing Workforce diversity:
− The varied personal characteristics that make the workforce heterogeneous.
− Today’s managers have found that employees do not set aside their cultural values and lifestyle preferences when
they come to work.
− The challenge for HR managers is to make organizations more accommodating to diverse groups of people by
addressing different lifestyle, family needs, and work styles.
− As organizations become more diverse, employers have been adapting their human resource practices to reflect
those changes.

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 − Workforce diversity requires employers to be more sensitive to the differences that each group brings to the work
setting. For instance, employers may have to shift their philosophy from treating everyone alike to recognizing
individual differences and responding to those differences in way that will ensure employee retention and greater
productivity.
− Employers must recognize and deal with the different values, needs, interests, and expectations of employees.
− Employers must avoid any practice or action that can be interpreted as being sexist, raciest, or offensive to any
particular group and of course must not illegally discriminate against any employee.
4) Outsourcing of HR activities
− Outsourcing is the process by which organizations transfer routine work to another organization that specialized in
that work and can perform it more effectively.
− Activities commonly outsourced: employee hiring, training and development, payroll preparation, benefits
administration and so on.
− Factors responsible: downsizing, rapid growth or decline f business, globalization, growing competition and
restructuring, etc.
− HR departments are shifting themselves from routine activities to focus more on strategic role. Subcontracting is
also done to help reduce bureaucracy and to encourage more responsive culture.
− Negative sides: Due to outsourcing the important and needs of HR department are in danger. Theoritically, if
outsourcing is carried to the logical end, a firm can do without an HR department. Moreover, logics are expressed
about the lost jobs in HR functions. Firms which outsource majority of its HR functions have only ‘skelton HR
departments.’
− There is big challenge in front of HR managers to justify that, HR department is not less important than any other
departments in the organization.
5) Balancing Work life and family life
− The present emerging issue of HR manager is to maintain balance between work life and family life of the
employees.
− It is also becoming a major challenge to the managers of HR department since more number of women is entering
into the organization.
− Both husband and wife are working in different institutions and if work life balance is not maintained it can create
the stress, conflict and misunderstanding among them. It may create the problems of divorce and living separately.
− To resolve such problems, HR managers need to introduce work life balance programme such as flexible work –
hours, job sharing, childcare centers, counseling programs, leave on request etc.
6) Change in Employees Expectations
− What motivate employees yesterday do not motivate today.
− Employee’s expectations are changing every day.
− With the changes in workforce demographics, employee expectations and attitudes also have shifted.
− The problems: traditional motivational tools like attractive salary and benefits, job security, housing, better offices
and the like do not attract and motivate today’s talented employees.
− They demands intrinsic rewards – team work, autonomy, empowerment, equity etc. they want coaches and mentors,
not the managers and bosses. They want quality of work life, job satisfaction and work life balance.
− HR managers need to discover new methods of hiring, training, compensating and motivation human resources.
7) Loss of joy and pleasure
− In recent years HR managers are facing strikes, lockouts, vehicle being brunt, executives being tortured, throwing of
name plates, etc. by employee leaders.
− On the one hand they are facing above problems, and on the other hand their existence itself is endangered due to
heavy outsourcing.
− What need to be done to save the status? HR department needs to focus more on activities that add value to the
firm’s bottom line activities such as: strategic planning, change management and development of human capital.
8) The contingent workforce
− The part time, temporary, and contract workers used by organizations to fill peak staffing needs or perform work not
done by core employee.
− Organizations facing a rapidly changing environment must be ready to adjust rapidly.
− Having too many full time employees limits management’s ability to react.
− On the other hand, organizations that rely heavily on contingent workers have greater flexibility because workers
can be easily added or taken off as needed.
− The challenge for HR manager is to how it will effectively attract quality temporaries and be prepared to deal with
potential conflicts between core and contingent workers.
9) Changing skill requirement:
 The vast spreads of technology require employee’s increased job skill requirement.

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  Workers will need the ability to read and comprehend (understand) software and hardware manuals, technical
journals and detailed reports.
 Such increased skill provides organizations with the ability to innovate, brings products to market rapidly, and
responds to customer request.

The Changing role of Human Resource Professionals

Since, a number of HR challenges created by the process of globalization, change in technology, need for managing
human capital, raise profitability and make continuous change,
− The role of HR managers has been rising to meet these challenges and grab opportunities for organization.
− Due to an increasing demand of organizational excellence to work with environmental challenges and
opportunities, the role and responsibilities of human resource managers will continue to expand in future too.
− Such excellence will increase when HR managers focus on; Strategic HR, creating high performance work
system, management of employees, etc.
− Some importance role of HR professionals are;
1) Management of Strategic Human Resource
− Strategic human resource management means formulating and executing human resource policies and
practices that produce the employee competencies and behaviors the company needs to achieve its strategic
aim.
− In practice, HR manager’s strategic role means, partnering of HR managers with their top managers in both
designing and executing their organizations’ strategies.
− For this HR managers follow following steps to the management of human resources;
a) Defining an organizational architecture: At the time of organizational architecture, HR department
has to architect and define reward system, culture, governing style, work process and leadership to work
in organizational strategy.
b) Conducting an organizational audit: organizational audit is done to find weak and strong
components of organizations that hinder and support strategy implementation – HR expert architect
organization in terms of competencies, leadership etc. to implement it.
c) Working as strategic partner: HR experts involved into renovating (repair) the parts of the
organization taking initiatives to improve compensation practices, performance evaluation system, team
work etc.
d) Taking stock of own and setting clear priorities: HR managers have to find stock of suitable HR
initiatives – such as, performance based pay, participative management etc. – and time to time evaluate
effectiveness of these initiatives to gain certain business performance.
2) Creating high performance work system
− A high performance work system is an integrated set of human resource management policies and practices
that together produce superior employee performance.
− There is no hard and fast rule about what comprises high performance work system, most organizational
psychologists would agree they include these practices.
− Employment security
− Selective hiring
− Extensive training
− Self-managed team and decentralized decision making
− Reduce status distinctions between managers and employee
− Information sharing
− Contingent rewards (pay for performance)
− Emphasis on high quality works
− In terms of measurable outcomes, high performance work system produce, more qualified applicants per
position, more employee hired based on validated selection tests, more hours of training for new employees
etc.
− Systems like these produce many benefits for employers.
− Study found that high performance work systems produced fewer occupational injuries.
3) Measuring the Human Resource Management Team’s performance

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 − In today’s performance based environment, employers naturally expect their human resource management
teams to provide measurable evidence of their efficiency and effectiveness, and for that of their proposed
program.
− E.g. How much will that new testing program save us in reduced employer turnover?
− How much more productive will our employees be if we institute that new training program?
− How productive is our human resource teams, in terms of HR staff per employee, compared to our
competitors?
4) Managing with the HR scorecard process
− The HR scorecard is a concise measurement system.
− It shows the quantitative standards the firm uses to measure human resources activities (such as
training, compensation, safety etc.), and to measure the employee behavior resulting from these activities,
and to measure the strategically organizational outcomes of those employee behaviors (such as higher
plant performance, and company profit).
5) Management of employees:
− The main role of HR managers is to ensure that employees are engaged – that they feel committed to the
organization and contribute fully.
− HR professionals have to involve in providing training for line management in methods of achieving high
employee morale, discuss employee problems with executive team, offer opportunity to personal and
professional growth and provide
6) Becoming a change agent:
− Because of globalization, innovation in production and information technology, pace of change is both shaky
(unsteady) and amazing (surprise).
− HR professionals can play role on creating high performing teams, reducing cycle time for innovation, or
deploying (use effectively) new technology timely.
− HR professional can work to make broad vision statements (such as we will be global leader in our market),
ask employees to work to achieve it.
− In such cases, HR can avoid resistance to change informing employees about benefits of change for them.

STRUCTURE OF HR DEPARTMENT
• The internal structure of a HRM or personnel department depends on various factors such as nature and size
of the organization, managerial preference to structure operations clearly, external forces etc.
• Small firms have only a single section, headed by a personnel officer taking care of everything.
• Medium sized firms may create a separate personnel department having experts in the personnel field
supported by administrative staff.
• In large firms the structure of a personnel department may take various shapes, depending on organizational
resources, competitive pressures and total employee strength.

− Four functions of staffing, training and development, motivation, and maintenance can be distributed
many different ways in organizations.
− Company size, strategy, and structure will play a role in who handles the HRM functions.
− Realize, too, that more than half of all HR departments also offer administrative services to the
organization.
− Theses might include making child care arrangement, providing security, or operating in house medical
or food services.
− There are four areas in a typical nonunion HR department:
1) Employment
2) Training and development
3) Compensations/benefits
4) Employee relations
− Usually reporting to a vice president of Human Resources, managers in these four areas have specific
responsibilities.

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 1) Employment
− The main thrust of the employment function is to promote staffing activities.
− The employment department embarks on the process of recruiting new employees.
− This means correctly advertising the job to attract those with appropriate knowledge and abilities.
− Entry level positions in the companies with large HR departments frequently involve representing
the company at job fairs and college campuses.
− Employment specialists who sort through resumes or applications, and reject applicants who do not
meet the job’s requirement.
− The line manager may instruct the employment specialists to interview the selected candidates.
− Once the line managers has selected a candidate, the employment specialist usually makes the job
offer and handles the routine paperworks associated with hiring an employee.
2) Training and Development
− Training and development section of an organization is often responsible for helping employees
maximize their potential.
− Their focus is to enhance employees’ personal qualities that lead to greater organizational
productivity.
− Training and development members are often better known as the organization’s internal change
agents.
− These change agents, or organizational development specialists, help organizations members cope
with change in many forms.
− Training and development may also include career development activities and employee counseling
to help people make better choices about their careers and to achieve their desired goals.
3) Compensation and Benefits
− Compensation and benefits concerned with paying employees and administering their benefits
package.
− Job rating is statistically compared to determine the jobs relative worth to the company.
− Activities include helping employees prepare for their retirement, looking for various payout options,
keeping up to date of recent tax law changes, or helping executives with their perquisites.
4) Employee relations
− Ensures open communication within the company by fostering top management commitment,
upward and accurate communication, feedback, and effective information sources.
− One of the key responsibilities is to ensure that open communication permeate the organization.
− This entails fostering an environment where employees talk directly to supervisors and settle any
differences that may arise.
− ER specialists are also intermediaries in helping employees understand the rules.
HRM as Shared Function
− In order to achieve the highest level of efficiency and productivity. The changing context is that;
− Line managers are encouraged to take part in HRM functions and deliver the responsibilities.
− On the other hand, HR managers are strongly encouraged to participate in formulation of business strategies in
the organizations.
− In other words, it signifies that line managers are included in the active execution of operational tasks of HRM i.e.
acquisition, development, utilization and maintenance functions of HRM as per requirements.
− Possible problems and prospects of sharing HRM functions
− In some of the organizations, at the initial stage HRM managers can be reluctant to share power of HRM
department to the line managers since this can be perceived as loss of professionalism.
− There can be unhappiness along line management to take on HRM responsibilities assigned to them. The logic
behind it is that the line managers are already under pressure, therefore, taking time for additional functions can
be troublesome.
− Collaboration between HR managers and line managers need to work together to operate and establish system of
consultation with regards to HRM functions.

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− Matter of common concern need to be identified.
− A better way ahead is to form consultative committees where line managers and their HR department counter
parts explore ways of injecting new ideas.
Line and Staff Aspects of HRM
a) Line manager: A manager who is authorized to direct the work of subordinates and is responsible for
accomplishing the organization’s tasks.
b) Staff manager: A manager who assists and advises line managers.
Line Managers’ HRM Responsibilities
1. Placing the right person on the right job
2. Starting new employees in the organization (orientation)
3. Training employees for jobs new to them
4. Improving the job performance of each person
5. Gaining creative cooperation and developing smooth working relationships
6. Interpreting the firm’s policies and procedures
7. Controlling labor costs
8. Developing the abilities of each person
9. Creating and maintaining department morale
10. Protecting employees’ health and physical condition
Human Resource Managers Duties
1) A line function: The human resource manager direct the activities of the people in his or her own
department, and perhaps in related areas (like the plant cafeteria).
2) A coordinative function: The human resource manager also coordinates personal activities, a duty often
referred to as functional authority. Here he or she ensures that line managers are implementing the firm’s
human resource policies and practices.
3) Staff (assist and advice) functions: HR manager advises the CEO so CEO can understand the personnel
aspects of the company’s strategic options. HR assist in hiring, training, evaluating, rewarding, counseling,
promoting, and firing employees.

External and Internal Context of Human Resource Management

Many interrelated factors affect human resource management. Such factors are part of either the firm’s
external environment or its internal environment. In addition, there are certain interrelationships that
complicate the management of human resources.
External Environmental Factors
Comprised of those factors that affect a firm’s human resources from outside the organization’s
boundaries.
1) Geographical/Physical Environment
 It represents an organizations location and climate.
 It affects several HR activities like recruitment and selection, compensation and so on. In
Nepal, social allowances are given to employees who work in remote area of the country
2) The Labor Force: The labor force is a pool of individuals external to the firm from which the
organization obtains its workers. The capability of a firm’s employees determines to a large extent
how well an organization can perform its mission.
3) Legal Considerations: Another significant external force affecting human resource management
relates to federal, state, and local legislation and the many court decisions interpreting this legislation. In
addition, many presidential executive orders have had a major impact on human resource management.
4) Society:
− Society may also exert pressure on human resource management.
− If a firm is to remain acceptable to the general public, it must be capable of accomplishing its
purpose in line with societal norms.
− Social responsibility is an implied, enforced, or felt obligation of managers, acting in their
official capacities, to serve or protect the interests of groups other than themselves.
5) Technology: As technological changes occur, certain skills are no longer required. This necessitates
some retraining of the current workforce. The trend toward a service economy also affects the type
and amount of technology needed.

11 Management of Human Resource, BBA and BBA (BI), Fifth Semester/Dhruba P. Aryal
6) The Economy: The economy of the nation—on the whole—and of its various segments is a major
environmental factor affecting human resource management. As a generalization, when the economy
is booming, it is often more difficult to recruit qualified workers. On the other hand, when a
downturn is experienced, more applicants are typically available.

The Internal Environment

Factors that affect a firm’s human resources from inside its boundaries are termed as internal
environmental factors. The primary internal factors include the firm’s mission, policies, corporate
culture, and management style of upper managers, employees, the informal organization, and other units
of the organization.
1) Mission: the organization’s continuing purpose or reason for being. Each management level should
operate with a clear understanding of the firm’s mission. In fact, each organizational unit (division, plant,
and department) should clearly understand objectives that coincide with that mission.
2) Policies: A predetermined guide established to provide direction in decision making. As guides, rather
than as hard and-fast rules, policies are somewhat flexible, requiring interpretation and judgment in their
use. They can exert significant influence on how managers accomplish their jobs.
3) Corporate Culture: The system of shared values, beliefs, and habits within an organization that
interacts with the formal structure to produce behavioral norms.
4) Management Style of Upper Managers: Closely related to corporate culture is the way in which the
attitudes and preferences of one’s superiors affect how a job is done.
5) Employees: Employees differ in many ways including their capabilities, attitudes, personal goals, and
personalities. As a result, behavior that manager finds effective with one worker may not be effective
with another.
6) Informal Organization: The informal organization is the set of evolving relationships and patterns of
human interaction within an organization that are not officially prescribed. Such informal relationships
are quite powerful.
7) Other Units of the Organization: Managers must be keenly aware of interrelationships that exist
among divisions or departments and should use such relationships to their best advantage.
8) Labor-Management Agreement: Upper management typically negotiates labor-management
agreements, but managers throughout the organization must implement the terms of the agreements. In
most

HRM in Nepalese Context

1) The Scenario
− Nepal lacks the sufficient basic infrastructure to develop manpower.
− Nepal’s population is more than 282 million.
− Approximate sex ratio is 51:49.
− Literacy rate is below 60 percent.
− Life expectancy is around 65 years.
− 400 thousand raw hands/new hands enter in the labor market every year.
− Around 4 million Nepalese originated citizens (excluding India) are estimated to be working
outside Nepal for job and other purpose.
− Most of our employees have not got proper training/development opportunities.
− Most of the HR managers are from other than the management fields. They lack basic skills and
knowledge of HRM.
2) The Dynamics of HRM in Nepal
− It is characterized by people having varied culture, social and religious background, multiple and
conflicting goals; ever rising expectations and work setting.
− HRM is relatively a new concept to Nepalese organizations.
− This situation drastically changed after the then HMG/N liberalized the economy in 1990s and allows
foreign investment.

12 Management of Human Resource, BBA and BBA (BI), Fifth Semester/Dhruba P. Aryal
 − Government regulations, competitive pressure, unionization of employees have put a strong influence on
the way HRM function is carried out to various organizations.
− The view point of HRM in Nepal has shifted in the last two decades.
− The Nepalese workforce is now globally acknowledged as dedicated, disciplined and low skilled.
− Most of the employees lack professional education, training, dedication and discipline.
3) The workforce diversity and its features
− The composition of workforce is changing in Nepal.
− Young, skilled and knowledgeable employees are occupying positions of importance.
− Forty-five percent posts of the posts to be fulfilled by open competition shall be set aside and be filled up
by having separate competition between the following candidates only, by considering the percentage
into cent percent: a) Women –Thirty Three Percent, b)Adiwasi/Janjati -Twenty Seven Percent (c) Madhesi
-Twenty Two Percent (d) Dalit - Nine Percent (e) Disabled (differently able)- Five Percent (f) Backward
Area - Four Percen,
− It has further added the complexity of diversity in Nepalese HRM scenario.
− Emerging areas such as financial, insurance, telecom, health care, schools/colleges are the major
attractions for Nepalese educated hands.
4) Perceptions and attitudes of Managers/Employers
− In the eye of the employees, most of the Nepalese organizations are in the personnel management era.
− They argue that recruiting, selecting and transferring consumes a major portion of managers’ time.
− A culture of nepotism, favoritism and political legacy is deep rooted in Nepalese managers/employers.
− Supply of HR is many times higher than demands of HR. so the managers/employers think themselves
as “masters” and employees as “servants/helpers” especially in private sectors.
− They rarely think training/development and career development as “investment in HR”.
− Most of the private organizations lack systematic performance appraisal and reward system.
5) Perceptions and attitudes of Workers/Employees
− Employees take the job as a training first i.e, they lack practical skills, knowledge and confidence.
− Competent manpower is hard to retain for more than 3-5 years.
− Many people work hard to impress managers during the early month/ year of their career.
− The current trend of “brain drain” is developing the perception that life is easy in foreign countries”. So
it has become hard to retain employees.
− The root cause of most of the HR problems in their organization is political affiliation and multicity of
unionization rather than poor HRM practice.
6) Changing work roles and value in the workplaces: Some positive sign can be seen in the areas of
work roles and values.
− Emphasize in intrinsic factors and quality of life rather than quantity and hygiene factors.
− Equity and justice for the employees over economics matters.
− Participation over authority.
− Team works instead of individual and group work.
− Mid and long term focus instead of short term focus on job and career.

13 Management of Human Resource, BBA and BBA (BI), Fifth Semester/Dhruba P. Aryal