Modi Institute of Management & Technology

Approved by AICTE, New Delhi & Affiliated to Rajasthan Technical University,

Kota

Assignment on

STRATEGIC HUMAN RESOURCE MANAGEMENT

Submitted in partial fulfillment of the requirements for the award of the degree of
Master of Business Administration
(Batch 2022-24)

Submitted By: Janvi Bajaj Submitted To: Mrs. Ramneet Kaur Ma’am
(MBA 3rd Semester)

1
 ACKNOWLEDGEMENT

“It is not possible to prepare a project report without the assistance &encouragement of other
people. This one is certainly no exception.”

On the very outset of this report, I would like to extend my sincere & heartfelt obligation towards
all the personages who have helped me in this endeavor. Without their active guidance, help,
cooperation & encouragement, I would not have made headway in the project. I am ineffably
indebted to Miss SURBHI JAIN Ma’am for conscientious guidance and encouragement to
accomplish this assignment. I am extremely thankful and pay my gratitude to my faculty of MBA
3rd SEMESTER for their valuable guidance and support on completion of this project in
its presently.
I extend my gratitude to MIMT, KOTA for giving me this opportunity. I also acknowledge with
a deep sense of reverence, my gratitude towards my parents and member of my
family, who has always supported me morally as well as economically. Any omission in this
brief acknowledgement does not mean lack of gratitude.

Thanking You
Janvi Bajaj

2
 TABLE OF CONTENTS
S.No. Particulars Page
No.
1. HUMAN RESOURCE 3-4
a. WHAT IS HR?
b. UNDERSTANDING HR
c. HR ROLE
2. HUMAN RESOURCE MANAGEMENT 4-6
a. DEFINITION
b. STRATEGIES
3. TYPES OF HR 7
a. HR ANALYTICS
4. SCOPE OF HUMAN RESOURCE 8-14
a. EMPLOYEE RECRUITMENT AND SELECTION
b. EMPLOYEE TRAINING AND DEVELOPMENT
c. EMPLOYEE PERFORMANCE MANAGEMENT
d. COMPENSATION AND BENEFITS ADMINISTRATION
e. INDUSTRIAL RELATIONS
5. HR EVALUATION 14
6. EVALUATION OF STRATEGIC ROLE OF HR 15
7. LEVEL OF ANALYSIS 16-22
a. INDIVIDUAL LEVEL
b. ORGANISATIONAL LEVEL
c. COMMUNITY LEVEL
8. THE SEVEN HR BASICS 23-29
a. RECRUITMENT & SELECTION
b. PERFORMANCE MANAGEMENT
c. LEARNING & DEVELOPMENT
d. SUCCESSION PLANNING
e. COMPENSATION AND BENEFITS
f. HUMAN RESOURCES INFORMATION SYSTEMS
g. HR DATA AND ANALYTICS
9. APPROACHES TO HR EVALUATION 29-32
a. AUDIT APPROACH
b. ANALYTICAL APPROACH
c. QUANTITATIVE AND QUALITATIVE APPROACH
d. BALANCED SCORECARD
e. BENCHMARKING
10. BILBLIOGRAPHY 33

3
 HUMAN RESOURCE (HR)

WHAT IS HUMAN RESOURCES (HR)?

Human resources (HR) is the division of a business that is charged with finding, recruiting,
screening, and training job applicants. It also administers employee benefit programs.
HR plays a key role in helping companies deal with a fast-changing business environment and a
greater demand for quality employees in the 21st century.

UNDERSTANDING HUMAN RESOURCES (HR)

John R. Commons, an American institutional economist, first coined the term “human resource”
in his book The Distribution of Wealth, published in 1893. However, it was not until
the 20th century that HR departments were formally developed and tasked with addressing
misunderstandings between employees and their employers.
An HR department is an essential component of any business, regardless of an organization’s
size. It is tasked with maximizing employee productivity and protecting the company from any
issues that may arise within the workforce.
HR responsibilities include compensation and benefits, recruitment, retention, firing, and
keeping up to date with any laws that may affect the company and its employees.

HR ROLE
Research conducted by The Conference Board, a member-driven economic think tank, found six
key, people-related activities that HR must effectively do to add value to a company. They are:
• Managing and using people effectively
• Tying performance appraisal and compensation to competencies
• Developing competencies that enhance individual and organizational performance
• Increasing the innovation, creativity, and flexibility necessary to enhance competitiveness

4
 • Applying new approaches to work process design, succession planning, career
development, and interorganizational mobility
• Managing the implementation and integration of technology through improved staffing,
training, and communication with employees

HUMAN RESOURCE MANAGEMENT (HRM)

DEFINITION
Human resource management (HRM) is a strategic approach to managing company employees,
the work culture, and the work environment so that people can function as effectively and
productively as possible. Typically, it involves using metrics to measure workforce success.

Human resources (HR) is the part of an organization that is in charge of finding, vetting, hiring,
and training job candidates, as well as running benefit programmes for employees. In the 21st
century, HR is an important part of helping businesses adapt to a quickly changing business
environment.

RECOGNIZING HUMAN CAPITAL

No matter how big or small an organization is, it needs a human resources department. A
company's human resources department is in charge of making sure employees are as productive
as possible and protecting the company from any problems that may arise in the workplace.
Human resources are in charge of things like pay and benefits, hiring, firing, and staying up-to-
date on any laws that might affect the company's employees.

Human Resource departments have been pushing for strategic projects since the 1980s. This
movement started when people looked into how employee issues affect the long-term success of
a business. All of these plans are sometimes called "human resource management" (HRM) plans.

HRM is a broad way to manage employees as well as an organization's culture and environment.
It looks at how to get people to work for an organization, how to manage them, and how to lead

5
them in general.

When a business uses HRM strategies, the human resources department usually does more to
improve the workforce. They might make suggestions to management about processes, ways of
doing things, and business solutions. Google is an example of a company whose human
resources department has become more involved in helping employees get along better.

The company gives its employees a lot of perks, and at its headquarters, employees can use a
wide range of facilities, such as wellness centers, cafeterias and playing areas, amongst other
things.

PARTICULAR CONSIDERATIONS
Since the middle of the 20th century, many companies have started to outsource some of the
more traditional administrative and transactional HR tasks so that the HR department has more
time to come up with and run programmes that are good for the business.

As part of this process, it may be possible to hire a third party to handle payroll, employee
benefits, hiring, background checks, exit interviews, risk management, conflict resolution, safety
inspections, and office policies. Using more modern tools, like the best recruitment software, can
also give HR departments more flexibility by making them more productive.

HR MANAGEMENT STRATEGIES
Beginning in the 1980s, there was a push for strategic initiatives within HR departments. This
movement was based on research related to the impact of employee-related issues on a firm’s
long-term business success.

Collectively, these strategies are sometimes referred to as human resource management (HRM)
strategies. HRM is a comprehensive approach to managing employees and an organization’s
culture and environment. It focuses on the recruitment, management, and general direction of the
people who work in an organization.

6
An HR department that adopts HRM strategies typically plays a more active role in improving an
organization’s workforce. It may recommend processes, approaches, and business solutions to
management.

Google is one example of an organization that has adopted a more active approach to employee
relations through its HR department. The company offers many employee perks, including on-
site wellness centers, on-site meals and snacks, fitness centers, massage programs, and
ergonomic support. For Google, happy employees are equivalent to productive employees.
In 1901, National Cash Register Co., known today as NCR Corp., established what is thought to
have been the first personnel department (the HR predecessor) to manage wages, workplace
safety, and employee concerns.

HOW TO DEVELOP HR MANAGEMENT STRATEGIES:

Before you can develop an HR strategy, you'll need to conduct a SWOT analysis that considers
your organization's strengths, weaknesses, opportunities, and threats:

STRENGTH- Where do you excel in general and in human resource specifically?

WEAKNESSES- In what areas does your organization fall short? What recruiting and retention
problems do you face?

OPPORTUNITIES- Where does your organization have room to develop, grow, or leverage
existing strengths?

THREATS- What are the primary challenges facing by your organization? What people-specific
challenges affect profitability?

7
WHAT ARE THE 5 TYPES OF HUMAN RESOURCES?
There are numerous important human resources functions carried out by an HR department. Five
well-known types of responsibilities are:
1. Recruiting, hiring, and onboarding new employees
2. Handling employee compensation and benefits
3. Offering employee job/career development
4. Addressing work-related issues of individual employees
5. Developing policies that affect a working environment company-wide

HR ANALYTICS

8
SCOPE OF HUMAN RESOURCE MANAGEMENT
There are many different scopes of human resource management activities that organisations can
choose to adopt. The scope of human resource management activities will be dictated by the
organisational culture, the organisation’s size, and the organisation’s specific needs. The scope of
HRM activities can be broadly classified into five categories:

• Employee recruitment and selection

• Employee training and development
• Employee performance management
• Compensation and benefits administration
• Industrial relations

9
Employee Recruitment And Selection
The scope of human resource management activities in employee recruitment and selection
includes all the activities involved in identifying, attracting, screening, and selecting employees
for an organisation. The scope of human resource management activities in employee
recruitment and selection also includes developing and implementing policies.
Recruitment and selection is the most crucial process that defines the scope of human resource
management. Hence, it becomes imperative to have a transparent scope of human resource
management activities in this area so that the organisation can identify the most suitable
candidates for the vacant positions. Without the proper scope of human resource management
activities in employee recruitment and selection, the organisation may end up recruiting
employees who are not a good fit for the organisation.

Benefits of Employee Recruitment and Selection:

1. Identify Suitable Candidates
Without the scope of human resource management activities in employee recruitment and
selection, the organisation may end up hiring employees who are not a good fit for the
organisation.

2. Assess the Skills & Abilities of the Candidates

The scope of human resource management activities in employee recruitment and selection helps
assess the candidates’ skills, knowledge, and abilities. This helps the organisation to identify the
most suitable candidates for the vacant positions.

Employee Training and Development

Organisations invest significant resources in employee training and development programs. The
scope of human resource management includes designing, delivering, and evaluating these
programs.

10
One popular employee development program is management training. Management trainees
learn the basics of running a business unit or organisation. They also learn how to motivate and
lead employees.

Organisations also offer training programs to help employees improve their job performance.
These programs may be specific to a particular job or maybe general skills training. For example,
an organisation might offer a customer service training program to help employees improve their
communication and problem-solving skills.

Finally, some organisations offer employee development programs to help employees prepare for
future roles within the organisation. For example, an organisation might offer a management
development program for high-potential employees. This program helps participants develop the
skills and knowledge they need to succeed in a management position.
The human resource management scope also includes evaluating employee development
programs’ effectiveness. Organisations use various methods to evaluate these programs’
effectiveness, including surveys, interviews, and focus groups.

Benefits of Employee Training and Development:

1. Improved Job Performance
Employee training and development programs can have several benefits for organisations. These
programs can help improve job performance by teaching employees the skills they need to be
successful in their jobs.
Organisations that offer employee development programs also tend to see improved job
performance from their employees. This is because employees who participate in these programs
have the opportunity to learn new skills and knowledge that they can apply to their jobs.

2. Increased Employee Retention

Employee training and development programs can also help increase employee retention.
Employees who participate in these programs often develop a stronger commitment to their
organisation. They also tend to better understand the organisation’s goals and objectives.

11
Employee development programs often see increased employee retention. Employees who
participate are loyal and committed to the company and employers.

Employee Performance Management

The scope of human resource management (HRM) is constantly evolving. With changing and
diverse workforce, the strategies and practices used to manage employees must evolve. An area
that witnessed significant changes in recent years is employee performance management.
With the advent of new technologies, there are now more tools and resources available to help
managers effectively evaluate and improve employee performance. However, there is a lot of
range for improvement in this area.

One of the challenges facing HR professionals is how to keep up with the latest trends and best
practices in employee performance management. Another challenge is how to communicate the
scope and objectives of human resource management to employees effectively.

Despite these challenges, employee performance management is critical to the HRM scope. With
regular updates on the trends, HR professionals can ensure that their organisations use the most
effective methods for managing employee performance.

Benefits of Employee Performance management

1) Identify and address employee development needs
Performance management provides a structured process for identifying and addressing employee
development needs. By assessing employees regularly, managers can identify areas where
employees need improvement.
This information is used to create development plans that address these needs. As a result,
employees are more likely to reach their potential and contribute positively to the organisation.
In addition, performance management can help identify high-potential employees who may be
candidates for promotion or other opportunities.

12
 2) Facilitates communication between managers and employees
Performance management provides a forum for regular communication between managers and
employees. This communication can help ensure that employees are aware of expectations and
are allowed to give feedback on their performance.

In addition, regular communication can help build trust and rapport between managers and
employees. This trust and rapport are essential for effective working relationships. Finally,
communication about performance can help identify issues early on before they become
significant problems.

3) Improve overall organisational performance

By improving individual employee performance, performance management can help to improve
overall organisational performance. When employees perform at their best, they are more
productive and engaged.

This increased productivity and engagement can improve organisational performance in terms of
profitability, customer satisfaction, and employee retention.

Compensation and Benefits Administration

This is the process of designing and maintaining employee compensation and benefits programs.
It includes developing eligibility criteria, classifying employees, and administering payroll
deductions. HR professionals work with accounting staff to ensure that employees are paid
correctly and on time. They also work with benefit providers to set up and administer employee
benefit programs, such as health insurance and retirement plans.

Having a thorough comprehension of state laws governing employee compensation and benefits
becomes imperative. These laws are constantly changing, so HR professionals must stay up-to-
date on the latest developments. They must communicate these changes to employees and
managers effectively.

13
In addition to compensation and benefits administration, HR professionals are also responsible
for employee relations. This includes investigating and resolving workplace issues, such as
harassment and discrimination complaints. HR professionals create a positive work environment
and foster good relationships between employees and managers.

Benefits of Compensation and Benefits Administration:

I. Boosts employee morale
Compensation and benefits administration can have a positive impact on employee morale.
When employees are fairly compensated and have good benefits, they are more likely to feel
content with their jobs. This can lead to increased productivity and a reduction in turnover.
Compensation and benefits administration can also help to attract and retain top talent. By
offering competitive salaries and benefits, employers can entice the best candidates to apply for
open positions. And once hired, these employees are more likely to stay with the company for the
long term.

II. Reduces costs

Compensation and benefits administration can help to reduce costs for employers. HR
professionals can ensure that employees are not overpaid or underpaid by properly managing
payroll deductions. This can help to prevent errors and save the company money.
In addition, by offering benefits like health insurance and retirement plans, employers can save
on taxes. These benefits are tax-deductible for businesses, which can lead to significant savings.

Industrial Relations
Industrial relations is the field of human resource management that deals with managing
employees in businesses and organisations. The scope of industrial relations includes aspects
such as employee relations, labour relations, and Collective bargaining.
HRM is a field that is constantly evolving and growing. As businesses become more globalised,
the scope of human resource management has become more complex. The scope of human
resource management now includes managing employees in various countries and cultures.
Industrial relation is a field that is growing in importance as businesses become more globalised.

14
Benefits of Industrial Relations
I. Improves communication and understanding
Effective communication is essential for any organisation, but it is imperative in an unionised
workplace. Industrial relations help to improve communication and understanding between
employees and management.

II. Resolves conflict

Conflict is inevitable in any organisation, but it can be especially damaging. Industrial relations
can help to resolve conflict before it gets out of hand and disrupts the work culture.
Industrial relation is a vital part of human resource management. The scope of industrial relations
has grown and changed as businesses have become more globalized. Industrial relations help to
improve communication and understanding between employees and management, and they can
help to resolve conflict.

HR EVALUATION
The need for measuring and evaluating the effectiveness of the personnel programs and policies
is widely felt by modern organizations. Evaluation enables the management to detect any serious
discrepancies or inadequacies in the company’s personnel policies, practices and programmes
before they cause any serious problem. HR Evaluation are the procedures and processes that
measure, evaluate and communicate the value added of HR practices to the organization. For a
good evaluation, it is important to assess how well and how far employees of the organization
have been utilized in achieving the organizational goals.

15
EVALUATION OF THE STRATEGIC ROLE OF HR
The integration of HR and strategic management should begin at the strategic analysis stage. In
this stage business goals, external opportunities and competitive advantages are identified. HR
must perform environmental scanning to identify the people-related business issues. HR then
must play a role in the strategy formulation by clarifying performance expectations and future
management methods. At this stage a business mission is determined and action plans and
resource allocations are set. HR strategies, objectives and action plans must be set to coincide
with and ensure the business strategy is carried out. Finally, HR plays a role in strategy
implementation by developing processes for organizational change, strategic staffing, learning
and development and employee relations.

As organizations plan for the future, Human Resources (HR) professionals must take on the
strategic role of anticipating where the company is going to be down the road and understanding
the changing demographics and expectation of the workforce. Essentially, HR is the guardian of
information as to who the best people in the organization are and what their talents are. HR must
track the skills of the workforce and match them up with the organization’s needs..
In order to effectively be a part of the strategic planning process, HR must perform
environmental scanning. Some environmental factors may include: economic factors,
competitive trends, technological changes, political issues, social issues, and demographic
trends. A vital element of HR’s strategic role is determining if people are available, internally or
externally, to carry out the organization’s goals.

Ultimately, successful HR planning helps to increase the organization’s ability to act and change
and gain competitive advantage. There must, however, be a reciprocal and interdependent
relationship between top management and HR. This is best achieved when a HR manager is part
of the organization’s management steering committee or strategic-planning team. HR’s role is to
essentially conduct a skills analysis which involves the evaluation of employees’ and applicants’
knowledge, skills and abilities in relation to the future needs of the organization. First, HR must
have a clear picture of what the organization will be doing by the end of the planning period and
then predict the needs and create a list of job modifications, descriptions and specifications that
can meet those needs.

16
EXPLORING HUMAN RESOURCE DEVELOPMENT: A
LEVELS OF ANALYSIS

APPROACH INTRODUCTION HRM

It is a multidisciplinary and multiperspectival construction. To understand the function and
nature of HRM, it is important to clearly identify the level of analysis that is being adopted.
Levels of analysis have a significant role to play in framing research and developing models for
the advancement of both theory and practice. The failure of HRM professionals to clearly
identify appropriate levels of analysis has obscured the context for HRM and has unduly added
to its complexity. Meanwhile, a growing volume of research is emerging that considers the
effects of HRM at the community/society level. Such research acknowledges the important role
of HRM in the economic, cultural and political wellbeing of society. This paper examines the
concept of human resource development from the individual, organisational and
community/societal levels of analysis. It outlines some of the dominant research strands within
each level and highlights both the distinctiveness and usefulness of the 2 three levels of analysis
as a means of evaluating the impact of HRM. It identifies tensions between them and points out
differences in the underlying assumptions, characteristics of HRM provision and delivery of
HRM for each level of analysis. Finally, some implications of this approach in improving HRM
theory and practice are presented.

INDIVIDUAL LEVEL OF ANALYSIS

The individual level of analysis emphasizes the “human” aspect of HRM. The purpose of HRM,
analyzed at an individual level is concerned with the development of human potential and is
focused towards aspects of learning, job satisfaction, career management and individual
experience. The general body of HRM literature provides limited primacy to the individual. One
can reasonably argue that HRM needs to consider how organisations take into account
individuals’ needs to discover ‘potential meaning through work’ (Chalofsky, 2000; 2001). Eliott
and Turnbull (2002) argue that ‘the ways in which individuals’ everyday working lives are
regulated and governed focuses increasingly on them as individuals’—what Russ-Eft (2000)
denotes as a focus on the “development of the resources of the humans” rather than the

17
“development of human resources”. DuGay (2000) suggests that much contemporary research
conceptualizes the employee as an individual in search of meaning and fulfilment. In addition,
there is evidence of increased individualism in the employment relationship reflected in
discourse on employability. The basic argument here is that individuals take responsibility for
planning and mapping their own development with the organisation being responsible for
ensuring that development opportunities are available. Legge (1999) notes that this focus on the
individual and free choice has its roots in Kantian philosophy; specifically, the idea that
individuals have freedom of self-determination and should be considered as ends in their own
right. She acknowledges a paradox, with a more collectivist or organisational notion, reflecting a
more Aristotalian position and she suggests that the latter will prevail or remain dominant in the
employment relationship. Utilising an individual level of analysis, it is arguable that
opportunities for development may arise out of interest or necessity; individuals may seek out
development to enhance job or person-related competencies or may participate in development
for the purposes of selfenhancement. On this latter point, Chalofsky (2000) argues that issues
concerned with spirituality, the meaning of work, autonomous learning and social responsibility
are becoming increasingly important in the workplace. Wager-Marsh and Conley (1999)
advocate the spirituality-based firm and define it as an attempt to focus on both individual and
spiritual growth, in addition to a broader collective focus. Most discussions of the spiritual
dimension emphasise its individual and personal nature and highlight characteristics such as
concentration, refinement of awareness and wisdom. Empirical research at the individual level of
analysis emphasises characteristics considered important to explaining participation in
development activities. Examples include training and learner motivation (Baldwin and Majuka
1991), age and learner commitment (Cleveland & Shore 1992), learner attitudes and beliefs
regarding development activities (Noe, 1986; Noe & Wilk, 1993), motivation to transfer (Yelon,
1992), transtheoretical change (Madsen 2003), self efficacy (Gist & Mitchell (1992) and so on.
Research has also focused on the impact of HRD activities on individual level concepts such as
job satisfaction (Mathieu, 1991), career satisfaction (Mathieu & Martineau, 1997), motivation
and commitment (Bontis & Fitz-enz, 2002) In summary, an individual level construction of HRD
concerns itself with developing the resources of humans, rather than developing human
resources. It advocates that HRD should focus on developing the inner resources of human
beings to enable their potential to be maximised. It rejects the development of human resources

18
as commodities; a view that is the dominant focus of organisation level analysis. The individual
level of analysis is relevant and pertinent for both HRD practice and research. HRD, as a field of
study embraces key elements of behavioural, developmental and cognitive psychology and
positions learning as an activity central to individuals irrespective of context. It is concerned with
continuous 4 lifelong learning processes composed of formal and informal components designed
to enhance individual effectiveness, personal growth, self-esteem, self-efficacy, spirituality and
wisdom.

ORGANISATIONAL LEVEL OF ANALYSIS

The organisational level of analysis emphasises the “resource” aspect of HRM. The purpose of
HRM, analysed at an organisational level is concerned with issues surrounding resource
maximisation, productivity enhancement and realising the full potential of employees towards
achieving organisational goals. An organisational level analysis understands HRM to be a
specialised set of developmental activities or interventions that focus on supporting the
achievement of organisational objectives. Organisation level discourse places an expectation on
HRM to deliver a set of specific, tailor-made solutions to satisfy organisational or system needs.
One of the dominant theoretical perspectives in this regard is systems theory. Swanson (2001)
argues, that systems theory captures the ‘complex and dynamic interactions’ of a range of
organisational characteristics including environments, work processes, group and individual
variables. Kuchinke (2001) cautions that systems theory should not be viewed as the primary
disciplinary foundation for HRM. He acknowledges that it has the potential to provide valuable
insights into how HRM operates in organisations but should not be the dominant frame of
thinking. Managerialist discourse, unsurprisingly, dominates the organisational level practice
literature and the strategic HRM literature. Wognum and Ford Lam (2000) argue that the word
strategic emphasises the company perspective and connects the link between HRM and the
organisational goals and objectives. Burgoyne (1988) and Walton (1999) argue that HRM is
concerned with the strategic leveraging of learning and development processes to enhance the 5
core competencies of the organisation. It emphasises HRM provision which is conscious and
proactive rather than unplanned; it focuses on the maturity of HRM provision to reflect
organisational growth and clearly envisages that HRM interventions are valuable only to the
degree that they facilitate the organisation in achieving its goals. Kuchinke (1998), for example,

19
suggests that within this narrow construction, the value of HRM is judged according to the
contribution it makes to financial performance—the imperative of the liberal-capitalist economy.
Likewise, Ruona et al. (2002) argue that one of the core challenges facing HRM has been and
continues to be that HRM professions must better demonstrate strategic and bottomline impact—
a perennial topic in the literature at this level. Another example of an organisational level HRM
discourse is found in the literature on knowledge management and intellectual capital. Salisbury
& Plass (2001) envisage HRM contributing to the development of intellectual capital and argue
that the management of local knowledge is considered vital to the success of the business.
Traditional HRM models focus on an explicit knowledge discourse; knowledge that is gained
through formal learning interventions, however contributions by Ahmed et al (2002), Gupta
(2000) and Sveiby (1997) shift the emphasis to tacit learning and informal learning. Smith
(2001) reports that nearly two thirds of workplace learning comes from face to face contacts,
including conversations, stories, apprenticeships and so on. HRM priorities at an organisational
level of analysis are determined by organisational decision makers rather than by individuals.
There is, however, some evidence (Garavan & Heraty, 2001) to indicate that individuals may
influence the less central or core elements of HRM such as programme design and delivery but
have limited impact on the organisation’s overall HRM agenda. The notion of humans as
resources is a dominant theme in organisational analysis of HRM, however, there is some
evidence that individual level concerns and values are reasserting themselves. Three trends are
cited; employability, entrepreneurial behaviours and 6 teamworking. These are said to contest the
notion of humans as resources, which Russ-Eft (2000) and Ruona (2000) argue dominate both
HRM practice and the underlying belief and values of many HRM scholars and practitioners.
Employability, for example emphasises the need for people to acquire competencies that are of
value in the marketplace as well as within the organisation. It acknowledges that both individuals
and organisations have a responsibility to develop generic competencies (Baruch 2001; Ghoshal
et al. 1999). Eliott and Turnbull (2002) point to the need for employers to demonstrate
entrepreneurial behaviour and for individuals to take responsibility for their ‘own show’ within
an organisational setting. Beck and Beck-Gernsheim (1996) point out that while individuals are
expected to interact with others and demonstrate effective teamwork they are also expected to
demonstrate individuality and ‘added value’. In summary, Martin et al. (1999) argue that two
competing philosophies and strategies, the investment strategy and the employability strategy

20
dominate the research agenda at the level of the firm. In addition, it is arguable that research has
also focused on the development of appropriate learning climates to support workplace learning.
Sonnenfeld et al. (1988) found that firms who are the dominant competitor in the marketplace
tend to place greater value on HRM and ensure that extensive development opportunities are
available to employees. Learning climate research focuses on the perceived existence of supports
and constraints to HRM investment in organisations and the impact of learning climate
differences on employee participation in HRM. This literature argues that an effective learning
climate is one that has strong social support, employees are encouraged to participate and there is
an emphasis on the utilisation of competencies to achieve organisational goals. It also examines
how attributes of reward systems influence HRM activities. This research emphasises the
benefits of HRM to the organisation as the primary focus with individual benefits secondary.

COMMUNITY / SOCIETAL LEVEL OF ANALYSIS

The community/societal level of analysis emphasises the “development” aspect of HRM. The
purpose of HRM at this level is concerned with the provision of education and the development
of human capital towards improving national competitiveness and the quality of life of citizens.
Three strands of the community/societal level of analysis are distinguishable: national cultural
influences and HRM; HRM and human/social capital enhancement in the economy and the
notion of learning communities. The distinctive nature and impact of national cultures and
societal models of HRM is under researched, considering the growing realisation that national,
institutional and cultural differences are important in determining how HRM professionals
operate and the specific definitions, and purposes attributed to HRM (Ashton and Green, 1996;
Hillion & McLean, 1997; Maurice et al., 1986; O’Donnell et al., 2001; Okongwu, 1995; Yank
and McLean, 1994). The notion of international HRM is a relatively new development in the
literature. Jankowicz (1999) argues that the techniques and practices of HRM are primarily
Western in orientation with an abundance of literature focusing on the difficulties of
generalisability due to cultural constraints. Cross-cultural differences represent one dimension of
the community and societal level of analysis. Weiss (1996), for example, argues that effective
communication with culturally diverse individuals and groups requires an understanding of both
cultural assumptions and differences. Cultural differences and national contexts have important

21
implications for our thinking about HRM. McLean and McLean (2001) illustrate in their review
of definitions that differences in national context are reflected in the types of definitions used.
Dimensions of national context that they consider important include the nature of the economy
(Lee & Stead, 1998), government and legislative influences (Deligny, 1998), educational system
influences and the role of professional organisations. They represent under researched
dimensions of HRM. 8 A second strand of the community/societal level of analysis is concerned
with the contribution of HRM to the human and social capital of the wider economy. Zidan
(2001) argues that HRM possesses the potential to create economic development benefits at a
societal level. Using human capital theory, he posits that societal approaches to HRM will have a
significant influence on the effectiveness of firms operating within these societies. Kessels and
Poell (2004) position HRM at the core of the knowledge economy and learning society.
Similarly, both Woodall et al. (2002) and Maurice et al. (1986) emphasise the significant role that
labour market institutions perform in determining the shape and structure of HRM policies
across Europe. Porter (1990: 628) argues that: “there is little doubt from our research that
education and training are decisive in national competitive advantage. The nations that invest
most heavily in education have advantages in many industries that can be traced in part to human
resources. What is even more telling is that in every nation, these industries that were most
competitive, were often those where specialised investment in education and training has been
unusually great”. This perspective, also dominant in the World Bank and the OECD, argues that
investment in HRM is primarily for economic benefit. McLean and McLean (2001) point out,
however, that where governments are involved in shaping HRM investment, performance or
economic return is rarely the sole objective. They assert that HRM is often used in the context of
social development such as in the investment in workplace reforms in Australia. Researchers are
also beginning to focus on how HRM enhances the social capital of the economy. The concept of
social capital is increasingly used in discussions of economic development; it reflects a dominant
feature of societies that social ties of many types are used for different purposes. Loury (1992:
100) defines social capital as: ‘...naturally occurring social relationships among persons which
promote or assist the acquisition of skills and traits valued in the marketplace…An asset which
may be…significant for the maintenance of inequality in our society’. 9 Some researchers raise
questions about how HRM interventions might enhance the social capital accumulation process,
but there are few answers as yet (Alder and Kwon, 2002). A third strand of community/societal

22
levels of analysis concerns the notion of learning communities. A learning community is
considered as an umbrella term to describe a range of situations where learners come together to
meet, share resources, competences and meet unique learning needs. Tosey (1999) highlights that
learning communities emphasise self direction, participative evaluation, equality of consideration
and opportunity, education of the whole person and political modes of power sharing. The HRM
literature has given little consideration to the learning community as an alternative to an
organisational level of analysis and as a mechanism to facilitate change at a community/societal
level (Boot & Reynolds 1997; Brookfield, 1987; O’Donnell, 1999). Reynolds (2000) considers
notions of community from a critical theory perspective, in the context of the design of
management development interventions, however he comes to a somewhat negative conclusion:
It ignores issues of power and it imposes a pressure to conform. He does not see much potential
for learning community ideas either in an organisational context or outside of that context.
Consideration of HRM from a community/societal level of analysis remains under researched
and has yet to establish itself within mainstream HRM discourse.

INDIVIDUAL

LEVEL OF
ANALYSIS

COMMUNITY ORGANISATION
AL

23
THE SEVEN HR BASICS
When we talk about Human Resource Management, several elements are considered
cornerstones for effective HRM policies. These cornerstones are:
• Recruitment & selection
• Performance management
• Learning & development
• Succession planning
• Compensation and benefits
• Human Resources Information Systems
• HR data and analytics

24
In the following section, we will cover these HR basics one by one:

1. RECRUITMENT & SELECTION

Recruitment and selection are arguably the most visible elements of HR. We all remember our
first interview, right?

Recruiting candidates and selecting the best ones to come and work for the company is a key HR
responsibility. People are the lifeblood of the organization and finding the best fits is a key task.
The request for new hires usually starts when a new job is created or an existing job opens up.
The direct manager then sends the job description to HR and HR starts recruiting candidates. In
this process, HR can use different selection instruments to find the best person to do the work.
These include interviews, different assessments, reference checks, and other recruitment
methods.

Sometimes, when there are a lot of candidates, HR may deploy preselection tools. These tools
help to separate the wheat from the chaff when it comes to suitable candidates. The successful
candidates then continue to the next round, where they are interviewed and receive a more in-
depth assessment.

2. PERFORMANCE MANAGEMENT
Once employees are on board, performance management becomes important. Performance
management is the second HR basic. It involves helping people to become their best selves at
work, boosting the company’s bottom line.

25
Usually, employees have a defined set of responsibilities that they need to take care of.
Performance management is a structure that enables employees to get feedback on their
performance – to reach their best performance.

Examples are formal one-on-one performance reviews, 360-degree feedback instruments that
also take into account the evaluation of peers, clients, and other relations, and more informal
feedback.

Usually, companies work with an annual performance management cycle, which involves
planning, monitoring, reviewing, and rewarding employee performance. The outcome of this
process enables the categorization of employees in high vs. low performers and high vs. low
potentials.

Successful performance management is very much a shared responsibility between HR and

management, where usually the direct manager is in the lead and HR supports. Good
performance management is crucial. Employees who are empowered to their full potential,
improve the efficiency, sustainability, and profit margin of a business. Employees which
consistently underperform may not be a good fit for their role, or the company culture. These
employees may need to be let go.
This is also one of the basic responsibilities of HR.

3. LEARNING & DEVELOPMENT

People are the product of life experiences, the country and era they grow up in, and a range of
cultural influences. Within HR, learning and development ensure that employees adapt to
changes in processes, technology, and societal or legal shifts.

26
Learning and development helps employees to reskill and upskill. Learning & Development
(L&D) is led by HR and good policies can be very helpful in advancing the organization toward
its long-term goals. One of the HR trends for 2023 is bringing learning into day-to-day work and
helping employees develop soft and hard skills that are aligned with organizational goals.
Many organizations have pre-defined budgets for L&D efforts. This budget is then distributed
amongst employees, with trainees, future leaders, and other high potentials often receiving more
training opportunities than others. Individuals may arrive at a company with vastly different
knowledge and experience. L&D provides employees with a way in which to bridge skill gaps
and develop into leaders. A well-known framework that connects performance management with
L&D activities is the 9-Box grid. Based on people’s performance and potential ratings, HR
department, together with managers, can advise different development plan

4. SUCCESSION PLANNING
Succession planning is the process of planning contingencies in case of key employees leaving
the company. If, for example, a crucial senior manager quits his/her job, having a replacement
ready will guarantee continuity and can save the company significant money.

Succession planning is often based on performance ratings and L&D efforts. This results in the
creation of a talent pipeline. This is a pool of candidates who are qualified and ready to fill
(senior) positions in case of someone leaving. Building and nurturing this pipeline is key to
good people management.

27
5. COMPENSATION AND BENEFITS
Another one of the HR basics is compensation and benefits. Fair compensation is key in
motivating and retaining employees. One of the fundamentals of human resource management
concerning pay is ensuring equity and fairness.

Making the right offer of pay is a key part of attracting the best talent. This must be balanced
with the budget and profit margins of the company. HR should monitor pay increases, and set
standards of merit. HR may also carry out a pay audit on occasion.

Compensation comprises primary compensation and secondary compensation. Primary

compensation involves directly paid money for work, which often is a monthly salary and
sometimes performance-based pay.

Secondary benefits are all non-monetary rewards. This can include extra holidays, flexible
working times, day-care, pensions, a company car and laptop, and much more.

The goal here is to reward people in ways that motivate them.

6. HUMAN RESOURCE INFORMATION SYSTEM

The last two HR basics are not HR practices but tools to do HR better. The first is the Human
Resource Information System, or HRIS. An HRIS supports all the cornerstones we discussed
above. For example, for recruitment and selection, HR professionals often use an Applicant
Tracking System, or ATS, to keep track of applicants and hires.

For performance management, a performance management system is used to keep track of

individual goals and put in performance ratings.

28
In L&D, a Learning Management System (LMS) is used for the distribution of content internally,
and other HR systems are used to keep track of budgets and training approvals.

Compensation specialists often use a payroll system, and there are also digital tools that enable
effective succession planning.

All these functionalities can often be done in one single system – the HRIS. Sometimes,
however, the management of these functionalities is split up into different HR systems.

The bottom line here is that there is a significant digital element to working in HR, that’s why we
need to mention HRIS when talking about the HR basics.

7. HR DATA AND ANALYTICS

The last of the HR fundamentals revolves around data and analytics. In the last half-decade, HR
has made a major leap towards becoming more data-driven.

The Human Resource Information Systems we just discussed is essentially a data-entry system.
The data in these systems can be used to make better and more informed decisions.
An easy way to keep track of critical data is through HR metrics or HR KPIs. These are specific
measurements that answer how a company is doing on a given measurement. This is referred to
as HR reporting.

This reporting focuses on the current and past state of the organization. Using HR analytics, HR
can also make predictions. Examples include workforce needs, employee turnover intention, the
impact of the (recruitment) candidate experience on customer satisfaction, and many others.

29
By actively measuring and looking at this data, HR can make more data-driven decisions. These
decisions are often more objective, which makes it easier to find management support for these
decisions.

APPROACHES TO HR EVALUATION
There are several approaches to human resource evaluation. The most prominent of them are:
audit approach, analytical approach, qualitative and quantitative approach, balanced scorecard
perspective, and benchmarking.

1. Audit Approach
A human resource management audit is a process of evaluating the effectiveness of the HR
function. The HRM audit, as its financial audit counterpart, possesses the following elements:

• Independence from the subject being audited.

• Technical work in the form of a systematic gathering and analysis of data.
• An evaluation of the HR activities, policies, and systems based on the evidence.
• A clearly defined objective of the process.
• Action in response to audit findings.

Human resource management audit offers several benefits as outlined below:

HR Audit-
• Provides verifiable data on the human resource management function
• Clarifies the HR function’s duties and responsibilities
• Identifies critical HR problems
• Helps align HR strategy with organizational strategy
• Improves the status of the HR function
• Helps reduce HR costs
• Helps review and improve the HRIS.

30
HR audit may be partial or total. Where it is partial, HR audit covers a few areas of HR. for
example, the compliance of managers and supervisors with the established HR principle and
practices. In the comprehensive audit system, all HR activities such as HRP, employee hiring,
training and development, performance management, employee well-being, safety and health,
Industrial Relations, and the like will be covered. Better results from an HR audit will be
obtained where it is comprehensive.

Approaches to HR Audit
Auditors may adopt any of the five approaches for the purpose of evaluation: (i) comparative
approach, (ii) outside authority approach, (iii) statistical approach, (iv) compliance approach, and
(v) Management By Objectives (MBO) approach. It may be stated that irrespective of the
approach, the data for assessment are provided by HR research.

2. Analytical Approach
The second approach to human resource management evaluation is the analytical one. The
analytical approach relies on cost-benefit analysis, also called the utility analysis. Utility analysis
seeks to express evaluations in economic terms, which are more useful for decision-makers.
Several HR activities have been evaluated with utility analysis, including appraisal systems,
employee hiring, training, and turnover.

Although utility analysis has wide applicability and represents a quantitatively superior means of
evaluating HR activities, the process is difficult. Because of this difficulty, and the number of
resources and effort required for analysis, its use has been limited to only certain specific
situations.

3. Qualitative and Quantitative Indices

A number of quantitative indices or metrics are available to determine the effectiveness of HRM.
For example, one can calculate the cost of turnover, absenteeism cost, cost of work-life
programs, cost per hire, lead time to fill vacancies, HR expense factor, training costs, and the

31
like. Sears, Roebuck, and Co. applied behavior-costing methodology to study the relationship
between employee attitudes, customer behavior, and profits.

In retailing, for example, there is a chain of cause and effect running from employee behavior to
customer behavior to profits. The human resource management department itself can be treated
as a profit center. These and other indicators, when calculated and compared with other firms,
give a fair picture of the outcome of HR functions and activities. Excessive reliance on
quantitative indices to evaluate HRM effectiveness, however objective they may appear may be
dysfunctional.

4. Balanced Score Card

Developed by Robot Kaplan and David P.Norton, a balanced scorecard helps evaluate HRM
effectiveness. The balanced scorecard contains four dimensions: the financial performance of an
organization, its customer service, its internal business processes, and it’s capacity to learn and
achieve growth. Within these four areas, managers need to identify key performance indicators
the organization should track. The financial dimension reflects a concern that the organization’s
activities contribute to improving short-term and long-term financial performance.

Customer service perspective measures such things as how customers view the organization, as
well as customer retention and satisfaction. Business process indicators focus on production and
operating statistics, such as order fulfillment or cost per order. The final component relates to the
human resource-its potential to learn and grow. This perspective seeks to focus on how
well resources and human capital are being managed for the company’s benefits.

The balanced scorecard provides a balanced picture of current performance as well as the
triggers for future performance. The scorecard helps managers align their business units, as well
as their financial, physical, and human resources, to the firm’s overall strategy.
What needs emphasis is that the HR evaluation should not confine only to people dimension of
the scorecard. The HR professional should be judged on all the dimensions of the scorecard. HR
executives tend to believe that their success should be judged only by the extent to which they

32
meet employee needs. As the scorecard indicates, employee commitment is only one criterion for
effective HR performance, and HR professionals will be held accountable for all the dimensions
as other managers.

5. Benchmarking
Benchmarking involves employees learning and adopting the so-called “best practices” by
comparing their human resource management practices with those of other (more successful)
organizations. Benchmarking essentially involves that employees study the practices followed in
competing firms and evaluating their own practices with those thus collected.
Besides the evaluation of their own HR practices, benchmarking enables managers to learn from
other firms and adopt effective HR strategies. In addition, benchmarking can help create and
initiate the need for change because it identifies what an organization needs to do to improve
relative to the HR strategy in excellent companies

Benchmarking involves seven sequential steps:

1. Identify HR practices for benchmarking. Critical practices from the organization’s
perspective are identified for benchmarking.
2. Constitute a core or a project team to handle the benchmarking process.
3. Identify benchmarking partners-organizations from the same or different industry,
competitors or non-competitors, or international firms-who are known to have tried best
practices successfully.
4. Collect data from each of the benchmarking partners (for example, firms A, B, and C).
5. Analyze and interpret the data.
6. Prepare a comprehensive report based on data analysis and interpretation.
7. Develop action plans to improve HR strategy and practices.

33
 BIBLIOGRAPHY
https://economictimes.indiatimes.com/definition/human-resources

https://www.aihr.com/blog/human-resource-basics/

https://www.iedunote.com/human-resource-management-approaches

https://www.slideshare.net/rambonix/human-resource-evaluation

https://www.researchgate.net/publication/228290257_Exploring_Human_Resource_Developme
nt_A_Levels_of_Analysis_Approach

34