Unit – 1

Concept of HRM and Objectives

Before we define HRM, it seems pertinent to first define the term ‘human resources’. In common
parlance, human resources means the people. However, different management experts have defined
human resources differently. For example, Michael J. Jucius has defined human resources as “a whole
consisting of inter-related, inter-dependent and interacting physiological, psychological, sociological and
ethical components”.

According to Leon C. Megginson “From the national point of view human resources are knowledge,
skills, creative abilities, talents, and attitudes obtained in the population; whereas from the view-point of
the individual enterprise, they represent the total of the inherent abilities, acquired knowledge and skills
as exemplified in the talents and aptitude of its employees”.

The National Institute of Personnel Management (NIPM) of India has defined human
resource/personnel management as “that part of management which is concerned with people at work
and with their relationship within an enterprise. Its aim is to bring together and develop into an effective
organisation of the men and women who make up an enterprise and having regard for the well-being of
the individuals and of working groups, to enable them to make their best contribution to its success”.

According to Decenzo and Robbins “HRM is concerned with the people dimension in management.
Since every organisation is made up of people, acquiring their services, developing their skills,
motivating them to higher levels of performance and ensuring that they continue to maintain their
commitment to the organisation are essential to achieving organisational objectives. This is true,
regardless of the type of organisation-government, business, education, health, recreation, or social
action”.

Thus, HRM can be defined as a process of procuring, developing and maintaining competent human
resources in the organisation so that the goals of an organisation are achieved in an effective and
efficient manner. In short, HRM is an art of managing people at work in such a manner that they give
their best to the organisation for achieving its set goals.

Objectives:
The primary objective of HRM is to ensure the availability of right people for right jobs so as the
organisational goals are achieved effectively.

This primary objective can further be divided into the following sub-objectives:
1. To help the organisation to attain its goals effectively and efficiently by providing competent and
motivated employees.
2. To utilize the available human resources effectively.
3. To increase to the fullest the employee’s job satisfaction and self-actualisation.
4. To develop and maintain the quality of work life (QWL) which makes employment in the organisation a
desirable personal and social situation.
5. To help maintain ethical policies and behaviour inside and outside the organisation.
6. To establish and maintain cordial relations between employees and management.
7. To reconcile individual/group goals with organisational goals.
 Human Resource Management Process
Each organization works towards the realization of one vision. The same is achieved by formulation of
certain strategies and execution of the same, which is done by the HR department. At the base of this
strategy formulation lie various processes and the effectiveness of the former lies in the meticulous
design of these processes. But what exactly are and entails these processes? Let’s read further and
explore.

The following are the various HR processes:

1. Human resource planning (Recruitment, Selecting, Hiring, Training, Induction, Orientation, Evaluation,
Promotion and Layoff).
2. Employee remuneration and Benefits Administration
3. Performance Management.
4. Employee Relations.

The efficient designing of these processes apart from other things depends upon the degree of
correspondence of each of these. This means that each process is subservient to other. You start from
Human resource Planning and there is a continual value addition at each step. To exemplify, the PMS
(performance Management System) of an organization like Infosys would different from an
organization like Walmart. Lets study each process separately.

Human Resource Planning: Generally, we consider Human Resource Planning as the process of
people forecasting. Right but incomplete! It also involves the processes of Evaluation, Promotion and
Layoff.

 Recruitment: It aims at attracting applicants that match a certain Job criteria.

 Selection: The next level of filtration. Aims at short listing candidates who are the nearest match in
terms qualifications, expertise and potential for a certain job.
 Hiring: Deciding upon the final candidate who gets the job.
 Training and Development: Those processes that work on an employee onboard for his skills and
abilities upgradation.

Employee Remuneration and Benefits Administration: The process involves deciding upon salaries
and wages, Incentives, Fringe Benefits and Perquisites etc. Money is the prime motivator in any job
and therefore the importance of this process. Performing employees seek raises, better salaries and
bonuses.

Performance Management: It is meant to help the organization train, motivate and reward workers. It
is also meant to ensure that the organizational goals are met with efficiency. The process not only
includes the employees but can also be for a department, product, service or customer process; all
towards enhancing or adding value to them.
Nowadays there is an automated performance management system (PMS) that carries all the
information to help managers evaluate the performance of the employees and assess them accordingly
on their training and development needs.

Employee Relations: Employee retention is a nuisance with organizations especially in industries that
are hugely competitive in nature. Though there are myriad factors that motivate an individual to stick
to or leave an organization, but certainly few are under our control.

Employee relations include Labor Law and Relations, Working Environment, Employee health and
safety, Employee- Employee conflict management, Employee- Employee Conflict Management,
Quality of Work Life, Workers Compensation, Employee Wellness and assistance programs,
Counseling for occupational stress. All these are critical to employee retention apart from the money
which is only a hygiene factor.

All processes are integral to the survival and success of HR strategies and no single process can work
in isolation; there has to be a high level of conformity and cohesiveness between the same.
 HRM vs. Personnel Management

Personnel Management
Personnel Management is a part of management that deals with the recruitment, hiring, staffing,
development, and compensation of the workforce and their relation with the organization to achieve the
organizational objectives. The primary functions of the personnel management are divided into two
categories:

 Operative Functions: The activities that are concerned with procurement, development, compensation,
job evaluation, employee welfare, utilization, maintenance and collective bargaining.
 Managerial Function: Planning, Organizing, Directing, Motivation, Control, and Coordination are the
basic managerial activities performed by Personnel Management.

From the last two decades, as the development of technology has taken place and the humans are
replaced by machines. Similarly, this branch of management has also been superseded by Human
Resource Management.

Human Resource Management

Human Resource Management is that specialized and organized branch of management which is
concerned with the acquisition, maintenance, development, utilization and coordination of people at
work, in such a manner that they will give their best to the enterprise. It refers to a systematic function of
planning for the human resource needs and demands, selection, training, compensation, and performance
appraisal, to meet those requirements.

Human Resource Management is a continuous process of ensuring the availability of eligible and willing
workforce i.e. putting the right man at the right job. In a nutshell, it is an art of utilizing the human
resources of an organization, in the most efficient and effective way. HRM covers a broad spectrum of
activities which includes:

 Employment
 Recruitment and Selection
 Training and Development
 Employee Services
 Salary and Wages
 Industrial Relations
 Health and safety
 Education
 Working conditions
 Appraisal and Assessment
 The main difference between Personnel Management and Human Resource Management lies in their
scope and orientation. While the scope of personnel management is limited and has an inverted
approach, wherein workers are viewed as tool. Here the behavior of the worker can be manipulated as
per the core competencies of the organization and are replaced when they are worn-out.

On the other hand, human resource management has a wider scope and considers employees as the
asset to the organization. It promotes mutuality in terms of goals, responsibility, reward etc. that will
help in enhancing the economic performance and high level of human resource development.

In early centuries, when Human Resource Management (HRM) was not prevalent, then the staffing and
payroll of the employees were taken care of, by the Personnel Management (PM). It is popularly known
as Traditional Personnel Management. Human Resource Management have emerged as an extension
over the Traditional Personnel Management. So, in this article, we are going to throw light on the
meaning and differences between Personnel Management and Human Resource Management.

Difference
PERSONNEL HUMAN RESOURCE
BASIS
MANAGEMENT MANAGEMENT

The branch of management that

The aspect of management that
focuses on the most effective use of
is concerned with the work
the manpower of an entity, to
Meaning force and their relationship with
achieve the organizational goals is
the entity is known as Personnel
known as Human Resource
Management.
Management.

Approach Traditional Modern

Treatment of
Machines or Tools Asset
manpower

Type of function Routine function Strategic function

Basis of Pay Job Evaluation Performance Evaluation

Management
Transactional Transformational
Role

Communication Indirect Direct

Labor Collective Bargaining Contracts Individual Contracts

Management

Initiatives Piecemeal Integrated

Management
Procedure Business needs
Actions

Decision
Slow Fast
Making

Job Design Division of Labor Groups/Teams

Primarily on mundane activities

Treat manpower of the organization
like employee hiring,
Focus as valued assets, to be valued, used
remunerating, training, and
and preserved.
harmony.
 HRM vs. HRD
BASIS FOR
COMPARISO HRM HRD
N

Human Resource Management Human Resource Development means

refers to the application of a continuous development function
Meaning principles of management to that intends to improve the
manage the people working in performance of people working in the
the organization. organization.

Subset of Human Resource

What is it? Management function.
Management.

Function Reactive Proactive

To improve the performance of To develop the skills, knowledge and

Objective
the employees. competency of employees.

Process Routine Ongoing

Dependency Independent It is a subsystem.

Concerned Development of the entire

People only
with organization.

HRM

Human Resource Management, shortly known as HRM refers to a systematic branch of management
that is concerned with managing people at work so that they can give best results to the organization. It
is the application of management principles to the people working in the organization. It aims at
improving the performance and productivity of the organization by finding out the effectiveness of its
human capital. Therefore, HRM is an art of placing the right person at the right job, to ensure the best
possible use of organization’s manpower.
The process involves an array of activities that begins with the recruitment, selection, orientation, &
induction, training & development, performance appraisal, incentives & compensation, motivation,
maintaining workplace safety, health & welfare policies, managing relationship with the organization,
managing change.

HRD

The term Human Resource Development or HRD refers to the development of people working in an
organization. It is a part of HRM; that aims at improving skills, knowledge, competencies, attitude and
behaviour of employees of the organization. The purpose of the HRD is to empower and strengthen the
abilities of the employees so that their performance will get better than before.

Human Resource Development involves providing such opportunities to the employees that will prove
beneficial in their all around development. Such opportunities include training & development, career
 development, performance management, talent management, coaching & mentoring, key employee
identification, succession planning and so on. Nowadays, there are many organizations work for the
human resource development of employees from the day they join the enterprise, and the process
continues, until the end of their employment term.

Key Differences between HRM and HRD

The significant differences between HRM and HRD are discussed in the following points

1. Human Resource Management refers to the application of principles of management to manage the
people working in the organization. Human Resource Development means a continuous development
function that intends to improve the performance of people working in the organization.
2. HRM is a function of management. Conversely, HRD falls under the umbrella of HRM.
3. HRM is a reactive function as it attempts to fulfill the demands that arise while HRD is a proactive
function that meets the changing demands of the human resource in the organization and anticipates it.
4. HRM is a routine process and a function of administration. On the other hand, HRD is an ongoing
process.
5. The basic objective of HRM is to improve the efficiency of employees. In contrast to HRD, this aims at
developing the skill, knowledge and competency of workers and the entire organization.
6. HRD is an organizationally oriented process; that is a subsystem of a big system. As opposed to HRM
where there are separate roles to play, which makes it an independent function.
7. Human Resource Management is concerned with people only. Unlike Human Resource Development,
that focus on the development of the entire organization.

Conclusion

HRM differs with HRD in a sense that HRM is associated with management of human resources while
HRD is related to the development of employees. Human Resource Management is a bigger concept
than Human Resource Development. The former encompasses a range of organisational activities like
planning, staffing, developing, monitoring, maintaining, managing relationship and evaluating whereas
the latter covers in itself the development part i.e. training, learning, career development, talent
management, performance appraisal, employee engagement and empowerment.
 Objectives of HRD
HRD is associated with the following objectives:

 Work Opportunity: HRD provides an opportunity and a systematic framework for the development
resource in the organisation for full expression of their talents.
 Development of Traits: HRD is associated with the development of total personality so that these can
show and use their talent for the benefit of the organisation.
 Ability development: HRD makes capable employees. Thus they can develop their capability by which
they can do their present job easily.
 Creative Motivation: HRD manager motivates employees and improve their level of performance.
 Good Relation: HRD manager stresses the need of coordination which is used for the benefits of
himself and for the benefits of those who come in his/their touch.
 Develop team spirit: HRD manager develops the spirit of teamwork; team work for it is used for the
effective cooperation and coordination of each employee which ultimately checks industrial unrest.
 Organisational Growth: HRM manager is responsible for developing health, culture and effective
work plan which always result in more profitability.
 Human Resource Information: HRM manager in general keeps all records to employees working in
his organisation; these can be used at any time when these are needed.

Conclusion

The organisational effectiveness can be reflected through better quality, higher productivity, cost
reduction, higher profits and more EPS (earning per shares) and more market price of shares. This
explains the increased role of HRD managers in modern industrial organisations which are working in
the most uncertain social, political, economical, technological and international complex and
competitive environment.
 Focus of HRD System
HRD systems must be designed differently for different organizations. Although the basic principles
may remain the same, the specific components, their relationships, the processes involved in each, the
phasing, and so on, may differ from one organisation to another organisation.

Designing an integrated HRD system requires a thorough understanding of the principles and models
of human resource development and a diagnosis of the organisation culture, existing HRD practices in
the organisation, employee perceptions of these practices, and the developmental climate within the
organisation.

The following principles related to focus, structure, and functioning should be considered when
designing integrated HRD systems.

 Focus on enabling capabilities: The primary purpose of HRD is to help the organisation to increase its
“enabling” capabilities. These include development of human resources, development of organisational
health, improvement of problem solving capabilities, development of diagnostic ability (so that
problems can be located quickly and effectively), and increased employee productivity and commitment.
 Balancing adaptation and change in the organisational culture: Although HRD systems are
designed to suit the organisational culture, the role of HRD may be to modify that culture to increase the
effectiveness of the organisation. There always has been a controversy between those who believe that
HRD should be designed to suit the culture and those who believe that HRD should be able to change
the culture. Both positions seem to be extreme. HRD should take the organisation forward, and this can
be done only if its design anticipates change and evolution in the future.
 Attention to contextual factors: What is to be included in the HRD systems, how is it to be sub-
divided, what designations and titles will be used, and similar issues should be settled after consideration
of the various contextual factors of the organisation—its culture and tradition, size, technology, levels of
existing skills, available support for the function, availability of outside help and so on.
 Building linkages with other functions: Human resource development systems should be designed to
strengthen other functions in the company such as long-range corporate planning, budgeting and
finance, marketing, production, and other similar functions. These linkages are extremely important.
 Balancing specialisation and diffusion of the function: Although HRD involves specialised functions,
line people should be involved in various aspects of HRD.Action is the sole responsibility of the line
people, and HRD should strengthen their roles.
 Ensuring respectability for the function: In many companies, the personnel function does not have
much credibility because it is not perceived as a major function within the organisation. It is necessary
that HRD be instituted at a very high level in the organisation and that the head of the HRD department
is classified as a senior manager. Both the credibility and usefulness of HRD depend on this.
 Balancing differentiation and integration: The human resource development function often includes
personnel administration, human resource development and training, and industrial relations. These
three functions have distinct identities and requirements and should be differentiated within the HRD
department. One person may be responsible for OD, another for training, another for potential appraisal
 and assessment, etc. At the same time, these roles should be integrated through a variety of mechanisms.
For example, inputs from manpower planning should be available to line managers for career planning
and HRD units for potential appraisal and development. Data from recruitment should be fed into the
human resources information system. If salary administration and placement are handled separately,
they should be linked to performance appraisals. Differentiation as well as integration mechanisms are
essential if the HRD system is to function well.
 Establishing linkage mechanisms: HRD has linkages with outside systems as well as with internal sub-
systems. It is wise to establish specific linkages to be used to manage the system. Standing committees
for various purposes (with membership from various parts and levels of the organisation), task groups,
and ad hoc committees’ for specific tasks are useful mechanisms.
 Developing monitoring mechanisms: The HRD function is always evolving

Structure of HRD System

The precise organizational plan for an HRD department depends on the type and of the organization
in which it is located. Here, we are giving hypothetical examples of organizational structure of three
different organizations to appreciate the functioning of HRD departments in different organizations
 Structure of HRD system in organizations was briefly discussed in the introductory part of this chapter,
duly illustrating an integrated HRD structure and HRD as a separate functional identity in an
organization. Here we will discuss the basic principles while structuring HRD Department of an
organization.

Needless to mention that the structure of HRD Department differs from organization to organization,
for the differences in size, nature of activity, philosophy and attitude. However, following principles
are usually followed in every organization, while it goes for structuring the HRD Department.

1. Developing an identity of HRD, which may or may not encompass other personnel functions
2. Establishing credibility for the HRD function, which is possible by entrusting the responsibility for HRD
at a higher level in an organizational hierarchy
3. Balancing integration and differentiation. Differentiation can be ensured by not diluting the HRD
functions with traditional personnel management and industrial relations function, which is possible by
entrusting the functional responsibilities to different department heads as illustrated in Chart 3.
Similarly, integration can be achieved by diffusion of HRD functions with other major corporate
functions like, marketing, production (as explained earlier) and line functions, as inputs from these areas
can enrich the functioning of HRD department, structure of which has been illustrated in Chart 2
4. Likewise, while structuring an HRD Department of an organization, it should be ensured that it has
linkages with external systems and internal systems, i.e., HRD Department should represent various task
groups, ad hoc committees, etc.
5. Finally, structure of HRD Department should be developed so that it can sustain a monitoring
mechanism

Basic principles governing the functioning of HRD system in an organization have been made clear by
the American Society for Training and Development (ASTD), while describing different roles of HRD
Managers. However, basic essence of functioning principles of HRD systems can be listed as follows:

(a) HRD systems should develop a strong feedback and reinforcing mechanism.

(b) The system should balance qualitative (subjective) and quantitative (objective) decisions.

(c) The system should balance the requirement of internal and external expertise.

(d) The system should be introduced in a phased manner.

 Role of HRD Manpower
The objective of human resource manpower development is to provide a framework for employees to
develop their competencies necessary for individual and organizational efficiency and productivity as
well as career growth. The employer is responsible for devising programs geared toward an employee’s
career development and job skills acquisition after employment through training, performance
management and organization development. Manpower development is typically a part of the
organization’s human resource strategy and aims to maximize human capital potential so as to attain
strategic business objectives.

Training and Development of Manpower

Among manpower development’s functions is to oversee the development of human expertise in the
organization to improve productivity and efficiency. Through planning and monitoring of employee
work results, development programs are designed to ensure employees acquire pertinent skills and
qualities required for working at higher levels. This motivates the workers and enhances their career
growth. Systematic training programs also place the organization in a unique position to confront the
growing and changing needs of manpower, technology and diversification of business activities.

Performance Appraisal and Management

Performance evaluations and reviews are a crucial opportunity for employee improvement in your
organization. Manpower development should devise techniques for managers to use in conducting
meaningful and effective appraisals. Typically, these should help the manager rate goal achievement and
assess performance against some defined metrics such as job-specific competencies and core company
values. Effective performance appraisals will allow your management team to identify gaps in employee
productivity, which can serve as the foundation for programs geared toward employee development.

Manpower Planning and Strategy Development

Planning consists of getting the right number and right kind of people in the right place. This ensures
employees are assigned tasks for which they are well-suited to help the organization achieve its goals.
Human resource manpower development has to analyze the current manpower inventory, make future
manpower forecasts and determine whether recruitment from outside or promotions from within are
necessary to boost performance. By identifying the different skill sets and talent required by respective
areas of your business, a human resources strategy can be developed that considers how existing and
future employees fit into your company’s overall business.

Employee Welfare and Quality of Work Life

The ultimate objective of manpower development is to contribute to the professional well-being, pride
and motivation of the worker. Employee welfare refers to those efforts that improve the living standard
of employees and hence the quality of work life. The goal is to provide good leadership, interesting and
challenging jobs, safe working conditions and good wages. Several benefits can be extended to
employees as indirect compensation plans to motivate them to perform better. In addition, you can
implement an open-door policy or allow your employees to participate in the decisions that affect them
and their relationship with the company.