MODULE 1: FUNDAMENTALS OF HRM

In any organisation there are major functional departments such as

Operations, Finance, Marketing and HR. The operations department
mainly deals with the manufacturing or services and all allied activities
such as purchase, R&D, supply chain and quality control. Management
of financial resources to the optimum level is the function of finance
department. Marketing department is mainly concerned with
advertisement and promotion and sales of services/products. HR
department is ultimately responsible for the people matters of any
organisation, which we will see in detail.

HRM -concept
People form the most important among the resources available in an
organisation. They are the only resources in an organisation possessing
thinking capacity. In simple terms people with relevant skills and
values are generally called as Human Resources (HR). In a
comprehensive definition Leon C. Megginson explained the term human
resources as “the total knowledge, skills, creative abilities, talents and
aptitudes of an organisation’s workforce, as well as the value, attitudes
and beliefs of the individuals involved.” Hence, the term HR is not
restricted to just a collection of people as such, rather it has the
philosophy of treating a person in totality with all the talents and
creative potential.

Human Resources Management (HRM) is concerned with the “people”

dimension in organisations. Every organization consists of people at
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different levels and types. Getting the right employees, motivating and
retaining them in the organisations is essential to attain the
organisational goals. The goal of HRM is to maximize employees’
contributions in order to achieve optimal productivity and effectiveness,
while simultaneously attaining individual, organisational and societal
objectives. It involves policies and practices related to obtaining,
developing, utilizing, appraising, maintaining, and retaining the
adequate number and skill mix of employees to accomplish the
organization’s goals. HRM is the approach through which organization
can utilize the manpower not only for the benefits of the organization
but for the growth, development and self-satisfaction of the people
concerned.

The National Institute of Personnel Management (NIPM) of India has

defined human resource 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
organization 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 organisational
success.”

Varkkey and Dessler in 2010 defined HRM as a process of acquiring,

training, appraising, and compensating employees and of attending to
their labour relations, health, safety and fairness concerns.

Goals of HRM

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  Societal Objectives: It attempts to ensure that the organization
becomes socially responsible to the needs and challenges of the
society while minimizing the negative impact of such demands
upon the organization. Here HR has to ensure a symbiotic
transaction of the organisation and the immediate neighbourhood.

 Organizational Objectives: It emphasises the role of HRM in

bringing about organizational effectiveness. It ensures that HRM is
not a standalone department, but rather a means to contribute to
the organizations’ strategic vision. HR has to work in great
collaboration with all the other departments of an organisation.

 Personal Objectives: It is to facilitate employees in achieving their

personal goals, so that these goals enhance the individual’s
contribution to the organization. This is inevitable to motivate and
retain them. Now a days, HR department attempts to make their
organisations as ‘great place to work’ by providing an engaged
experience to the employees.

Evolution
The evolution of HRM in India is relatively of recent origin though
Kautilya had references of some aspects of it in his Arthasastra. In his
treatise Kautilya detailed some logical procedures and principles in
respect to people management referring to the rajya (state) as an
organization and the raja (king) as the head or CEO of an organization.
However, as a profession HRM has found its development in the
country only since independence. During the early twentieth century,

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there was more concentration on industrial relations (IR) and labour
management. This paved way for the enactment of various acts related
to IR. It was with the introduction of liberalisation policies in India
during early 1990s that the HRM as a holistic concept got acceptance.
The focus was to incorporate the essence of human spirit and
recognition of its potential for business success. The subsequent years
witnessed the development of profession with more strategic role in
organisations gaining more professionalism and visibility.

Source: C.S. Venkataratnam & B.K. Srivastava, Personnel Management and Human
Resources, TataMcgraw Hill, Newdelhi

The progression of the profession of HRM can be discussed in six stages.

Phase one falls back to pre-independence period emphasising labour
welfare. The period after independence till 1960s is called industrial
relations era. The third phase was personnel administration during

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1970s. This was followed by Personnel Management phase during early
80s where it was recognised as a specialised profession. During the post
liberalisation the people function was accepted as HRM with a strategic
focus. In post 2000, the sixth stage, the profession gained further
strategic role with the emergence of Strategic HRM where this function
was considered as a business partner.
Scope of HRM

The functional areas of HRM is vivid. It covers the entire gamut of

activities of recruitment of people to post-retirement services. The
services of HRM is available to the entire workforce in an organisation
from CEO to the grass root level worker.

Manpower
Planning

Strategic
partnership role Employee
of Hiring
HRM

Industrial
HRM
Employee
Relations Rewards

Perforamance Employee
Managment Development

Source: American Society for Training and Development

Importance of HRM in organisations

Growth-oriented organizations do require effective management of

people in a fast-changing environment. Organizations flourish only

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through the efforts and competencies of their human resources.
Employee capabilities must continuously be acquired, sharpened, and
applied. The importance of human resource management can be
discussed across three heads, viz., social, professional and individual
enterprise (Yodder, Heneman and others).

1. Social Significance: Proper management of people enhances their

dignity by satisfying their social needs. This is done by: (i) maintaining a
balance between the job demands of organisations and the needs of
jobseekers (ii) Providing suitable and most productive employment,
which might bring them psychological satisfaction; (iii) making
maximum utilization of the resources in an effective manner and paying
the employee a reasonable compensation in proportion to the
contribution made by him; (iv) eliminating wastage or improper use of
human resource, through optimising their efforts and health; and (v) by
helping people make their own decisions, that are in their interests.
2. Professional Significance: By providing conducive working
environment that promotes team work. This is done by: (i) maintaining
the dignity of the employee as a ‘human-being’; (ii) providing maximum
opportunity for personal development; (iii) providing healthy
relationship between different work groups so that work is effectively
performed; and (iv) improving the employees’ working skill and
competencies.

3.Organiastional Significance: Good HRM practices help the

organization in accomplishing its goals by: (i) creating right attitude
among the employees through effective motivation; (ii) utilizing
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effectively the available resources of the enterprise and fulfilling their
own social and other psychological needs of recognition, love, affection,
belongingness, esteem and self-actualization.
Role of HRM in Strategic Management
HRM function is getting integrated into strategic management process.
More and more HR managers are involved in strategic management
process.

 Role in Strategy Formation – Strategy Formulation is preceded by

environmental scanning, which finds threats and opportunities.
HR manager supplies competitive intelligence that is useful in
Strategy Formulation. Every business strategy has its own HR
implications. So, it is the responsibility of the HR department to
anticipate and advice on HR aspects of any business strategy.

 Role in Strategy Implementation – HR manager helps strategy

implementation by supplying competent people. Sometimes, there
is a need for preparation of people to work in a new strategic
context. HR team has to implement many HR strategies to
augment the changes proposed by a new business strategy.