MODULE 3: FUNCTIONS OF HRM

The scope of HRM functions are vivid and wide. Authors have given
diverse set of functions across a range of areas. The major functional
areas of HRM can be discussed under the following heads. This module
gives an overview of these functions, a detailed explanation of each one
is included in the upcoming sessions.

1. Talent Acquisition: This is traditionally known as staffing or human

resourcing function. This includes HR Planning, Job Analysis,
Recruitment, Selection and Onboarding. It involves a process of
enabling the organisation to have the right people, doing the right
jobs at the right time. It is concerned with planning for the number
and quality of employees required under different job categories. This
also helps to ensure that staffing process such as recruitment,
selection, placement, onboarding, promotions, transfers and
downsizing/rightsizing are effective.

Human resource planning is defined as the process of analysing the

supply and demand of people in an organisation. In HR planning, the
focus is on the availability and allocation of people to jobs over long
periods of time, not just for the next month or even the next year.
Adequate number has to be ensured, not less and not more !

The staffing process used by an employer, based on HR planning must

include successful recruiting and selection efforts. Recruiting is the
process of generating a pool of qualified applicants for organizational

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jobs. This pool can be generated internally (inside the organization) or
externally (outside the organizations).

To be effective, HR planning, recruiting, and selection all should be

based on job requirements and the capabilities of individuals identified
by job analysis. Job analysis, is a systematic way of gathering and
analysing information about the content, context, and human
requirements of jobs. Most other functions in HR make use of the job
analysis information. The value of job analysis begins when the
information is compiled into job descriptions and job specifications for use
in virtually all HR activities.

Onboarding is a comprehensive process intended to integrate the newly

selected employee to the organisation starting from formalities before
joining (pre-boarding), joining formalities, induction and integration.

2. Talent Development: Beginning with the orientation of new

employees, talent management and development include different
types of training. This was traditionally known as Human Resource
Development (HRD). Orientation is the first step towards helping a
new employee to adjust himself with the new job and the employer.
Training and Development programs provide useful means of
assuring that the employees are capable of performing their jobs at
acceptable levels. Training means learning the basic skills and
knowledge necessary for a particular job or a group of jobs. In other
words, training is the act of increasing the knowledge and skills for
doing a particular job. But development refers to the growth of an
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 individual in all respects. An organization works for the development
of its executives or potential executives in order to enable them to be
more effective in performing the various functions of management.
Organizations also provide both on the job and off the job training
programmes for those employees whose jobs are undergoing change.
Training Development
Learning skills to do a particular Growth of an employee in all
job aspects
Job oriented in nature Career oriented in nature
Short term perspective Long term perspective
Provided to lower level Provided to senior managers
employees/junior managers

3. Performance Management: The HR department has to initiate the

system, process, techniques and tools of measuring performance. This
can be done at individual, teams and organisational levels. It has to
ensure that performance targets for individuals, teams, sections and
departments are set and agreed upon. This is known as setting Key
Performance Indicators (KPIs). Performance management also involves
measures to address performance gaps are properly implemented. This
is not an easy task as it requires a value judgement about employees.
Indeed, this is one area of personnel management that makes personnel
officers more uncomfortable and unpopular, though the basic work of
this is done by the line managers. This function monitors employee
performance to ensure that it is at acceptable levels or not. This involves
decisions such as Which tasks should be appraised ? and who should
assess employees’ performance ?.

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Once performance appraisal is done, then appropriate feedback to the
employees needs to be given. Here, the manager has to take the role of a
counsellor and a coach. Counselling is a process where the manager
helps the employee to identify the problems/difficulties associated with
the performance. As a coach the manager provides one to one training to
monitor and improve the performance of the employees. HR manager
functions as an enabler in the entire process by co-ordinating the roles
with the line managers.

Providing adequate rewards is also an integral part of performance

management, this is discussed in detail in the subsequent section.
Rewards are important to maintain the motivation level of good
performers in the organisation. Corrective actions are taken in the case
of poor performers. It may be in the form of a transfer, demotion or a
training programme.

4. Compensation Management: Compensation in the form of pay,

incentives and benefits are the rewards given to the employees for
performing organizational work. Compensation management includes
the method for determining how much should be paid to the
employees for performing a given job. Compensation affects staffing
because people are generally attracted to organizations offering a
higher level of pay in exchange of the work performed. To be
competitive, employers develop and refine their basic compensation
strategy and may use variable pay programs such as incentive rewards,
promotion from within the team, recognition, balancing team and
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 individual rewards etc. This function uses rewards to motivate
personnel to achieve an organization's goals of productivity,
innovation and profitability.

Pay structure refers to an array of pay rates for different works or skills
in an organization. It provides a framework through which an
organization makes career and pay opportunities to its employees. The
various components in the pay basket has to be suitable designed. The
different types of payment of compensation include:
Performance related pay
Performance Related Pay (PRP) provides individual employees with
financial rewards linked to an assessment of their work performance.

Most Common Types of Performance Related Pay

 Piecework: a price is paid for each unit of output.
 Organisation-wide Incentives: bonus earnings based on
quantified values are put in place for the whole establishment.
 Merit Pay: an employee is offered bonus earnings depending on
their level of contribution to performance.
 Individual Performance Related Pay: a recent development in the
public sector, bonuses are established after an appraisal of an
employee’s execution of a task and are compared to previously set
objectives.
 Profit Related Pay: the most common process in the private sector,
bonuses or shares are decided based on the overall profit of the
organisation.

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  Commission: most commonly used in sales, retailing and other
branches of distribution, percentage payments are offered on sales
or turnover, generally once initial targets have been hit.
 Competency related pay: Method of rewarding people wholly or
partly in reference to the competence they demonstrate in carrying
out tasks. It is a method of paying for performance.

 Team-based pay: is a system of compensation in which managers

in an orgnisation reward the members of a project or a department
team with bonus compensation or pay increases based on their
performance or the successful completion of goals. Unlike
individual reward schemes, such as commission-based pay, team-
based pay rewards the output of the team as a whole and divides
the rewards equally among team members. This is more
prominent in IT sector.

5. Employee Relations: Traditionally known as Industrial Relations

(IR), this involves effective management of the relationship between
managers and their employees. Employer and employee rights must be
addressed. It is important to develop, communicate and update HR
policies and procedures so that managers and employees alike know
what is expected. Formulation of Standing Orders, setting-up a
grievance handling mechanism and disciplinary procedures are all
activities related to this. Union/management relations is another major
function of employee relations. Another major function of employee
relations includes negotiating with the unions regarding wages, service
conditions and resolving disputes and grievances.

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Employee Relations is concerned with the relationship between
management and workers and the role of regulatory mechanism in
resolving any industrial dispute. It includes the systems, rules and
procedures used by unions and employers to determine the reward for
effort and other conditions of employment. Protecting the interest of the
employees and their employers, and regulating the ways in which
employers treat their employees are also come under the purview of IR.

The other functions of industrial relations include conducting collective

bargaining, co-ordinating the different stakeholders like management,
unions and government, facilitating the machineries for resolution of
industrial disputes, formulating grievance and disciplinary policy,
administering various provisions of labour legislations, and maintaining
industrial peace.

6. Career Management: This includes Career Planning and

Development. It is the planning of one’s career and implementation of
career plans by means of education, training, job search and acquisition
of work experiences. It includes internal and external mobility in which
the vertical and horizontal movement of an employee within an
organisation is monitored. The various systems are transfer, promotion
and demotion.

7. Health, Safety and Employee Wellness: Protecting employees

and stake holders against the hazards arising from their employment or
their links with the company, is yet another important function of HR.

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 Occupational health programmes deal with the prevention of ill-health
arising from working conditions. They consist of two elements:
1) occupational medicine, which is a specialized branch of preventive
medicine concerned with the diagnosis and prevention of health hazards
at work and dealing with any ill-health or stress which has occurred in
spite of preventive actions, and
2) occupational hygiene, which is concerned with the provision of
systems to measure and control environmental hazards.

Safety programmes deal with the prevention of accidents and

minimizing the resulting loss and damage to people and property. They
require more rigorous systems of work. Safety has to be treated as a
priority value in the organisation. HR has a great role in creating a
culture supportive to this. Both awareness and attitude have to be
created among employees where they know the importance of safety
and are self-motivated to practice safety rules.

Employee wellness is a broader concept covering all measures to ensure

the wellbeing of employees. This includes measures to ensure physical,
mental, spiritual and environmental wellbeing of employees.

8. Separation Formalities: HR has a significant role during the time

of employee separation as well. This includes all the formalities related to
employee separation either in the form of retrenchment, resignation or
superannuation. This is also known as off-boarding. Conducting exit
interviews and co-ordination of settlement of benefits like gratuity and
pension are main activities at this stage.
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