UnitIIntroduction

Concept of Human Resource Management HRM is concerned with people dimension in organization. People, not building, vehicles, plant furniture make a company successful. Hiring and keeping good people is critical to the success of every organization. Human is the significant resource of the organization which combines their skills, knowledge and talents with other resources to create utility. Human is only the assets which appreciate with the passage of time. Human resource management is management function concerned with hiring, motivating and maintaining people in an organization. It focuses on people in organization. Human resource management is planning, organizing, directing and controlling of acquisition, development, motivation and maintenance of human resource in order to maximize the employees, organizational and societal goal. It is the function of every managers job, not just those who work in human resource management department. Definitions 1. Gary Dessler The policies and practices involve in carrying out the "people or human resource aspects of a management position, including recruiting, screening, training, rewarding and appraising 2. DeCenzo & Robbins: Human Resource Management is consisting of the acquisition , development, motivation and maintenance of Human Resource Thus, HRM refers to a set of managerial programs, functions and activities of acquisition, development, motivation and maintenance of Human resource, designed to support corporate objectives, plans and strategies by integrating the needs of the organization , individuals and society that comprise it HRM Environment: HR environment are those forces which have their bearing on the functioning of HR department or functions of HRM. Analysis of environment is useful for the HR manager in order to become proactive and remain reactive to the environment. Reactive strategy serves the purpose when the environment is fairly stable and competition is less severe. Todays business environment is characterized by change and intense competition so proactive steps are vital for any organization. It is, therefore, desirable that we know what the environment is and how it influences HR functions in the firm. A. External Environment Of HRM: 1. Political and legal environment 2.Economic environment: Globalization Demographics HR suppliers/ Labor Market Competitors Customers Economic Growth 3. Technology 4. Socio Cultural forces

5. Physical : Topography , Climate ,Transportation and communication 1.Political and Legal Environment: In a democratic political set up there are three institutions which constitute the total political environment. i) the legislature, ii) the executive and iii) the judiciary. The legislature is the parliament and lawmaking body e.g. Labor law. The executive is the Government and law implementing body. The judiciary is the Supreme Court and the watch dog which ensure that both the legislature and executive work with in the constitution. Constitutional provision mandate affirmative action which are desirable. 2. Economic Environment: Economic environment refers to all those economic forces which have the relation with HR functions. a) Globalization: Globalization refers to the free movement of capital, goods, services, ideas, information, people, across national boundaries. Coca Cola earns more than 80% of its revenues outside the US through globalization of business. Everything can be duplicated anywhere except HR Globalization includes these elements: International labor market, International labor act and rules, international labor court, International communication network, Foreign workers. Globalization has considerable influence on HR function e.g. Employee hiring, training, motivation, compensation and retaining, cross cultural HRM.HRM should think globally but act locally. b) Demographics: Concerned with human population and its distribution. It consists of Population size, growth, age mix, urbanization and migration. It affects the recruitment, selection and other HRM function. c) Labor Supplier/ Labor market: Labor market is the geographical area within which people looking for work and employer looking for people. Tight labor market; demand of employees exceed than supply. Loose labor market; supply of HR exceed than demand. Labor market affects on ; salaries and benefits, Selection standard, using aggressive recruitment methods etc. Employment exchanges, universities and colleges, training institutes, consulting firms, causal labors contractors etc are the external source of recruitment. d) Competitors: Competitors play a significant role in some of HR functions.eg. If several companies make job offer to one individual , the firm with more attractive terms and conditions will win. e) Customers: It is need not to mention that customers want high quality goods at reasonable price. Sales are often affected by quality, which is directly related with skills and qualification of employee. Each and every employee in the firm contributes towards achieving quality of goods and services. So customers have their own influence on a companys HR functions. f) Economic Growth: Availability of quality labor depends on economic growth, Per capita Income, exchange rate, education and health of the people of that nation. Developed countries allocate a lot of budget in education and health sectors. Uneducated citizens with poor health cant contribute to productivity.

3. Technology: A systematic application of organized knowledge to practical task is called the technology. Technology has developed beyond anybody comprehension. Technology enabled man to overcome distance, control birth, saves lives, generate and preserve energy & completely change in the procedure and nature of jobs. Technology have following effects on HR functions: Jobs tend to become more intellectual or upgrade so high skills and knowledge are required. Dislocates current workers if they are not updated and creates new jobs. Current compensation and reward system should be adjusted Technology has its impact on labor relation. The arrangement of a production set up determines who will be near to whom, who need to talk to whom and interaction activity affect sentiments, feeling and thinking and productivity. 4.Socio Cultural Forces: Social norms affect the attitudes and expectations toward job and organization. Social institutions such as family, reference group and pressure group also affect HRM. Persons pattern of living standard reflects in his activities, interest and opinions. Changes in life style have resulted in shorter work weeks, flexible working hours, work at home etc. Cultural forces have following influence on HR functions:

First, culture creates the type of people and train people. people have cultural ,sub - cultural experience, family experience, unique personal experience. Secondly, culture creates the attitude toward job. Tasks are performed without any interest. There is indiscipline in everywhere. Thirdly, Time orientation such as present, past and future. In some society people are oriented towards past, in others they are tend to present and in some society they tend to future. Japan is a futuristic (innovative) society. So Japanese organization. Can retain HR for long time.

Fourth, work ethics, achievements, needs, efforts and reward expectation are the result of cultural background of HR & culture confines people in some jobs due to food habit, dress sense, language. 5.Physical: The physical infrastructure, transportation, climate affect the HR functions. In difficult topography the mobility of HR is low. The climate and weather affect the working time and work performance of the employees. The communication and transportation facilities and determines the recruitment selection and compensation functions in organization. B)Internal Environment The internal environment of HRM is under the control of the organization but it has also so inflexibilities so HR manager should properly understand it make HRM effective. It includes the following components. 1. Organization goal and policies ,strategies, plans & programs:

Goals: are the ends toward which activity is aimed. They are the results to be achieved e.g. Earning profit with customer service. Policies: are the statements or guidelines or channel of thinking in decision making. They facilities to achieve goals. Strategies : are long-term plans which are developed in the light of internal strength and weaknesses as well as external opportunities and threats to maintain a competitive advantages. Plans & Programs: These are the course of actions and things to do . These all factors affect the functions of HRM. 2. Organizational Structure: It includes the Department and branches, division of labor and coordination. The place of HR manager determines his role and responsibilities in the organization whether he has line or staff role 3. Organizational Resources : The availability of financial, physical, human and information resources affect the functions of HRM .e.g. HR manager can organize the training if budget for training is allocated. 3.Organization Culture: Orgn. Culture includes values, belief, norms, loyalty of employee, autonomy, employee commitment, team sprit etc. It shapes the behavior of employees. 5. Labor Union: Labor union affect functions of HRM based on the authority, efficiency and they have cooperation. 6. Other Departments: The decisions and activities of other department affect the activities and decision of HR department.

Strategic Role of HRM

The Meaning of Strategy A critical factor that affects Firm Performance A factor that contributes to Competitive Advantage in markets Having a long-term focus Plans that involve the top executives and/or board of directors of the firm A general framework that provides a perspective for selecting specific policies and procedures

Strategic HRM is the process of linking of HRM with strategic goals and objectives of the organization in order to improve business performance and develop organizational cultures that foster innovation and flexibility. Today HRs role is shifting from protector and screener to strategic partner and chance agent. HR strategies are the courses of action HR uses to help the company to achieve its strategic

aims.

HR Strategy: Strategic Fit

Corporate Strategy Business Strategy HR Strategy

Training HR System (Performance Mgmt.)

Rewards

MBAO 6030 Human Resource Strategy

HR Strategy: HR System Internal Fit

HR Strategy
Goal Setting Appeal Performance Measurement Coaching Rewards Performance Evaluation

Performance Management System

MBAO 6030 Human Resource Strategy

These are the some examples of HRM strategies: 1. Innovation Strategy:

If business set innovation strategy HRM should develop following strategy. Selecting highly skilled individuals, giving more direction, using minimal control. Making greater investment in HR. 2. Quality enhancement strategy: For enhancing quality HRM should develop strategies as use highly valid selection, training program, arrange equitable and attractive financial benefits, developing positive attitude and in their lifestyles. One of FedEx's strategy aims is achieve superior levels of customer services and high profitability. HR objectives is thus to build a committed workforce ,provides highly competitive salary and pay for performance. Objectives Of HRM 1.Achieving High Productivity: Effective HRM is the key to increasing organizational productivity. The extent to which an organization able to get its productivity goal depends on how effectively it uses its HR. Organization with a high productivity goal treat HR differently from the organizations with a low productivity goal organization .Focus on developing strategies of HR department. 2. Increasing the quality of work life: Quality of work life is multi faced concept that improves HR dignity, working environment so that employees feel jobs become more rewarded and less hazardous.HRM responds to the needs of the employees by giving the people adequate responsibilities, opportunities of participation and communication. Organization provides training and development, career development opportunities as well as an ideal combination of financial and non financial benefits. 3. Increasing workforce commitments: HRM is increasingly concerned with work forces commitments to enhancing organizational efficiency and productivity. Increasing level of commitments means people are interested to be involved in the work mentally and physically.HRM motivate people to commit them towards organization by adopting desirable HR practices, promotion and rewards. 4. Management of organizational culture: HRM is concerned to manage culture in the organization. Organization culture shape and guides the behavior of HR working in organization. Culture determines how to behave, respond and react in different situation. Organizations culture is the shared beliefs, values and norms of organizations member and other stakeholder.HRM develops different work related rules and guidelines which direct HR. 5. Providing supportive environment for employees creativity: HRM makes efforts to develop favorable environment so that people working in organizations can work creatively. HRM focuses on such management mechanism such as teamwork, management by objectives and total quality management (TQM).So it allows employees to use their owns creativity. 6. Making Organizational System Flexible: Environment is ever changing rapidly. So workforce must be able to rapidly shift and adjust to new technologies, skills, strategies and human resource practices.HRM aims at training and developing the workforce in order to adjust in a quickly and frequently changing environment. It follows flexible HR practices. 7. Maximum Social concern:

Organization should be responsible ethically and socially to the needs and challenges of society and use the HR for the betterment of the society. Activities of the society directly affect the HRM decision. So, organization must pay special care on legal compliance, benefits, Equal Employment Opportunity, health promotion, improvement in living and working conditions of the society.HRM foster to fulfill the above interest of the society. Functions of HRM 1.Acquisition Human Resource Planning (HRP) HRP is the process of determining and ensuring to the right kinds and numbers of HR as and when need in future time. Human resource information system helps in developing HRP. Recruitment: Recruitment is the process of searching , encouraging and motivating for apply to the prospective candidates in the vacant post and making the pool of candidates so that right kind of HR could be selected for the right job .There are two sources, internal and external sources of recruitment. Selection: Selection is the process of choosing the best candidate for the job and matching the man and the job. Section is the process of screening the candidates through different stages. Socialization: Socialization is the process of mutual adaptation of the new employee and the new employer to one another. Employees understand the organizational culture, values, attitudes, and behaviors that appropriate to their roles in the organization. Job Analysis: Scientific and formal procedure of studying job to collect the pertinent facts of job. The collected facts about jobs are prepared in written form and classified into two group known by job description and job specification. 2. Training and Development: Orientation: is the process of giving the preliminary information about the organization, job duties, leaves, salary payment system etc. It is the part of the training process. Training: It is the process of learning and increasing the knowledge and skills for doing particular job by non managerial employees. Employee Development: It is known by executive development. It is concerned to development of theoretical and conceptual knowledge of managerial employees to meet long term objectives. Career Development: Career planning is giving employees the assistance to form realistic career goals and the opportunities to realize them. 3.Motivation: It is the task of arousing interest and sprit in employees to work actively in disciplined, responsible and dedicated manner for effectively operating an organization for the achievement of organizational goal is called motivation. Job Design: Job design involves conscious efforts to organize tasks, duties and responsibilities into a unit of work to achieve certain objectives .Job design follows job analysis. Job design involves three steps: 1. The specification of individual task. 2. The specification of the methods of performing each task.

3. The combination of tasks into jobs to be assigned to individual Performance Appraisal: PE is a formal, structured system of measuring and evaluating an employees job related behaviors (Strengths and weakness) and outcomes to discover how and8/3/2011 why the employee is presently performing on the job and how the employee can perform more effectively in the future so that the employee, organization and society all benefits. Reward and Compensation: All forms of employees pay or reward arising from the employment is the compensation. Rewards may be pay, promotion, fringe benefits, status symbol, bonus, commission, profit sharing, desirable work assignment, smile, acceptance by peer etc. Benefits: A fringe benefits is not a direct reward to the output, effort or merit of an employee. It if offered on the basis of length of service, sickness, sex etc. E.g. maternity leave 4.Maintenance: Safety &health: Occupational health and safety cannot be isolated from other problems like wages or job security. Management has both legal & moral responsibilities to provide a safe & healthy workplace. Employee relations: The term "labor/industrial relations" is usually used in unionized firms & industries. The term "labor relations" refer to a system or web of rules regulating employment & the ways in which people behave at work. These rules regulate the behavior of union representatives, management or employer in the process of collective bargaining

Rising Interest In HRM

1. Changing Skill requirement. To Have a competitive advantage. In 1980s, the American literature on HRM identified that HR as a source of competitive advantage. Poor HRM practices and dissatisfaction of HR is the main cause of business failure. Transfer of Japanese manufacturing technology to developing countries is the key way of getting success due to cheap and skilled labor . 2. Globalization: Globalization refers to the free movement of capital, goods, services, ideas, information, people, across national boundaries. Coca Cola earns more than 80% of its revenues outside the US through globalization of business. Everything can be duplicated anywhere except HR. Globalization includes the following elements: International labor market, International labor act and rules, international labor court, International communication network, Foreign workers. Globalization has considerable influence on HR function e.g. Employee hiring, training ,motivation, compensation and retaining, cross cultural HRM.HRM should think globally but act locally. 3. Workforce Diversity: Increasing women participation on labor force, workforces from different countries with different values, culture, education, training, background, race, language, religion etc. Diversification is increasing in developing and developed countries. It should be properly and timely managed.HR department should solve the diversity problem. One good example of diversity management program is host countries language training. 4. Changing skill requirement: Rapid changes in information technology brings substantial changes in the current skill requirements .Gradual demise of blue color job and creation of new job of computer scientists, demand of knowledge worker and other professional workers.HR department have to look for

and develop different selection, rewarding, training and development strategy to fulfill skill deficiencies to minimize accident, customer complaints according to change in skill requirement. 5. The Contingent workforce: Due to increasing effect of globalization, downsizing, corporate restructuring and total quality management employment practices have been changed and firms are interested to use contingent workforce ( part time employee) rather than life time employment pattern. It minimizes labor cost, fulfills the need of peak time and other expenses but it is difficult to retain and motivate such manpower. 6. Continuous improvement program: Company should manage the continuous quality improvement program by work process reengineering.HR is the main agent to make improvements in the quality of goods and services of the business. 7. Decentralized work sites: Due to globalization, development of information technology and use of computers, fax machines, email and internet employees are not required to sit in the office. Decentralized work sites are beneficial to balance work and family life for the workers. The success of decentralization depends on HR department.HR department should develop proper reward, performance appraisal system of decentralized sites 8. Employee involvement: Due to increasing level of competition, for new innovation, high decentralization at lower level high involvement is required.HRM plays a vital role in designing job, assigning roles and responsibilities to employees, to train and develop them for high involvement. 9. Minimizes the complexities of the organization: Organizations are becoming more and more complex due to , increasing no of employees, increase in size of organization, multiple layer of organization, growth of multinational company, different culture, context etc .HRM focuses on developing system, rules, regulation and codes, conduct to make a cultured organization to handle different complexities. 10. Change in Technology: Technology is changing. Innovation in information technology, production technology quality of product and services are expected to improve. However , in order to cope with efficient technology organization required skilled, innovative and motivated work force. The role of HRM is to plan for education, training and development of work force. 11. Provide opportunities for educated work force: Educated workforce demands more challenging and meaningful work .Organization should provide opportunities for such employee to be involved, participate and to take responsibility.HRM plays role for attract. Select and place proper man in proper job. and design work effectively so that they have high job satisfaction. 1.Input :Skills , experience Policies , objectives of organization and Labor union. 2.Processing : Acquisition: HRP, recruitment, selection, orientation, Socialization. Development: Training, Management development Utilization: direction, motivation, remuneration Performance appraisal Maintenance: career development, Employee Welfare, labor relation 3. Output Goal achievement

Quality of work life Readiness for changes Productivity

Perspectives /Development /Evolution of HRM

1. Early Scientific Management Era (beginning of the 18th century) 2. Industrial Revolution of 1850s 3. Scientific Management in the late 1800s & early 1900s 4. Human Relations Movement (1930s to 1950s) 5. The HRM Era 6. Behavioral Science Movement (1960s) 7. The New HRM Era
1.Early Scientific Management Era (beginning of the 18th century) (beginning of the 18th century) Forerunners of the modern trade unions (later part of the 18th century)

Formation of guilds (A guild is an association of craftsmen in a particular trade.)

Welfare officers in the UK business houses Schemes of unemployment benefits, sick pay

Edward Cadbury and Joseph Rowntree business 2.Industrial Revolution of 1850s Labor a commodity to be bought & sold Used and abused workers Widening gap between workers & owners Alleviation in their pitiable condition Use of machine power Advent(coming) of collective bargaining between labor & management

Laid the foundations of the present HRM concepts 3.Scientific Management in the late 1800s & early 1900 Frederick Winslow Taylor Logic of efficiency to management Principles of precision (Time & motion study) Tasks were systematically broken down Laid the foundations of the present HRM concepts

Psychology & Industrial Efficiency (1913)

Hugo Munsterberg Focus on the worker & individual differences Ways of improving employment testing, training, performance evaluation & job efficiency Classical Organization Theory (1916) Henry Fayol Basic concepts to guide the design, creation & maintenance of large organizations Identified the basic functions of managing organizations Management a process

Managerial activities: planning, organizing, commanding, coordinating &controlling 4.Human Relations Movement (1930s to 1950s) Chester Barnard

Concept of organization as human cooperative systems rather than as mechanical contraception Information should be two-way

Cohesive leadership is necessary Hawthorne Studies (1927 - 1932) Elton Mayo & Fritz Roethlisberger: General Electrics Hawthrone plant Changes in the physical environment could not completely explain changes in productivity Importance of social factors (morale, interpersonal relationships)

Cooperation & teamwork 5.The HRM Era End of WW I personnel management was recognized to fight labor shortage problems 1920s Personnel management began being taught at the university level (US) Between the WWI & Great Depression estd. of personnel depts. Labor exploitation (1930 50s) resulted in labor relations movement, unions, collective bargaining (1935 -60s)

Until the 1960s, the personnel function was considered to be concerned only with the blue-collar employees Management by Objectives (MBO) 1954 Peter F. Drucker Objectives must be set in all areas where performance affects the health of the enterprises Concept of Corporate Culture:

The art of Japanese Management written by Pascale and Athos in 1981 stated that shared value of management workers are the secret of success of Japanese management.

In search of excellence written by Peters and Waterman named 43 U.S. companies that were driven by Managers value and paying close attention to the needs of their people. 6. Behavioral Science Movement (1960s)

Maslows hierarchy of needs Frederick Herzberzs two factor theory Theory X and Theory Y Douglas McGregor Theory X: employees dislike work Theory Y: work is a natural act for employees

7.The New HRM Era: Emergence of the new HRM theory & practice (1980s) Challenges of globalization, technological advances, changing customer etc.