Human Resource Management

Evolution of Human Resource Management

Though it is said that HRM as a discipline is of recent growth, it has origin dating back to 1800
B.C. For example, the Chinese had originated the principle of division of labour around 1650
B.C. and understood labor turnover even in 400 B.C., the Chaldeans had incentive wage plans
around 400 B.C. In India, Kautilya has observed that there existed a sound base for systematic
management of human resources as early as the 4 th century B.C., in his book titled
Arthasastra. The government used to take active interest in the operation of both public and
private enterprises and provided well-enunciated procedures to regulate employer-employee
relationship. Kautilya provides an excellent discussion on staffing and personnel management
embracing job descriptions, qualifications for jobs, selection procedure, executive
development, incentive systems and performance evaluation.
Human resource management development in different Eras:
Era of Industrial Revolution
The industrial revolution followed the guild system with the emergence of the new energy
source and the steam engine. The new economic doctrine was advocated in the form of
laissez-faire, which meant that an individual should be permitted to make what he intended to
and to go where he desired. Initially, the industrial organization was characterized by the
"cottage system" where the work was performed in the home town of workers. Then,
"factory system" developed which resulted in new economic freedom to the worker and
enhanced specialization. The result was a tremendous increase in job specialization as well as
in the amount of goods that workers could produce. "Division of labour" became the rallying
organization of this revolution and was supported by Adam Smith and Charles Babbage (17921871). However, several injustices were done with workers during this era. The working and
living conditions of the workers was very poor. Child workers of 5 or 6 years of age were
commonly employed and standard day was 13 hours long. At that time Robert Owen (18201850) made all possible efforts to win the confidence of the workers by improving conditions
and extended several facilities as a result of which he was able to strike a better productive
rate among his employees. In view of his efforts to improve the management of people at
work, Owen has been recognized as "the pioneer of personnel management."
Era of Trade Unionism and Collective Bargaining
Shortly, after the advent of the factory system, groups of employees began to get together to
discuss their common problems. As a result workers joined together on the basis of their
common interest to improve their lot and trade unions, also called "labour unions" spread
rapidly, and so did the incidence of strikes, slow-downs, lockouts, picketing, boycotts and
sabotage. The basic philosophy underlying trade unionism was that "through strength and
collective support, the management could be forced to listen to the workers and redress their
grievances." In that same era the Wagner Act, technically called the National Labour Relations
Act was passed. The Act focused on labour's right to organize and it provided that a majority
of employees in an appropriate "bargaining unit" could obtain exclusive collective bargaining
rights for all the employees in that unit. Administration of the Act was the responsibility of the

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National Labour Relations Board. Subsequent legislations refined, broadened, and set legal
limits on the scope of management and union activities.
Viewed through the perspective of labour, the development of free collective bargaining and
the American labour Movement created the need for what we are now coming to recognize as
effective human resource management.
The Scientific Management Era Viewed through the perspective of management, the
scientific management movement also created a need for effective HRM. Fredrick Winslow
Taylor was the prophet of scientific management (1856-1955). Therefore, he was also known
as the Father of Scientific Management. Scientific management was based on four great
principles of management viz.,
i. The development of true science for each job. Scientific management is nothing but a
systematic analysis and breakdown of work into its smallest mechanical elements and
rearranging them into their most efficient combinations.
ii. A scientific selection of the right person for the job - Taylor argued that individuals selected
to perform the tasks should be as perfectly matched, physically and mentally to the
requirements of the task as possible and that overqualified individuals should be excluded.
iii. Training a person to perform his job in a' scientific manner - Employees should be trained
carefully by the supervisors to ensure that they perform the task exactly as specified by prior
scientific analysis.
iv. Friendly cooperation between the management and the men -Taylor's approach was
accepted by labour management because it placed a strong emphasis on the mutual benefits
of productivity: the organization produced more and more and thus increased its profits, while
workers made more money and lived better lives.
A differential piece rate system was also advocated by Taylor to provide an incentive for
employees to follow the detailed procedures specified by the supervisors.
Overall, there is little doubt that application of the principles of scientific management has
resulted in much higher productivity than would otherwise have been possible. What is
remarkable is not that Taylor was "correct in the context of his time," but that many of his
insights are still valid today.
Industrial Psychological Era - The development of industrial psychology owes a great deal
to Hugo Munsterberg's book, 'Psychology and Industrial Efficiency,' which was published in
1913. He is regarded as the Father of Industrial Psychology. His contributions to industrial
management were particularly notable in respect of his analysis of jobs in terms of their
mental and emotional requirement and in terms of the development of testing devices.
Definition of Human resource management- it refers to the practices, policies,
procedures and process, which the organization needs to carry out in relation to its workforce.
Thus, it broadly includes recruiting, selecting, training, rewarding, appraising and motivating
its man power. It involves all managerial personnel and regards people as the most important
single asset of the organization. It is proactive in its relationship with people and seeks to
enhance companies' performance, employees 'needs' and societal well-being.
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According to Leon C. Megginson, the term human resource refers to "the total
knowledge, skills, creative abilities, talents and aptitudes of an organizations workforce, as
well as the values, attitudes and beliefs of the individuals involved."

Byars and Rue opined that, "Human Resource Management encompasses those
activities designed to provide for and coordinate the human resources of the organization."

According to Ivancevich and Glueck, "Personnel/Human resource management is the

function performed in organizations that facilitates the most effective use of people
(employees) to achieve organizational and individual goals."

In words of Milkovich & Boudreau, "Human Resources Management is a series of

integrated decisions that form the employment relationship; their quality contributes to ability
of the organization and the employees to achieve their objectives."

Michael Armstrong has defined HRM as "a strategic and coherent approach to the
management of an organization's most valued assets, the people working there who
individually and collectively contributes to the achievement of its goals."
HRM is thus essentially a business oriented philosophy concerning the management of people
by line managers in order to achieve competitive advantage.
Characteristic features of Human Resource Management
On basis of the contributions, integration of the individual and organizational objectives for the
purpose of attaining effectiveness, the characteristic features of HRM as a new paradigm for
managing people may be put forward thus:
1.
It Acknowledges Employees as Non-trade-able Assets. HRM interprets human
resource as a unique resource which is to be organized, appreciated and treated differently, as
a human and not like other material resources. They contribute a great deal towards the
achievement of organizational goals and so are valuable for the organization.
2.
It Facilitates the Development of Human Resource. HRM helps the employees to
develop their potentialities and capacities to maximum possible extent by enhancing their
knowledge, capability, skill, potential and personality. This aids them in maximizing their
personal contribution as well as deriving maximum satisfaction from their jobs.
3.
It Focuses on Collective Growth, It stresses on the importance of gaining
commitment to the organization's mission and values by considering employees both as
individuals as well as group. The purpose behind collaboration and active involvement in
organizational activities is to get better results.
4.
It is Pervasive in Nature. HRM is all pervasive i.e., it is inherent in all organizations
and not merely confined to industry alone. It is thought out and applied at all levels and to all
management functions such as production management, financial management, sales
management & research management, in corporate policies, in the systems procedures and
employees practices etc. As a result, every person in the organization is involved with
personnel decisions and not with personal decisions.

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5.
It is a Continuous Function. HRM is an activity, function or process which is ongoing
in nature. It can neither be stopped nor turned on or off. It is required to be practiced infinitely
and requires constant alertness and awareness of human relations in everyday organization.
6.
It is Performance Orientated. It is performance oriented, thereby emphasizing the
need for higher levels of achievement to meet new challenges. For this purpose, HR managers
develop the potential of the employees so that maximum satisfaction is derived by them from
their work, objectives of the organizations are achieved and good human relations maintained
in the organization.
7.
It is based on Business Orientated Philosophy. HRM is a top management driven
and management orientated activity. It is thus essentially a business oriented philosophy
concerning the management of people by line managers in order to achieve competitive
advantage.
8. It Garners a Competitive Advantage. In India, after globalization, the markets became
very competitive and businesses have been forced to become more service oriented. In this
scenario, human resource management is considered critical for a company as it is now
actively involved in fashioning career paths for employees, improving their skills, and
developing leaders for the future who can take the company forward. So, if managed
effectively the workforce will provide a very definite competitive advantage to those firms that
are savvy and progressive enough to leverage the human resource department appropriately.
Personnel vs. Human Resource Management
HRM is a modern term which traditionally has been referred to as personnel administration or
personnel management. Some authors, therefore, view HRM as an 'old wine in a new bottle'.
Although personnel management shares a platform with HRM on some key issues there are
some points of dissimilarity which are as follows:
1. Personnel management treats personnel function as the exclusive responsibility of the
personnel department, whereas HRM regards the functions of human resource as the concerns
of all the managers in the organization.
2.
Traditional personnel management tended to be parochial, striving to influence line
managers, whereas HRM is integrated into the role of line managers with a strong proactive
stance and bias towards business.
3.
Personnel management is more concerned with the administration of the personnel,
whereas HRM is concerned with the development of people and their competencies.
4.
In personnel management, systems and procedures are designed to achieve maximum
efficiency, whereas, in HRM, systems and procedures are to achieve a high level of job
satisfaction in the organization.
5.
In personnel management, people in the organization are motivated mainly by salary
and rewards whereas, in HRM, people are motivated by job challenges and opportunities for
development of creativity and self actualization.
6. In personnel management, employees are utilized for organizational benefit whereas, in
HRM, employees are utilized for mutual benefit i.e., both for organization and themselves.
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Objectives of Human Resource Management

Human beings are goal directed. Therefore all work performed by them in an organization,
contributes to the objectives of that organization. They also help in establishing the character
of an organization. In the light of this, following are some of the major objectives of HRM.
1.
To create an environment in which people are willing to work with passion, initiative and
zest.
2.

To achieve and maintain cordial relations within the organization.

3.

To ensure respect for human personality and the well-being of each individual.

4.
To ensure satisfaction of various needs of individuals by providing adequate wages,
fringe benefits, incentives, social security, etc.
5.
To develop and maintain quality of life and work culture in line with the organization's
goal.
6.
To maintain ethical personnel policies in the organization and communicate them to all
employ.
7.

To employ the skills and knowledge of employees in a productive manner.

8.
To introduce the innovative reward plans that distinguishes workforce contributions and
grant enhancements.
9.

To enable each person to learn, grow and achieve the maximum.

10

To avoid industrial unrest and maintain complete harmony among the employees.

11.

To make potential appraisal and emphasize greatly on HRD.

12.

Provide training on the basis of the performance appraisal reports.

13,

To integrate and align employees at various levels In line with the organizational goals.

14.
To retain the existing employees & to utilize workforce with idiosyncratic capabilities to
create unparalleled competence in their areas.
Functions of Human Resource Management
Human resources functions refer to tasks performed in an organization to provide for and
coordinate human resources. HRM functions are concerned with a variety of activities that
significantly influence almost all areas of an organization. Its functions are broadly classified
into three categories viz. I. Managerial functions II. Operative functions and III. Emerging
Functions.
I. Managerial functions.
Managerial functions of HRM is basically concerned with the process of allocating an
organization's input by planning, organizing, directing and controlling for the purpose of
producing outputs desired by its customers so that organization objectives are accomplished.
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Thus managerial functions involve planning, organizing, directing and controlling which also
influences the operative functions of HRM.
1. Planning. Planning is an all pervasive and important function of HRM. It involves
formulating the future course of action; therefore, it is considered a rational approach to the
future. It includes determining in advance the personnel programs and changes required that
would contribute to the achievement of organizational goals. It also involves forecasting the
personnel needs, foreseeing the changes in employees' attitudes and evolving effective ways
of handling these changes.
2. Organizing. Organizing involves establishing a proper structure of roles for people in an
organization and establishment of relationships among employees so that they can contribute
collectively towards the attainment of an organization's goals. To meet this end, it is very
necessary to take into account the structural considerations like the chain of command,
division of labour and assignment of responsibility as the important part of organizing
function.
3. Directing. Directing is an important function which helps in building sound industrial and
human relations and in ensuring employee contributions. It is the process of directing all
available resources towards the common organizational goals by tapping the maximum
potentialities of the people. It also involves coordination between departments to ensure
maximum utilization of all resources including human resources.
4. Controlling. In order to know that personnel functions are being performed in conformity
with pre-determined plans or not, controlling function needs to be exercised by the manager.
This helps to measure performance against goals and plans, helps to identify deviations if any
and taking remedial measures. Thus, actions and operations are adjusted to pre-determined
plans and standards through control.
II. Operative Functions.
The operative functions of HRM are related to specific activities of HRM viz. employment,
development, compensation and employee relations. These functions must be performed in
conjunction with the managerial functions. They are also known as service functions and are
as follows:
1. Employment. This involves procuring, securing and employing the people with suitable
knowledge, skills, experience and aptitude necessary to perform various jobs and at the same
time to achieve the organizational goals. This function specifically deals with areas like i) job
analysis, ii) human resource planning, iii) recruitment, iv) selection, v) placement, vi)
induction, vii) follow-up, viii) transfers, ix) lay-offs, etc.
2. Human Resource Development. It is the process of improving, moulding, changing and
developing the skills, knowledge, creative ability, aptitudes, values and commitment etc. of
the employees so as to help them to perform their jobs better. For this purpose, it involves i)
Performance appraisal, ii) training, iii) management development, iv) career planning and
development.
III. Emerging Functions.

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1.
Maintaining Personnel Records. Personnel records such as papers, files, cards,
cassettes and films are maintained to have tangible record of what is actually happening in an
organization and to formulate appropriate HR policies and programmes (based on records,
actual experience & future trends) and from time to time:
2. Conducting Human Resource Audit: It is examination & evaluation of personnel
policies, procedures and practices to determine the effectiveness of HRM.
3. Human Resources Research- The process of evaluating the effectiveness of human
resource policies & practices and developing more appropriate ones The main objective of this
research is to measure and evaluate the existing conditions and to predict future course of
action,
4. Human Resource Accounting- it is the measurement of the cost and value of human
resources to the organization, Human resource management is said to be effective if its value
and contribution in any organization is more than its cost
5. Human Resource Information System (HRIS). It is an integrated system designed to
improve the efficiency with which HR data is complied. It makes HR records more useful to the
management by serving as a source of information. HR managers required this for decision
making.
6. Stress Management & Counseling: Stress is a psychological and physical reaction to
certain life events or situation. At an organizational level, stress results in burn out,
depression, reduced job satisfaction, increased absenteeism and increased turn over. Hence to
promote the physical & mental well being of employees proper counseling and stress
management programmes are essential HRM function.

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