Human Resource Management

Human Resource Management - Importance - Challenges - Line and Staff aspect - HR

management activities - Role of personnel manager - Images and qualities of HR
manager - Integration of employee/management interests -Environment of Human
Resource Management - Role of External forces, Internal forces

INTRODUCTION

Human resource management (HRM) is the process of acquiring, training, appraising, and

compensating employees, and of attending to their labor relations, health and safety, and
fairness concerns.

“Take our twenty best people away, and I will tell you that Microsoft would become an
unimportant company”

Bill Gates, CEO of Microsoft in Fortune, November 25th 1996

Human resources is a term with which many organizations describe the combination of
traditionally administrative personnel functions with performance, Employee Relations and
resource planning. The field draws upon concepts developed in Industrial/Organizational
Psychology. Human resources have at least two related interpretations depending on context.
The original usage derives from political economy and economics, where it was traditionally
called labor, one of four factors of production. The more common usage within corporations
and businesses refers to the individuals within the firm, and to the portion of the firm's
organization that deals with hiring, firing, training, and other personnel issues. The objective
of human resources is to maximize the return on investment from the organization's human
capital and minimize financial risk.

Organizations’ have to provide a healthy work climate in order to get the best out of people.
To utilize the capabilities of people fully, you need competent leadership willing to
recognize, reward and nurture talent at all levels. This is where human resource managers
play a critical role by bridging gaps between employee expectations and organizational
requirements by adopting appropriate human resource strategies and practices. HRM, in
short, is the art of procuring, developing and maintaining competent workforce to achieve the
goals of an organization in an effective and efficient manner.

1
 Human Resource Management

Human Resource Management:

Meaning of Human Resource Management:

 Human Resource Management is a process of bringing people and organizations together

so that the goals of each are met. It tries to secure the best from people by winning their
wholehearted cooperation. In short it may be defined as the art of procuring, developing
and maintaining competent workforce to achieve the goals of an organization in an
effective and efficient manner.

 Human Resource Management focuses on all issues related to ‘people’ in the organization.
The people in an organization are undoubtedly the most important assets. Therefore,
special care must be exercised in managing them. Human resource management is
concerned with practices involved in the acquisition, development, motivation and
maintenance of people. This is important to achieve the organizational goals.
 The people in the organization are instrumental to its success. If human resource
management practices are good, then the organization will be effective and efficient.
‘Effectiveness’ is reflected by the success in goal achievement. ‘Efficiency’ on the other
hand, is reflected by its ability to achieve the output with very little inputs or resources. An
organization that is unable to achieve effectiveness or efficiency will eventually die.
Survival is dependent on the human resource manager’s competence to coordinate the
activities of all people in the organization.

Human Resource Management definitions given by management gurus.

 According to M L Cuming, “Human Resource Management is concerned with

obtaining the best possible staff for an organization and having got them looking after
them so that they want to stay and give their best to their jobs.”

 Dale Yoder defines “Human Resource Management as that part of the phase of

management dealing effectively with control and use of manpower as distinguished
from other sources of power.”
 According to F. E. L. Brech, “Human Resource Management is that part of
management progress which is primarily concerned with the human constituents of
an organization.”

2
 Human Resource Management

 Edison defines “Human Resource Management as the science of human

engineering.”
 Stephen P Robbins, Human Resource Management is concerned with the people
dimension in management. It is a process consisting of four functions-acquisition,
development, motivation, and maintenance of human resource.

Features of Human Resource Management

 Pervasive force: HRM is pervasive in nature. It is present in all enterprises and

permeates all levels of management in an organization.

3
 Human Resource Management

 Action oriented: HRM focuses on action, rather than on record keeping, written
procedures or rules. The problems of employees at work are solved through
employee-friendly policies.
 Individual oriented: HRM seeks to get the best out of an employee. Each employee is
treated with respect and dignity. Career opportunities are created so that employees do
not leave a company. Necessary training is provided in order to help an employee
grow.
 People oriented: HRM is all about people at work, both as individuals and groups.
The right jobs are assigned to the right people. Growth avenues are thrown open to
all. Excellent performance is rewarded and encouraged. Every attempt is made to
keep employees happy and contented.
 Future oriented: Effective HRM prepares people for current as well as future
challenges. Employees are encouraged to take up assignments that match their skills
and talents.
 Development oriented: HRM intends to develop the full potential of employees. The
reward structure is tuned to the needs of employees. Training is offered to sharpen
and improve their skills. Employees are rotated on various jobs so that they gain
experience and exposure. Every attempt is made to use their talents fully in the
service of organizational goals.
 Integrating Mechanism: HRM seeks to strike a rapport between people working at
various levels in an organisation. The whole attempt is to create a tension-free work
environment. Issues that flare up emotions such as wage increases, work schedules,
benefit plans and union-management relations are always given topmost priority so as
to keep employees in good humour.
 Comprehensive function: HRM is concerned with managing people at work. It covers
all types of personnel—workers, supervisors, middle and top managers. All issues
relating to talent acquisition, development and retention are put to close examination.
 Auxiliary service: HR departments exist to assist and advise the line or operating
managers to do their work more effectively. The HR manager is a specialist advisor,
and HR is a staff function.
 Interdisciplinary function: HRM is a multidisciplinary activity, utilizing knowledge
and inputs drawn from subjects such as psychology, sociology, anthropology,
economics. Influences that affect employee behaviours, attitudes and performance are

4
 Human Resource Management

given topmost priority. The whole exercise is meant to understand the psychology of
employees from various angles—as to why people behave the way they do.
 Continuous function: HRM is not a one-shot deal. It cannot be practiced only one
hour each day or one day a week. It requires constant alertness and awareness of
human relations and its importance in everyday operations.

Objectives of Human Resource Management (HRM):

Objectives are pre-determined goals to which individual or group activity in an organization

is directed. Objectives of personnel management are influenced by organizational objectives
and individual and social goals. Institutions are instituted to attain certain specific objectives.
The objectives of the economic institutions are mostly to earn profits, and of the educational
institutions are mostly to impart education and / or conduct research so on and so forth.
However, the fundamental objective of any organization is survival. Organizations are not
just satisfied with this goal. Further the goal of most of the organizations is growth and / or
profits.

Institutions procure and manage various resources including human to attain the specified
objectives. Thus, human resources are managed to divert and utilize their resources towards
and for the accomplishment of organizational objectives. Therefore, basically the objectives
of HRM are drawn from and to contribute to the accomplishment of the organizational
objectives. The other objectives of HRM are to meet the needs, aspirations, values and
dignity of individual employees and having due concern for the socio-economic problems of
the community and the country.

The objectives of HRM may be as follows:

To create and utilize an able and motivated workforce, to accomplish the basic

organizational goals.

To establish and maintain sound organizational structure and desirable working

relationships among all the members of the organization.

To secure the integration of individual or groups within the organization by co-

ordination of the individual and group goals with those of the organization.

5
 Human Resource Management

To create facilities and opportunities for individual or group development so as to

match it with the growth of the organization.

To attain an effective utilization of human resources in the achievement of

organizational goals.

To identify and satisfy individual and group needs by providing adequate and

equitable wages, incentives, employee benefits and social security and measures for

challenging work, prestige, recognition, security, status.

To maintain high employee’s morale and sound human relations by sustaining and

improving the various conditions and facilities.

To strengthen and appreciate the human assets continuously by providing training and

development programs.

To consider and contribute to the minimization of socio-economic evils such as

unemployment, under-employment, inequalities in the distribution of income and

wealth and to improve the welfare of the society by providing employment

opportunities to women and disadvantaged sections of the society.

To provide an opportunity for expression and voice management.

To provide fair, acceptable and efficient leadership.

To provide facilities and conditions of work and creation of favorable atmosphere for

maintaining stability of employment.

6
 Human Resource Management

Nature of Human Resource Management:

 Pervasive Function: HRM is practiced at all levels of management and applies to all
kinds of organizations, even to non-profit organizations.

 Result Oriented: It aims at achieving organizational objectives through the optimum

utilization of human resources.
 Tactful Approach: HRM deals with the people who are distinct from one another;
thus the manager needs to apply diverse strategies and tactics at different point of time
and in different situations.
 People-Centric: Human resource management is concerned majorly with the
employees working in an organization.
 Integrative Action: It focusses on maintaining cordial relations among the employees
at different levels and also addresses employee grievances.
 Continuous Process: HRM is an ongoing process of procurement, development and
redirection of personnel towards the organizational goals. It cannot be completed in a
day, a week or a month.

7
 Human Resource Management

Scope of Human Resource Management

Human Resource Management has a very wide scope, every department and activity in an
organization needs human resources, even if it is about running machinery.

The scope of human resource management can be broadly divided into three:

1. HRM in Personnel Management

2. HRM in Employee Welfare

3. HRM in Industrial Relation

HRM in Personnel Management:

The objective here is to ensure the individual growth of each employee which indirectly
contributes to the overall growth of the entire organization.

HRM in Employee Welfare:

This aspect of HRM is concerned with the working condition and the amenities at the
workplace. It makes the environment worth working by eliminating workplace hazards,
providing job safety, medical and health services etc.

8
 Human Resource Management

HRM in Industrial Relation:

The main aim of this aspect is to maintain peace and harmony in the organization. It requires
effective interaction with the labour or employee unions, sensitively addressing their
grievances and settling their disputes.

Human Resource Management in the new millennium:

Current thinking in Human Resource Management strongly supports the view that when
opportunities for growth and enhancement of skills are available in an organization, people
will be stimulated to give their best, leading to greater job satisfaction and organizational
effectiveness. To this end, therefore, HR managers in the new millennium are expected to
successfully evolve an appropriate corporate culture, take a strategic approach to the
acquisition, motivation and development of human resources and introduce programs that
reflect and support the core values of the organization and its people.     

 Size of work force

Demands for better pay, benefits, working conditions

Composition of workforce
Equal pay for equal work
Breaking down of glass ceiling
Constitutional protection to minority groups
Importance to factors such as age, sex, religion, region, caste especially while
dealing with multifarious, heterogeneous, culturally diverse work groups

 Employee expectations

Better educated, more knowledgeable, emotionally strong and demanding

workforce
Demand for educated, trained, experienced and knowledgeable workers
growing

9
 Human Resource Management

Understand individual differences and develop appropriate policies to meet

their growing expectations.

 Changes in technology

Modernization, computerization, sophistication increasing by the day

Knowledge and skills need to be refined constantly
Training, retraining and mid-career counselling important
Equip employees so as to cope with dramatic challenges brought forward by
rapid advances in science and technology

 Life style changes

 Environmental challenges
 Personnel function in future

o Job redesign
o Career opportunities
o Productivity
o Recruitment and selection
o Training and development
o Rewards
o Safety and welfare  

 Changes in 21st century affecting HRM

HR as a springboard for success

Talent hunting, developing and retraining
Lean and mean organizations
Labour relations
Health and benefit programs

10
 Human Resource Management

Importance of Human Resource Management:

An organization’s success depends on three dimensions of employees viz. Knowledge, Skills

and Abilities. These dimensions establish a set of core competencies that distinguishes an
organization from its competitors.

With appropriate HR policies and practices, an organization can hire, develop and utilize best
brains, realize its professional goals and deliver results better than others.

HRM helps an organization and its employees accomplish their respective goals.

At the Individual Level:

It offers excellent growth opportunities to people who have the potential and attitude.
It allows employees to work with diligence and commitment.
It promotes team work arid team spirit.

 At the Organization Level:

(i) It helps in attracting and retaining the best people.

(ii) It alerts the firm, through forecasting the types of people required in the short,
medium and long run.
(iii) It comes handy in training people for challenging jobs.
(iv) It develops right attitude toward the job and organization.
(v) It promotes loyalty and commitment through appropriate reward schemes.

At the Society Level:

It improves employment opportunities.

It puts the scarce talents to best use.

At the National Level:

Efficient and effective use of human resources helps in usage natural, physical and
financial resources in a better way.
People with right attitude, appropriate values and proper skills help the nation
compete with the best in the world.

11
 Human Resource Management

Proper HRM with HRD results in better standard of living.

From an organizational standpoint, good HR practices help in:

Directing A Happy Workspace

One of the best ways to keep employees determined at the desk and in the office is to
maintain a safe, healthy and happy atmosphere in the office. Creating the environment
alike home which eventually makes an employee dedicated as well to stay with the
organization for a very long time. They should also do surveys to capture their
thoughts and remarks regarding the office’s situation. You can consider adding any
printed forms or HR Software  to run an anonymous employee survey program to get
feedback.

The Open Book Management Style

By open-book management, we mean having a transparent business. Your organization

must share company updates with the employees as well. It makes a confident
statement that the workforce is as passionate about the business as the
management . This will motivate your employees towards archiving business goals
because they will have a long-term vision as to where and for what they are working.

12
 Human Resource Management

This will not only improve your business productivity but you will have the least
issues with challenges like employee engagement and retention.

Bonus Based on Employee Performance

Rewarding the employees who have been creative and have been doing wonders for
the organization is a good way to keep them enthusiastic. Bonuses must be assigned in
such a way that employees understand that there is no payout until the company
reaches a particular profit. Additional criteria could be the team’s success and the
individual’s performance. It also helps in keeping the determined and dedicated
employee back for the office.

The 360 Degree Performance Management Feedback System

This system which demands feedback from peers, and juniors, has been frequently
adopted as the best feasible method for collecting performance feedback. Every person
in the team is accountable for giving appropriate, constructive and positive feedback.

Neutral Evaluation System

Developing an evaluation system that clearly links individual performance to

corporate business goals and significances. Every employee should have well-defined
reporting relationships. The employees rating themselves should be a part of the
evaluation process as it empowers employees. Evaluation becomes neutral if it is
based on the achievements of the employee, tracked over the year . For better
objectivity, besides the immediate boss, each employee should be evaluated and
judged by the next higher level as in reviewer. Cross-functional feedback, if obtained
by the instant boss from another manager (for whom this employee’s work is also
imperative), will add to the justice of the system.

Sharing Knowledge

To ensure that knowledge management supports strategy, one should adopt a

systematic approach. Store and save knowledge in databases to provide better access
to the information posted before by the company or the employees on the knowledge
portals of the company. Whenever an employee returns after attending any capabilities

13
 Human Resource Management

or skills development program, sharing essential knowledge with others could be made
important and mandatory. New and innovative ideas should also be posted on these
knowledge-sharing platforms.

Highlight Performers

The best performance and employee achievement must be kept prominent though
company intranet, display boards, etc. It will give them boost and encourage others to
put in their best, for creating a competitive environment within the company.

Open House Discussions and Feedback

Well, Ideas rule the world. The organizations that wish to create gigantic ideas and try
to execute them working on it. The employees play a vital role in creating and
discussing the idea, they are of a great source. Lack of planned and strategic
mechanism is the only thing that stops great ideas to be implemented in your
organization. Open house discussions, employee-management meetings, suggestion
boxes and tools such as Critical Incidents Diaries can help identify and develop talent.

Rewards and Recognition

Working on recognizing talent may not work, you need to couple it with public
appreciation. Getting a cash bonus is often less significant than listening to the loud
applause by colleagues in a public.

Pleasure Employees with the Unexpected

In the end, you should often delight your employees with unique things in the form of
a reward, a gift or a certificate. Reward not only the top performers but also a few
others who need to be motivated to display their best.

14
 Human Resource Management

Challenges in Human Resource Management:

Compliance with Laws and Regulation

Keeping up with changing employment laws is a struggle for business owners. Many choose
to ignore employment laws, believing they don’t apply to their business. But doing so could
mean audits, lawsuits, and possibly even the demise of your company.

Management Changes

As a business grows, its strategies, structure, and internal processes grow with it. Some
employees have a hard time coping with these changes. A lot of companies experience
decreased productivity and morale during periods of change.

15
 Human Resource Management

Leadership Development

A recent study showed more than a third of companies are doing an average job, at best, at
implementing leadership development programs. Thirty-six percent of companies surveyed in
Brandon Hall Group’s State of Leadership Development Study admitted that their leadership
development practices are below average.

Workforce Training and Development

Investing in the training and development of lower-level employees is another common HR

problem. Some businesses have trouble finding the resources to do so. Employees on the
front lines are some of your hardest workers, and may not have the time to take a training
course.

Adapting to Innovation

Technology is constantly changing. Businesses must be quick to adapt, or risk being left in
the dust by their competitors. The challenge for small business owners is getting employees
to embrace innovation and learn new technology.

Compensation

Many companies are struggling with how best to structure employee compensation. Small
businesses have to compete not only with businesses of a similar size, but also with
corporations with big payroll budgets. Plus, you have to factor in the cost of benefits,
training, taxes, and other expenses, which can range from 1.5 to 3 times the employee’s
salary.

Understanding Benefits Packages

The Affordable Care Act has been a pain point for many small businesses in the past few
years. Rising healthcare costs mean companies must either pass these costs on to employees,

16
 Human Resource Management

or take a hit to their bottom line. Since good benefits packages can be a deciding factor for
potential hires, understanding them is key.

Recruiting Talented Employees

Attracting talent is a huge investment of time and money. It’s difficult for entrepreneurs to
balance between keeping a business running, and hiring the right people at the right time. In
addition, it’s impossible to know whether a candidate will actually be a good fit until they’ve
worked for you for a period of time.

Retaining Talented Employees

Competition for talented employees is fierce. Startups and small companies don’t have big
budgets for retirement plans, expensive insurance plans, and other costly items that their
larger competitors do—at least, not yet. Employee turnover is expensive and can negatively
impact business growth.

Workplace Diversity

Multiple generations. Ethnic and cultural differences. These are just a few of the many factors
that make workplace diversity a continual challenge for small businesses. The risk of lawsuits
for failing to protect employees from harassment is real.

Line and Staff Aspects of Human Resource Management:

In a sense all managers are HR managers as they all get involved in activities like selecting,
training, compensating employees. Yet most firms now days have the HR department headed
by a person with requisite qualifications in behavioural sciences. How do the duties of this
HR manager relate to the line managers? HR duties would be an interesting question to
answer

Line managers manage operational functions that are crucial for the company’s survival.
Staff managers run departments that are advisory or supportive, like purchasing, HRM, and
quality control.

17
 Human Resource Management

Human resource managers are usually staff managers. They assist and advise line managers
with recruiting, hiring, and compensation. However, line managers still have human resource
duties.

Line Manager Is authorized (has line authority) to direct the work of subordinates and is
responsible for accomplishing the organization’s tasks.

Staff Manager: Assists and advises line managers. Has functional authority to coordinate
personnel activities and enforce organization policies.

Line Manager’s Human Resource Management responsibilities:

The direct handling of people has always been an integral part of every line manager’s
responsibility, from president down to the lowest-level supervisor. For example, one major
company outlines its line supervisors’ responsibilities for effective human resource
management under the following general headings:

 Placing the right person on the right job.

 Starting new employees in the organization (orientation)

 Training employees for jobs that are new to them

 Improving the job performance of each person

 Gaining creative cooperation and developing smooth working relationships

 Interpreting the company’s policies and procedures

 Controlling labour costs

 Developing the abilities of each person

 Creating and maintaining department morale

 Protecting employee’s health and physical condition

18
 Human Resource Management

Staff Managers Responsibilities:

Staff managers assist and advise line managers in accomplishing these basic goals. They do,
however, need to work in partnership with each other to be successful.

Some examples of the HR responsibilities of staff managers include assistance in following

tasks

 Hiring,

 Training,
 Evaluating,
 Rewarding,
 Counselling,
 Promoting,
 Firing of employees, and the Administering of various benefits programs

Human Resource Management Activites:

Planning:

19
 Human Resource Management

Planning is the first and basic activities of the management and everything depends upon
planning as it is a process of thinking about things before, they happen and to make
preparations in-advance to deal with them. Poor planning results in failure and effects overall
system. Therefore, HR Mangers should be aware of when is right time to do things, when
things should be done and when things should not be done in order to achieve goals and
objectives of the organization

It Includes:

Establishing goals and objectives to be achieved

Developing rules and procedures

Determining plans and forecasting techniques as a part of Human resource planning

HR outsourcing

Organizing

HR managers should be well aware of organizing everything related to human resource and
organization as organizing is the process of making and arranging everything in the proper
manner in order to avoid any confusion and conflicts.

It includes:

Giving each member a specific task

Establishing departments and divisions

Delegating authority to the members

Establishing channels of authority and communication 

Creating a system to coordinate the works of the members 

20
 Human Resource Management

Staffing:

Staffing is one of the key functions of human resource management as staffing is the process
of employing right people, providing suitable training and placing them in the right job by
paying them accordingly and satisfactorily.

Determining the type of people to be hired

Compensating the employees

 Setting performance standards, measuring and evaluating the employees:

Counselling the employees 

Recruiting prospective employees and selecting the best ones

HR Metrics

Directing:

Directing is a knowledge, discipline and formal way of communicating to others that what
you are expecting from them to do for you or to an organization. Unless a HR manager has
capability of directing, he / she can't be said as full-fledged HR manager. when a HR
manager has right directing capabilities, it is gives clarity for employees what they are
expected to perform, removes confusion in employees and gives clarity of what results are
expected by the management from employees.

Getting work done through subordinates

Ensuring effective two-way communication for the exchange of information with the

subordinates

Motivating subordinates to strive for better performance

Maintaining the group morale

Controlling:

21
 Human Resource Management

HR managers should have the knowledge of controlling all HR related matters, as they
should be able to think and decide what should be done and what should not be done and
which should be done and which should not be done while dealing with employees.

Establishment of standard performance so as to measure the actual performance of the

employees by conducting performance evaluation for appraisals

Measurement of actual performance with the established performance standards of

employees for finding out gaps in employee performance.

Operative function of Human Resource Management:

Procurement:

Job analysis is a systematic process of gathering all the data & information pertaining
to the job for preparing of  job specification which determine the skills, qualifications
& traits for job  and preparation of job description which describes the duties and
responsibilities so as to recruitment and selection of employee, give satisfaction on
the job, and feel motivation while doing the job

Job design   is the process of deciding on the content of a job in terms of its duties
and responsibilities; on the methods to be used in carrying out the job, in terms of
techniques, systems and procedures and on the relationships that should exist between
the job holder and the superiors, subordinates and colleagues.

Recruitment & selection - Recruitment and selection of the human resources for an

organization is the major and basic function of human resource management.

Human resource planning (HRP) may be defined as strategy for acquisition,

utilization, improvement and preservation of the human resources of an enterprise.

22
 Human Resource Management

The objective is to place right personnel for the right work and optimum utilization of
the existing human resources.

Induction & Orientation: Induction of Employee is the first step towards gaining an

employees' commitment, Induction is aimed at introducing the job and organization to
the recruit and him or her to the organization.  Orientation is the planned introduction
of new employees to their jobs, coworkers, and the organization so as to alien an
employee with their job role.

Socialization is a process of making employees to mingle up with everyone for team-

spirit.

Development:

Career planning and Career development: process of establishing personal career

objectives by employees and acting in a manner intended to bring them about.

Executive development: developing the skills and competencies of those that (will)
have executive positions in organizations

Employee training and development: is the subsystem of an organization and core

function of human resource management. It ensures continuous skill development of
employees working in organization.

Employee training methods or categorized into on-the-job training methods and off
the job training methods.

 On-the-job training methods: job rotation, coaching, job instruction, committee

assignments, apprenticeship and internship
 Of the job training methods: classroom lecture method, audiovisual training
method, simulation, case studies, role playing and the programmed instruction
method.

Overall development of organization: Though human resource department is one of

the departments in organization, but it is linked to overall development of
organization as employees are center for final output and organization’s performance.

23
 Human Resource Management

COMPENSATION 

Job evaluation; analyzing and assessing various jobs systematically to ascertain their

relative worth in an organization.

Performance evaluation is also called as performance appraisal of employees. Human

Resource Managers can adopt various methods for assessing the performance of the
employees.

Wages or salary administration as prescribed by the labour laws, Wages for workers
or salary for employees is the basic and primary thing for which employee's work for
an organization.

Employee rewards, perks and benefits payments according to the employment and

labour laws. Employee benefits are categorized into statutory or mandatory and
voluntary benefits. Statutory benefits are compulsory benefits for employees
voluntary benefits claims cannot be legally enforceable in the court of law in case
management fails to pay to their employees.

MAINTENANCE / MOTIVATION:

Employee well-being; Providing good working conditions at workplace is the

fundamental duty of Human Resource Management department.

Social security for employees: Providing and contributing Employee Provident fund,

Payment of Bonus, compensation, payment of gratuity, maternity benefit, paternity
benefit and employee insurance.

Worker's participation encouragement either individually or collectively, become

involved in one or more aspects of organizational decision making within the
enterprises in which they work Would make employees feel motivated, satisfaction
and stay loyal to the management.

Motivating employees stimulate the desire and energy in employees to be

continuously interested in a job and committed it, role, or subject, and to exert
persistent effort in attaining a goal.

24
 Human Resource Management

Job rotation is the human resource management technique in which employee

is moved between two or more jobs in a systematic and planned manner.

Maintaining HR records in accordance with employment laws and organizational

needs is the basic function of Human Resource Management

Human Resource information system implementation lets you keep track of all your

employees and all information about them.

Integration: 

Industrial relations are the process of management dealing with one or more unions
with a view to negotiate and subsequently administer collective bargaining agreement
or labour contract. Maintaining proper industrial relationships is the core activity of
Human Resource Management so as to avoid industrial disputes.

Employee Discipline is a systematic procedure the set-rights and corrects or punishes

a subordinate by superior because a rule of procedure has been disobeyed or violated.
Discipline is the force that prompts employees to observe rules, regulations, standards
and procedures deemed necessary for an organization.

Grievance redressed; Grievance procedure is a formal communication between an

employee and the management designed for the settlement of a grievance of
employees. Grievance procedures differ from organization to organization as
grievances can be very damaging if not handled properly. 

Dispute settlement: Causes of industrial disputes can be broadly classified into two

categories: economic and non-economic causes. The economic causes will include
issues relating to compensation like wages, bonus, allowances, and conditions for
work, working hours, leave and holidays without pay, unjust layoffs and
retrenchments. The non-economic factors will include victimization of workers, ill
treatment by staff members, sympathetic strikes, political factors, indiscipline.

25
 Human Resource Management

Collective Bargaining is a method of determining the terms and conditions of

employment and settling disputes arising from those terms by negotiating between the
employer and the employees or their trade union.

Being a spokesman of employees and organization: It is the responsibility of human

resource manager to be as, spokesman, negotiator and middlemen between
management and employees 

Resolving conflicts among employees is major task of human Resource Management.

Role of personnel manager:

Administrative roles:

Policy maker

 The human resource manager helps management in the formation of policies

governing talent acquisition and retention, wage and salary administrative
welfare activities, personnel records, working conditions etc. He also helps in
interpreting personnel policies in an appropriate manner.
Administrative expert
 The administrative role of an HR Manager is heavily oriented to processing
and record keeping. Maintaining employees file and HR related databases
processing employee benefit claims, answering queries regarding leave,

26
 Human Resource Management

transport and medical facilities, submitting required reports to regulatory

agencies are examples of the administrative nature of HR management.
These activities must be performed efficiently and effectively to meet
changing requirements of employees, customers and the government.
Advisor
 It is said that personnel management is not a line responsibility but a staff
function. The personnel manager performs his functions by advising,
suggesting, counseling and helping the line managers in discharging their
responsibilities relating to grievance redressal, conflict resolution, employee
selection and training. Personnel advice includes preparation of reports,
communication of guidelines for the interpretation and implementation of
policies, providing information regarding labor laws etc.
Housekeeper
 The administrative roles of a personnel manager in managing the show
include recruiting pre-employment testing, reference checking, employee
surveys, time keeping, wage and salary administration, benefits and pension
administration wellness programs, maintenance of records etc.
Counselor
 The personal manager discusses various problems of the employees relating
to work, career their supervisors, colleagues, health, family, financial, social
etc and advises them on minimizing and overcoming problems if any.
Welfare officer
 Personnel manager is expected to be the Welfare Officer of the company. As
a Welfare officer he provides and maintains (On behalf of the company)
canteens, hospitals, crèches, educational institutes, clubs, libraries,
conveyance facilities, co-operative credit societies and consumer stores.
Under the Factories Act, Welfare officers are expected to take care of safety,
health and welfare of employees. The HR managers are often asked to
oversee if everything is in line with the company legislation and stipulation
Legal consultant

Grievance Handling
Settlement of disputes and Union Management
Disciplinary procedures

27
 Human Resource Management

Collective bargaining
Joint council and workers participation in management
Industrial relation issues
Separation

Operational roles

Recruiter

Winning the war for talent has become an important job of HR managers in
recent times in view of the growing competition for people possessing
requisite knowledge, skills and experience. HR managers have to use their
experience to good effect while laying down lucrative career paths to new
recruits without, increasing the financial burden to the company.

Trainer, developer, motivator

Trainer developer motivator: Apart from talent acquisition talent retention

is also important. To this end, HR managers have to find skill deficiencies
from time to time, offer meaningful training opportunities, and bring out the
latent potential of people through intrinsic and extrinsic rewards which are
valued by employers

28
 Human Resource Management

Coordinator/linking pin

The HR manager is often deputed to act as a linking pin between various

divisions / departments of an organization. The whole exercise is meant to
develop rapport with divisional heads, using PR and communication skills
of HR executives to the maximum possible extent.

Mediator

The personnel manager acts as a mediator in case of friction between two

employees, groups of employees, superiors, and subordinates and
employees and management with the sole objective of maintaining
industrial harmony.

Employee champion
Placing people on the right job
Charting a suitable career path
Rewarding good performance
Resolving differences
Adopting family-friendly policies
Ensuring fair and equitable treatment
Striking balance between employee expectations and
Organizational requirements
Representing workers' problems and concerns to management

29
 Human Resource Management

Strategic roles:

Change agent

Role of an HR manager as a successful change agent in an organization is

to foster business leaders who can anticipate change, analyze the
environment, act decisively and collaboratively, and affirm the value of
positive change

Strategic partner

A strategic partner is a leader who is included in conversations about the

future, mission, goals, and overall strategy of a company or organization

Images and Qualities of Human Resource Manager:

Images of Human Resource Manager:

What qualifications and skills should HR professionals possess to succeed in their

profession? HR manager needs to have technical, cognitive and interpersonal skills and
processes to accomplish his or her work. He or she needs to be good in communication, be
empathetic, have tolerance for ambiguities, be even tempered, be pleasant, confident and be
the one who loves people. The individual needs to be competent in legal matters and have

30
 Human Resource Management

didactical instincts. Needless to say, the HR professional needs to be good in basics. In other
words, he or she should have comprehensive understanding of HR policies, principles,
programs and practices.

The HR Manager needs to be multi-knowledgeable. In addition to the knowledge about the

HRM subject, the HR manager should be competent in finance, sales, marketing and
operations. No longer HR manager is confined to file-pushing and record keeping. He or she
is increasingly playing strategic role. Strategic role demands knowledge about all functional
areas of business. Diverse knowledge is a must for HR managers for another reason: There
are instances of organizations where finance executives become HR directors, and worse still,
stores managers are made personnel managers. Why not HR specialists become finance
executives or marketing managers?

Knowledge about all the functional areas is of immense help to HR professionals.

Qualities of Human Resource Manager:

Communication skills

o Communication is essential in Human Resource Management, as the HR

professional is the link between the business and the employee. On the one
hand, you are an activist for employees, and on the other hand, you represent
the employer.
Administrative expert
o Administrative tasks remain a major part of the HR role. Administrative duties
involve areas like employee leave, absence, absence files, the in- and outflow
of employees, payroll and other topics.

31
 Human Resource Management

HRM knowledge and expertise

o Previous work experience, or an educational background in Human Resource

Management or Industrial- and Organizational Psychology are very helpful.
o HRM knowledge helps in doing most of the other skills and competencies
mentioned in this article. It helps to understand recruitment, selection, absence
procedures, data reporting, and other personnel processes. An educational
background in psychology or HRM often also helps to develop the soft skills
that are helpful in communication and coaching.
Proactivity
o Proactivity is often considered more of a personality trait than a skill.
However, it is certainly something you can develop over time. As an HR
professional, you are the connection between the employer and the employee,

32
 Human Resource Management

therefore proactivity can help you in spotting potential problems early and
preventing them from escalating.
o In line with this, proactive Human Resource Management is preferred over
reactive HRM.
Advising
o One of the key HR skills is advising different stakeholders. You need to able
to advise both employees, line managers, and senior managers on personnel
issues.
o These issues can be very operational, for example creating a re-integration
plan for an employee or helping a senior manager with the formulation of an
email to the department. More tactical issues are the organization and advising
in restructuring efforts. Strategic advice involves the alignment of HR
practices to align more with the business.
Coaching
o Coaching skills are helpful when it comes to one-on-one or group sessions to
spread information or train people. This happens in training and development
situations, but also in onboarding, re-integration, conflict resolution, and in
assisting frontline managers with people issues.
Recruitment and selection
o Another often mentioned HR skill (obviously) involves recruitment and
selection. Finding qualified candidates, selecting the best, and exploring if
there’s a match between the candidate, the company (culture), and the
manager is one of the most important HR tasks.
HRIS knowledge
o Human Resource Information Systems are the digital counterpart of the soft-
side of Human Resource Management. Most information regarding hiring,
performance evaluation, payroll, rewards and benefits, and more are registered
in one or more HRIS.
o Large organizations usually have standard providers like SAP (with
SuccessFactors) or Oracle. Smaller companies work with smaller providers.
Knowledge of an HRIS is a prerequisite for most senior HR jobs and one of
the top technology skills HR professionals need today. 

33
 Human Resource Management

o It’s hard to understand these systems without having hands-on experience in

them. They are, however, relatively simple and intuitive to work with.
Intercultural sensitivity and language skills
o This HR skill depends on the specifics of the organization. Especially for
larger multinational companies, intercultural sensitivity is a must. When
you’re in touch with managers and employees in different countries, you need
to be aware of intercultural differences.
Analytically driven and oriented
o Skills related to data-driven working and analytics have emerged rapidly in the
last five years. Most HR generalists are now required to be analytically-driven
and oriented.
o There’s a push through all departments to leverage the power of data analytics
to make better decisions. This can involve the use of complicated predictive
analytics on HR data, or the much simpler use of data to make better
decisions. The latter is often referred to as evidence-based HR.

HR reporting skills

o As part of being more analytically driven and oriented, HR reporting skills are
increasingly required too. These skills include the ability to create, read, and
interpret HR reports using data coming from different Human Resource
Information Systems.
o Reporting on key metrics is key to advising managers and employees, create
better people policies, and make otherwise more evidence-based decisions.
Teamwork
o Teamwork is one of those HR skills that is impossible to avoid. As an HR
professional, you’re expected to work together with your colleagues in HR and
with managers in the organization. Working together internally by actively
aligning HR activities benefits both the organization and HR.

34
 Human Resource Management

Integration of Employee

Integration of your employees is essential for a good working environment and employee
engagement. The more your employees feel well informed, listened to and appreciated the
more they are likely to feel engaged. It is also essential that new employees feel welcomed
and integrated (onboard). The better your Pre and Onboarding process/program is the greater
chance your new employee will stay longer than one year.

Effective Ways to Integrate Employee’s

The recruitment process incurs many costs and without effective employee integration the
fact is: it’s not worth it. Staff are more likely to leave, have low morale and a slower speed to
performance.

High early attrition rates can often be traced back to early areas which were overlooked. This
can affect fellow employees when there’s a high staff turnover rate.

As a result, overall productivity, customer service and employee engagement will be low.
This in turn has negative effects on an organization as a whole.

These below steps to employee integration improve speed to performance and employee
engagement. They are a must to save costs and to stay competitive in any industry.

Understand the ‘hierarchy of employee needs’

Before organizations can start planning employee engagement strategies and programs, they
first have to understand what their employees’ needs are. Like Maslow’s famous hierarchy of
needs, employees must have certain areas met before they can continue to grow. As a
company, help master the lower levels—survival and safety—early on by creating a
welcoming company culture and impactful onboarding process. This can give you more time
to focus on the higher levels: belonging, importance and self-actualization, which ultimately
help grow and spread engagement. As an organization, start with conducting surveys to better
understand your current engagement levels and where employees would like to see
improvement.

Discuss engagement goals with employees and make them realistic

35
 Human Resource Management

When setting goals and expectations, don’t be afraid to make employees a part of the
engagement conversations. They can help during the brainstorming process and are great
insights for what will and won’t work. In addition, Gallup writes that employers should,
“make engagement goals meaningful to employees’ day-to-day experiences.” When you
relate organizational engagement goals with daily tasks, employees feel more connected and
motivated to their current work.

Create a reward program

Lastly, another way to begin implementing employee engagement tactics within your
organization is to create a meaningful rewards program. So, how can you make employee
recognition actually rewarding to employees?

According to O.C. Tanner, organizations should “optimize the recognition experience by

creating a memorable and rewarding experience. Employees should select a personal award
from a limited number of award choices. These awards should be unique items the employee
“wants,” and not just “needs” to provide a sense of luxury and pampering.” Basically,
organizations should keep an awards system that values the individual and not a program
that’s one-size-fits-all.

If your organization doesn’t have an employee engagement program, now is the time to start
one. When employee engagement tactics are in place and seen within your organization, great
work follows.

New Employee Onboarding

First impressions can make all the difference and new employee onboarding is
certainly a part of that. They can help set employee expectations and staff engagement
levels.

The importance of onboarding cannot be overlooked as there are many benefits. Many

employers expect six to 12 months for new hires to add value to an organization.

This can be significantly sped up when a new starter has a smooth transition into their
role. Moreover, it helps them feel immediately valued and more comfortable.

36
 Human Resource Management

Likewise, an initial one-to-one meeting with a senior member of staff can introduce

the company culture whilst making a good initial impression of employee relations.

Again, this has an effect on employees around them because they will quickly show
their positive contribution to the team.

Team Building Ideas

Alongside general introductions to fellow members of staff, team building ideas

quickly break the ice and create a rapport. An example of this is the Personal
Shield method.

This allows people to introduce themselves in a fun, productive and professional way.
It can also be useful when forming a new team and in first-meetings.

Similarly, Snowball Fight is effective for initial meetings to discuss any problems that
may arise. Whilst, the Market Stalls approach can mix-up meetings and create more
open conversation as well as being highly productive.

Mentoring and Coaching

Immediately introducing new employees into a mentoring program can give them the
opportunity to set their own career goals. Working towards targets will speed up how
quickly they add value to the organization.

It also gives them the opportunity to build other employee relations with a member of
staff who has been with the organization longer.

Additionally, effective employee coaching from managers goes a long way to

integrating employees. Firstly, managers are likely to perform the onboarding process.

This will give them the opportunity to point out training, for example, that they push
to help their staff’s development. Moreover, they give a first point of contact for the
company culture.

37
 Human Resource Management

They can also inform new hires of the creative recognitions, low cost rewards and
employee benefits on offer. This can instantly show new starters what unique
attributes the organization has.

Employee Engagement Surveys

High early attrition rates are the type of staff turnover which incurs the most costs.
Therefore, beginning staff surveys early can help avoid this pitfall.

Employee engagement surveys are helpful because they show trends that are specific
to an organization’s workforce. Moreover, companies know how to deal with
statistics.

As a global cosmetics brand told great{with}talent, “If you have quantitative

information on why people have left an organization then it’s more difficult for
people to ignore.”

By ironing out any initial kinks, new employees can start on a better foot which sets
the tone for the rest of their employment.

Staff Engagement Strategies

Staff questionnaires are nothing without follow-up actions. After all the fight to
get high survey response rates, employees expect change.

It’s a good idea for employee engagement surveys to be succeeded by ‘quick-wins’.

That’s small steps which can quickly show results.

This gives the organization time to work on building more complex staff engagement
strategies. Whilst, employees can see that things are actually happening.

Without follow-up actions, employees will feel misled and like their opinions don’t
matter. In fact, it’s likely to cause the opposite effect and lower staff engagement even
further.

38
 Human Resource Management

Initially, new hires can also be informed of changes that are taking place and why, i.e.
because the staff suggested such actions. This will even increase new starters
employee engagement even though they didn’t take part in the staff survey.

Employee integration is part and parcel of recruitment and retention. Overlooking it

will waste resources and result in high staff turnover and no one wants that.

Environment in Human Resource Management:

Human Resource Environment is a part of social environment which includes the concept,
viewpoints, work culture, attitudes, efficiency, skills, productivity, nature and behaviour of
HR, employees’ demand and supply, motivational aspects, compensation methods and
industrial relation concerning of HR practices.

Environment of HRM includes all those factors which have bearing on the functioning of HR
department.

39
 Human Resource Management

These forces can be divided in two categories, i.e. External Environment and Internal
Environment.

Internal Environment:

Forces in the internal environment provide strengths and weakness. They are controllable by
HRM.

Organizational goals: desired outcomes which provide frame of reference for

conducting HRM.

Policies: they provide guidelines for HRM decisions and actions.

Structure: it is the design of jobs and relationships. It divides HRM activities and
coordinates HRM efforts.
Reward system: it ensures attraction and retention of quality human resources.
Organization culture: it includes shared norms, values, beliefs, and customs that guide
organizational behaviour.

40
 Human Resource Management

Stakeholders: they consist of employees, labour unions, customers, competitors,

government and pressure groups who have interest in the performance of
organization.

External Environment:

Dynamic forces in the external environment provide opportunities and pose threats. They are
uncontrollable by HRM.

Politics / laws: political situation and laws restrain or encourage HRM activities.

Economic forces: they consist of economic systems, policies and conditions which
affect job market and reward system of employees.
Socio-cultural forces: related to human relationships which provide status to jobs.
Technology: it consists of skills, methods, systems and equipment.

Need to Study HR Environment:

In order to create and develop intellectual capabilities among employees, there is need
to develop the learning and knowledge attitudes among employees;

In order to determine and prepare social values, ethical norms and several code of
conducts within the purview of employees;
In order to analyse and implement effectively and perceptively the business and
labour laws and provisions;
For strengthen and develop the work plan for productive and constructive activities by
the employees;
In order to make congenial and harmonious work-culture at work places, there is need
to analyse all the relevant aspects as arising out of environmental studies;
In order to solve and overcome different societal issues, evils and conflicts, there is
need to analyse the social environment;
For managing and organising the mechanical and technological advancement as well
as new and innovative methods at the work place;

41
 Human Resource Management

In order to take sound, rational and comprehensive decision making invariably

relating to HR practices;
In order to determine long term strategies for different internal and external aspects of
HRM as well as to develop HR efficacies; and
In order to study, analyse and develop the personal skills and efficiency, there is a
need to study HR environment.

Role of External forces, Internal forces in Human Resource Management:

Human resource management is a subsystem of an organization as a system. However, when

a subsystem is taken for analysis, it is treated as a system because it has the features of a
system. A system works in the context of its environment. Environment of a system consists of
all those factors which lie outside the system but affects working of the system.

In the case of human resource management, there are two categories of environmental
factors-external and internal. External factors are all those factors which lie outside an
organization and affect its working, including human resource management. Internal factors
are all those factors which lie within the organization and affect human resource
management.

Learn about the various external factors affecting human resource management. They are: -
1. Economic Factors 2. Socio-Cultural Factors 3. Technological Factors 4. Political-Legal
Factors

Also, learn about the various internal factors affecting human resource management. They
are: 1. Organization’s Strategy 2. Organizational Culture 3. Trade Unions and 4.
Organization’s Financial Position.

42
 Human Resource Management

1. External Factors:

External factors affecting human resource management are economic, socio-cultural,

technological, political-legal, and professional association. These factors have different types
of influences on human resource management.

Economic Factors:

Economic factors are those factors which give shape and form to the development of
economic activities and include factors like nature of economic system, general economic
conditions, various economic policies, and various factors of production including human
resources.

Out of these, factors that influence human resource management practices are population and
workforce, workforce market conditions, national income, and inflationary pressures.

Influence of Economic factors on human resource management practices are as follows:

Population and Workforce:

Population and workforce influence human resource management because these forms the
basis for an organizations’ external supply of human resources. While considering

43
 Human Resource Management

population and workforce as a means for supply of external human resources,

organizations should differentiate between workforce and population because only a part
of the population is eligible to work.

Further, eligible workforce can be divided into two groups- the workforce reserve (those
not working for economic gain, for example, homemakers, students, etc., and those who
constitute workforce. Out of this workforce, organizations can choose their employees.

Workforce Market Condition:

Workforce market condition shows demand and supply of workforce. It influences human
resource management practices relating to recruitment and selection. Exchanges between
employers and potential employees occur in the workforce market. Since workforce
market includes all types of workforce, only relevant workforce market is taken into
account for searching potential employees.

Three factors usually define the relevant workforce market- (a) occupation —
qualifications and skills required, (b) geography — potential employees are willing to
relocate or commute, and (c) other employers that compete with similar products and
services.

These three factors define the part of the workforce that is of interest to a particular
employer. In fact, human resource professionals consider workforce market in terms of all
three factors.

National Income:

National income, particularly measured in terms of per capita income, affects wage/salary
structure at the macro level. Each employer has to align wage/salary structure with that
operating at the macro level. This is the reason for difference between wage/salary
structure of economically advanced countries and developing countries.

Inflationary Pressures:

Besides the national income, inflationary pressures in a country also affect the payment to
be made to employees. In most of the countries, payment to employees is linked to cost of

44
 Human Resource Management

living either directly or indirectly. As a result, when a country faces inflationary pressures,
its cost of living index goes up forcing employers to pay more to employees.

For example, in India, dearness allowance, a part of the payment made to employees, is
linked with cost of living index. When this index goes up, there is proportionate increase
in the amount of dearness allowance.

Socio-Cultural Factors:

Socio-cultural factors are quite comprehensive and affect various aspects of organizational
operations, including human resource management. From human resource management point
of view, attitudes, beliefs, desires, expectations, and customs of the society at a given point of
time are important.

These factors determine-

Expectations of the society from organizations,

views towards social status of jobs,
views towards achievement of work,
views towards authority structure, responsibility, and organizational positions,
workforce mobility.

Technological Factors:

Technological factors consist of sum total of knowledge providing ways to do things. These
include inventions and techniques which affect the ways of doing things, that is, designing,
producing, and distributing products and services. Technology affects an organization in two
ways-

(i) defining nature of jobs and

(ii) affecting human resource management practices.

Defining Nature of Jobs:

45
 Human Resource Management

Technology is a major source of productivity increase. Various jobs in an organization being

performed by individuals are determined by the technology being used for conversion
process. Thus, technology determines the type of skills to be possessed by job performers.

As the level of technology improves in an organization, skill requirement also increases. For
example, in knowledge-based companies like in information technology, skill requirement is
quite different as compared to industrial companies. For knowledge-based companies,
knowledge workers are required.

Even in industrial companies, those opting for highly automated technology require human
resources with different skill set as compared to companies opting for non-automated
technology. HR professionals have to select and train human resources accordingly.

Technology not only affects the internal operations of organizations but it also affects how
human resource professionals work. By linking computers, fax machines, copiers, printers,
and the likes, information related to human resources can be disseminated more quickly.

With that information, human resource planning can be better facilitated, decisions can be
made faster, and communication with employees and external community can be enhanced.

Affecting Human Resource Management Practices:

Technology has changed human resource management practices in the following areas:

In recruitment and selection, the total process has been reduced to such an extent that
the entire process can be completed within a very short time. By posting jobs on the
Internet, required information is assimilated quickly; applications from prospective
candidates can be received quickly; even interviews can be conducted through
telephone; result of selection process can be communicated electronically.

It may be mentioned that most of the IT companies and many of the forward-looking
companies in other sectors send appointment letters to the selected candidates through
the Internet.
In training and development, technology is dramatically changing how HR
professionals are training and developing employees. The Internet has provided
opportunities to deliver specific information to employees on demand; visual display
terminal (VDT) is being used to make training programmes more effective.
46
 Human Resource Management

In fact, various training media are also making it possible to send employees for
training without having them to physically transport from one location to another.
In communication, technology has paved the way for open door policy, a policy
which is must in the present business environment. Open door policy implies that
anyone can communicate with anyone in the organization without being limited
because of hierarchical pressures.
Organization’s websites and the Internet have made open door system workable.
Human resource professionals use these media to share information with employees.
In the surveillance of employee behaviour, technology is playing crucial role. Instead
of monitoring employee behaviour physically, this can be done through technology
whether the employees are located at a single place or dispersed across the globe. In
fact, many multinational companies adopt this mode of monitoring the behaviour of
their employees.
In today’s environment, a major concern before HR professionals is to maintain
proper work-life balance for employees. Organizational jobs have become
demanding. This feature takes lot of employee time. If time taken in commuting to
and from office is added to this, employees have no time to their personal life.
Technology has paved the way for emergence of virtual office which is devoid of a
central place, known as office; no commuting of employees is required; they are
linked through information technology. Therefore, they can work from any place.
This helps them to maintain proper work-life balance.

IV. Political-Legal Factors:

Political-legal factors include political system, role of government in business, various

government policies related to business operations, laws formulated by governments, both
central and state levels.

Political-legal factors affect human resource management practices in the following

ways:

Governments prescribe policies from time to time related to management of human

resources. These policies have to be adhered by all the organizations which are
covered by these policies.

47
 Human Resource Management

There cannot be discrimination among employees on the basis of sex, caste,

religion, or place of origin.
In certain sectors, at least prescribed percentage of total employees must be
selected from personnel belonging to backward classes, scheduled castes/tribes, and
physically handicapped.
Employee remuneration, safety, working conditions, and industrial relations
systems must conform to various legal prescriptions. In India, there are various Acts
passed by Parliament and State legislatures, relevant to management of human
resources. Organizations have to adopt their human resource management practices
according to prescriptions of these Acts as these Acts leave very little discretion for
adopting different human resource management practices.

2. Internal Factors:

Internal factors (also known as organizational factors) lie within the organization and affect
human resource management practices. In an organization, human resource management
works within the overall perspective provided by the organization.

Overall perspective for the functioning of human resource management is provided by

numerous organizational factors, the more relevant being the following- organization’s
strategy, organizational culture, trade unions, and organization’s financial position.

Besides the above organizational factors, organization’s technology also affects human
resource management practices by defining nature of jobs. Now let us see how the above
internal factors affect human resource management practices.

Organization’s Strategy:

Human resource management issues are not independent issues but these are derived; these
are derived from organization’s strategy. Every organization sets its strategy either explicitly
or implicitly. Strategy is a way in which an organization, reacting to its environment, deploys
its principal resources and marshals its main efforts in pursuit of its purpose.

Human resource is one of the principal resources of any organization. Therefore, it must be
deployed and utilized keeping in view the requirements of the strategy. Its implication is that
HR strategy should be chalked out in the light of organization strategy.

48
 Human Resource Management

How strategy affects human resource management practices can be seen by analyzing how
strategy works in an organization. Strategy operates at three levels- corporate level, business
level, and functional level. At the corporate level, strategic decision involves deciding ‘what
business should we be in’.

Such a decision sets the long-term direction for the whole organization. Such a decision is
made by top management of the organization. Business level strategy is relevant to different
business areas, often called strategic business units (SBUs). Each SBU formulates its own
strategy within the overall framework provided by corporate level strategy.

Business level strategy primarily deals with the question- ‘how do we compete in the given
businesses’? Functional level strategy is relevant to each functional area like production,
marketing, finance, and, of course, human resource. Functional level strategy primarily deals
with the question- ‘how do we contribute to business unit and corporate objectives’?

Thus, HR strategy is formulated within the overall framework provided by corporate level
and business level strategy. Depending on the nature of corporate strategy, human resource
management practices are followed.

Organizational Culture:

Organizational culture is another factor that shapes human resource management practices.
Organizational culture is the set of assumptions, beliefs, values, and norms that are shared by
an organization’s members. There are two types of elements which define the culture of an
organization- abstract elements and material elements. Abstract elements are internally-
oriented and include values, beliefs, attitudes, and feelings.

Material elements are externally- focussed and include buildings, personnel dresses, products,
etc. Every organization, being a social entity, develops within it a cultural system with some
unique modes of behaviour. These unique modes distinguish an organization from others.

Organizational culture is very important factor which affects organizational processes and
practices including human resource management practices. To understand the differences in
human resource management practices in different types of organizational culture, it can be
divided into two groups- high-performing culture and low-performing culture.

49
 Human Resource Management

Human resource management practices differ in these two cultures on the following
dimensions:

In high-performing culture, HR practices are intricately linked to the strategic

management of the organization. In low-performing culture, there is lack of such a
linkage.

In high-performing culture, human resource is treated as a strategic resource. In low-

performing culture, human resource is treated just like any other organizational
resource.
In high-performing culture, human resource function establishes business partnership
with line managers who have a direct interest and involvement in delivering human
resource.
Human resource functionaries become integral part of strategic business units and
customize human resource solutions to provide fast and efficient service. In low-
performing culture, human resource functionaries and line managers have
independent status and way of working.
In high performing culture, the focus is on growing new managers internally by
promotion from within. Therefore, training and development activities have very high
importance in HRM. In low-performing culture, training and development is not
accorded high importance.
In high-performing culture, performance management is based on the person rather
than the job. Assessment is done frequently and relies on multi-rater feedback. In low-
performing culture, performance management is based on job result. Assessment is
done after a fixed interval of time and assesses immediate superior plays significant
role in assessment.
Trade Unions:

Though a trade union in an organization is a separate entity, it has been treated as an internal
factor because organization’s employees (particularly operatives) are members of the trade
union. Trade union affects recruitment of employees, their development, compensation,
maintenance, and industrial relations.

Generally, agreement between management and labour is reached through collective

bargaining. Outcome of the collective bargaining depends on the relative bargaining position

50
 Human Resource Management

of the management and labour. If trade union is in relatively better bargaining position,
outcome of the collective bargaining goes in its favour.

In such a situation, the organization has to adopt human resource management practices
according to wishes of the trade union though such practices may have adverse impact on the
organization. Bargaining position of a trade union depends on the strength of its members as
well as support of trade unions of other organizations at the same location and apex body of
trade unions at national level.

Organization’s Financial Position:

While the above factors are enduring in shaping human resource management practices,
organization’s financial position affects human resource management practices, particularly
those having substantial financial implications. The ability to pay the wages and salaries,
funds for retraining human resources, etc., are affected by an organization’s financial position
and its cash flow.

Generally, highly profitable periods bring higher bonus while unprofitable periods may not
result in any bonus (except the statutory bonus). Though many organizations tend to profess
that employees are their most important asset, they manage their human resources as if
employees are the most important expense.

Therefore, when financial difficulty is experienced, the axe falls first on the employees. This
is evident by substantial employee layoff during the economic slowdowns. On the other hand,
employee stock option, profit sharing, performance incentives, etc. are the result of sound
financial position.

51