A Mathematical

Approach to
Human Resources
A Mathematical
Approach to
Human Resources
By

Teena Mishra
A Mathematical Approach to Human Resources

By Teena Mishra

This book first published 2024

Cambridge Scholars Publishing

Lady Stephenson Library, Newcastle upon Tyne, NE6 2PA, UK

British Library Cataloguing in Publication Data

A catalogue record for this book is available from the British Library

Copyright © 2024 by Teena Mishra

All rights for this book reserved. No part of this book may be reproduced,
stored in a retrieval system, or transmitted, in any form or by any means,
electronic, mechanical, photocopying, recording or otherwise, without
the prior permission of the copyright owner.

ISBN (10): 1-5275-5709-X

ISBN (13): 978-1-5275-5709-3
This book is dedicated to my mother. ‘Nothing is better than practice,’
says my mother, Nirmala Mishra, who has always encouraged me to strive
and try again in my life. And I was always one step ahead. She is no
longer alive, but when I chose to publish a book about a mathematical
approach to human resources, I discovered that it is a fresh method with
many problems in this subject. I remembered my mother and began and
eventually finished this job.

While writing this book, my father (Ashok Mishra) has always put light on
the practical parts of life, which has helped me to develop knowledge.
 CONTENTS

Preface ....................................................................................................... xii

Introductory Note ..................................................................................... xiv

Acronyms ................................................................................................. xvi

Chapter One ................................................................................................. 1

Introduction to Human Resource Management
Evolution of Human Resource Management
Human Resource Digitalization
Human resource in the 21st century
Challenges of Human Resource Management
Human Resource Philosophy
Approaches to Human Resource Management
Management approach
Commodity approach
Strategic management
Human Capital Management Approach
Difference in Human Capital Management and Human resource
Management
Human Resource Approach
Proactive Approach
Reactive Approach
Holistic Approach
Hard and soft Approach
System Approach
Internal Marketing Approach
Skill management Approach
Mathematical Approach
System appraoch to human resource management
Approaches towards handling diverse human potential
Case of Human resource practice in the health care system
viii Contents

Chapter Two .............................................................................................. 29

Human Resource Accounting
Why HR accounting is a new dimension?
Why Human resource accounting has been gaining attention
in the present context?
Definition of Human Resource Accounting
Meaning of Human Resource Accounting
Objective of Human Resource Accounting
Concept of Human Resource accounting
Concept of accounting in Human Resource Management
Features of HRA
Concept of accounting in Human Resource Management
Applications of Human Resource Accounting in Human Resource
Management
Accounting Functions
Employee Training and Development
Employee Salary Design
Employee Allocation, Arrangement and Turnover
Human Resource Reset
Relationship between Accounting and Human Resource Management
Cement Corporation of India Ltd
HRA at Infosys
Hurdles in HRA
Enhancement of HRA Application

Chapter Three ............................................................................................ 57

Mathematical Modelling of Human Resources
Mathematical Model for HRP in the Production Process
A Model for Defining Optimal Workforce Planning of
Pilot Roles in an Airline
Mathematical Modelling of Performance Management
A Novel Perspective on Human Resource Management Based on
Multiple Regression Modelling and Quantile Regression Modelling
Mathematical Models to Solve Strategic Workforce Planning
Mathematical Modelling for Allocating Human Resource
Investigation of a Mathematical Model for Optimal Human Resource
Allocation in Heavy Haul Railway Operation and Maintenance
Units
Mathematical Modelling of Bhagavat Gita
Mathematical Modeling of Intellectual Capital and Business Efficiency
 A Mathematical Approach to Human Resources ix

Design of Mathematical Model Assessment of Performing

Achievements
Techniques for HR Forecasting
Mathematical Models in Human Resource Management
Mathematical models in human resource planning
Mathematical Models for allocating human resource

Chapter Four .............................................................................................. 85

Relation between Internal Marketing and Human Resource System
Meaning of Internal Marketing
Significance of Internal Marketing
Internal Marketing Implementation
Types of Measurement Scale
Nominal
Ordinal
Interval
Ratio
Measurement of Internal Marketing Campaign
Responsibility of Internal Marketing Campaign
Internal Marketing and Human Resource Management
Relation between Internal Marketing and Internal Communication
Linakage between Internal Marketing and Branding
Metrics to measure HR
Recruitment Metrics
Human Resource Service and Software metrics
Engagement and employee retention metrics
Training and development metrics
Time tracking metrics
Performance management metrics
Internal Communication metrics
Measurement of Capital Management
Key Performance Indicators
HR Analytical Tools
Measuring Human Resource Internal Efficiency and Effectiveness
Auditing Human Resource Compliance

Chapter Five ............................................................................................ 109

Internal Marketing Measurement
Developing Internal Marketing Plan
Importance of Internal Marketing Measurement
Measuring Human Resource Effectiveness
x Contents

Employee Net Promoters score

Mapping HR Career Path
Employee turnover rate
Employee retention rate
Absenteeism rate
Trainingeffectiveness
New hire performance
Internal mobility rate
Cost of HR per employee
HR tech ROI
Meauring HR efficiency
Effectiveness of HR functions
Development of Core competency
Human capital metrics
Internal marketing dimensions

Chapter Six .............................................................................................. 128

Performance Measurement and Evaluation
Meaning of Performance Measurement
Advantages of Performance Measurement
Performance Measurement Framework
Meaning of Performance Evaluation
Benefits of Performance Evaluation
Essentials of Employee Performance review
Six Best Practices to Conduct Effective Employee Performance
Review
Procedure of Performance evaluation
Methods of Performance evaluation
Performance Instruments and Indicator
KPI
Kinds of KPI
Employee Performance Indicator
Measurement and Perforamnce evaluation system
Performance measurement and management of workforce
Study on health care performance measurement

Chapter Seven.......................................................................................... 156

Internal Marketing Methods and Tools
Internal and External Marketing
Communication of Internal Marketing campaign
Internal marekting tools
 A Mathematical Approach to Human Resources xi

Internal Marketing methods and tools

Advantages of Internal marketing program
Internal marketing methods
Methods of Internal marketing strategy
Best Internal Marketing tools
Mechanism of Internal marketing strategy

Chapter Eight ........................................................................................... 172

Case Studies on Human Resource Practice and Measurement
Recent Trends in Human Resource Practices
Usage of IT technology
Innovations
Adoption of Internal marketing practices
Green Human Resource Management Practices
Human resource measurement and evaluation
Measurement approaches
Selection of Human resource measurement
Case study on Ghana commercial bank
Human resource analytical tools
Nielsen case
Case of reduction in road accidents
Dutch FMCG retailer
Shell
HR driving store performance
Compensation and advantage at Clarks
A new office started at Cisco
Uniliver workforce
Bonus at small organization
Improve health through proper human resource system
Artificial intelligence
Home health agency case study
Dell technology

Bibliography ............................................................................................ 196

Glossary ................................................................................................... 206

Endnote.................................................................................................... 208

Index ........................................................................................................ 209

 PREFACE

This book, “A Mathematical Approach to Human Resources”, presented

the concepts of various approaches to human resource practices.
Academicians and practitioners follow human resource practices on the
basis of their ideas and understanding. Currently, there is a rising debate on
which human resource approach is better, i.e., human resource accounting,
internal marketing approach, mathematical approach, proactive approach,
reactive approach, etc.

Due to the extensive usage of human resource practices, it is difficult to

determine the number of human resource practices. Due to rising
employee-related concepts and various approaches that are employee-
focused, it isn't easy to implement human resource practices and
differentiate them from other concepts. To bring clarity to the concept and
to follow the right approach toward employees, this book was developed.

There are eight chapters in this book. Chapter 1 provides an introduction

to the mathematical approach to human resources, which includes the
evolution of human resources, human resource digitalisation, human
resources in the 21st century, and various approaches to human resource
management.

Chapter 2 elaborated on the concept of human resource accounting, which

encompasses the meaning of human resource accounting, the objective,
the concept of HRA, the application of HRA, and the relationship between
accounting and human resource management. Chapter 3 explores the
mathematical modelling for human resource practice, comprising human
resource planning, workforce planning, performance management, human
resource allocation, company efficiency, and intellectual capital. Every
feature of the organisation is changing rapidly. Since the evolution of
human resource management, various ways have been followed to attain
its objective.

Chapter 4 focuses on internal marketing, which is a different concept from

human resource management. It works as an integrated approach between
human resource management and marketing to increase the value of
 A Mathematical Approach to Human Resources xiii

internal customers. The major distinction is that internal marketing is

competitive and needs to build customer focus by providing value to
internal customers. Employees' value was enhanced with the introduction
of internal marketing, as they called employees internal customers.
Chapter 5 explains the importance of internal management measurement,
measuring HR effectiveness, and HR efficiency.

Chapter 6 discusses performance measurement, the advantages of

performance measurement, the performance measurement framework, the
meaning of performance evaluation, benefits, employee performance
reviews, KPIs, Employee performance indicators, and performance
measurement and management of the workforce.

Chapter 7 highlighted internal and external marketing, internal marketing

tools, internal marketing campaigns, internal marketing strategies, and
their tools and mechanisms. Chapter 8 revealed various recent trends in
human resource practises, including the usage of IT technology, the
adoption of internal marketing practises, and emerging human resource
management practices and innovations. It also discussed human resource
measurement and various case studies.

Thus, these chapters are directed towards increasing knowledge of the

mathematical measurement aspect of human resource practice as well as
providing practical aspects of it.
 INTRODUCTORY NOTE

Employees play a crucial role in organisational performance; thus, it is

vital to measure and improve their performance in the future, which is the
aim of this book, ‘A Mathematical Approach to Human Resources’. It is
valuable to comprehend the effectiveness and efficiency of organisational
initiatives, programmes, and projects in attaining organisational goals.

The management of any organisation is continuously working hard for

optimal employee effectiveness. The most widespread way to define an
organisation's effectiveness is to inspect its financial accounts, like
inventories, account receivables, cash, etc. There is a need to measure
employee investment to save costs for the organisation and attain
organisational goals.

Due to considering the feelings and emotions of employees, various

factors like leadership, attitude, commitment, emotional intelligence,
happiness, and leader-employee interactions lead to organisational
development through employee motivation and satisfaction. However, it is
typical to measure these intangible aspects. But despite this, various
measurement techniques are being used currently.

Conventional and modern approaches to human resource management are

discussed in this book. Human resource accounting is the concept of
identifying, measuring, and reporting human resource investments that
need to be accounted for by typical accounting methods.

Businesses are heavily dependent on creativity or research to determine

methods to measure human investment. However, it is critical to measure
intangible assets such as human abilities. Despite the reason that human
resource accounting is practised in the organisation, they are handling their
problems with this method. Still, the fact is that effectiveness can only be
gained with the positive attitude and commitment of the employees. For
this, internal marketing is focused on the employer as well as employee
commitment to attain organisational objectives. The reason is that
employees and employers are both involved in the exchange process; thus,
how can human resource professionals measure employee performance
 A Mathematical Approach to Human Resources xv

with a one-sided approach? In this regard, Internal marketing measurement

is the technique to measure the functioning of its dimensions in the
organisation, for example, internal communication, internal segmentation,
rewards, job products, internal customer orientation, service quality, etc.

There is a requirement for mathematical modelling to measure human

resource practice so that organisations can utilise it for their development.
Developing consistent quantitative methods for various practices takes
time and effort. However, it is possible only if there is a proper
understanding of the various concepts linked to it.

This book will provide a better insight into the human resource
measurement procedure and approaches and provide a basis to develop
quantitative techniques in human resource practice.
 ACRONYMS

HRM Human Resource Management

HR Human Resource

HRM Human Resource Management

IM Internal Marketing

SHRM Strategic Human Resource Management

R and D Research and Development

AI Artificial Intelligence

COVID 19 Coronavirus Disease

ITC limited India Tobacco Company Limited

HRA Human Resource Accounting

SAIL Steel Authority of India Ltd

BHEL Bharat Heavy Electrical Limited

SPIC Southern Petrochemicals Industries

Corporations of India

MMTC Metals Trading Corporations of India Ltd

SMEs Small and medium-sized firms

IT Information Technology

CIS Common Wealth of Independent States

 A Mathematical Approach to Human Resources xvii

AHP Analytical Hierarchy Process

HRA Human resource allocation

SPSS Statistical Packages of Social Science

IC Intellectual Capital

KPI Key Performance Indicator

ROI Return on investment

SMS Short Message Service

 CHAPTER ONE

INTRODUCTION TO HUMAN
RESOURCE MANAGEMENT1

Abstract
There is a drastic change in every sector of business. Due to changing
technology, increasing globalisation, and competition, there is a change in
the organisation's overall system. Human resource management is one of
the disciplines in management that focuses on managing employees at
work. However, various conceptions have developed over time regarding
how to tackle human resources in the organisation. There is an increasing
awareness for the betterment of human resources in the organisation; thus,
currently, organisations call human resources 'internal customers’.

It is required to redefine and develop the human resource concept due to

the increasing complexity and dynamic environment. To deal with human
resource practices and assess the effectiveness of the human resource
management process in the modern era, mathematical approaches and
tools are required. In this context, the introduction to human resource
management and other associated methodologies were the main topics of
this chapter.

Introduction
"Human resource management" describes managing human resources in a
business. (Manashree 2019) With the advent of human resource
management, the significance of human resources has been increasing.
Employees play a vital role in the organisation, and their management
brought various stages of its evolution.

1 Chapter One: Human Resource Management

2 Chapter One

Personal management, human relations approaches, human resource

management approaches, strategic human resource management
approaches, holistic approaches, mathematical approaches, and internal
marketing approaches are some stages of its evolution.

There is a need for much work in measuring human resources. It is time to

consider how to quantify human resources. Therefore, there is a need to
make an effort and provide a direction for implementing it. Due to
growing rivalry, organisations concentrate on strategic human resource
management to acquire a competitive advantage. In 1981, internal
marketing was initiated in response to the growing need to motivate and
retain workers following the emergence of human resource management.
Instead of treating employees as assets, internal marketing involves
treating them as internal customers. Later, different authors continued to
explore this idea. Identification of measurement variables is required for
internal marketing implementation to be successful. (Manashree, 2019)

There is a question: Are internal marketing and human resource

management similar notions? After extensive research in this field, it
shows that both are distinct. (Mishra, 2022) A measurement approach
needs to be identified to measure the internal marketing concept. Scandia
is the first big company to concentrate on measuring knowledge assets.
Intellectual capital is one of the factors present when the hidden
components of human and structural capital are combined. (Edvinssion
and Malone, 1997, as cited in Kucharčíková, 2011)

According to Sveiby (1997), intellectual property is an intangible asset. He

proposed a framework based on three families of intangible assets: internal
structure (organisation management, manual systems, legal structure,
attitudes, R&D software, and individual competence), external structure
(customer relations, brand knowledge, supplier relationships, and
distribution relationships) and individual competence (education, skills,
and experience). Sveiby presented a method for calculating intangible
assets. Several authors have updated their intellectual capital because
intangible assets help boost value. According to conventional accounting,
these assets are costs. An argument is made that a comprehensive
indication of financial success and shareholder value can be found by
utilising non-financial measurements to assess intangible assets and
financial measurements to assess visible equity. (Kucharčíková 2011)

There are various changes that have occurred in the development of

human resource management. The most significant change is the way
 Introduction to Human Resource Management 3

employees deal within the organisation. There is an exchange between the

organisation and employees for mutual benefits. The organisation's
ultimate aim is to improve employees' performance and lead to
organisational growth and development. The problem for the organisation
is how to measure their performance and accountability. Human behaviour
is typical; therefore, it is vital to understand it and do proper planning and
implementation to improve performance. If we look at organisations
today, there is no need to manage employees rather than empower them.
The human resource management concept remains, but there is a need for
a new vision to see it.

Evolution of Human Resource Management

Human resource management is a crucial component of every
organisational management system. Human resource policies significantly
affect individuals, as is well known. Firms have begun to focus on human
resource strategies and applications to establish a sustainable competitive
advantage and high performance in company operations. The concept of
human resource management evolved from using human capital wisely
and effectively. (Vardarlier, 2016)

Following 1980, there was a noticeable increase in the use of human

resource management. Craftsmen and skilled artisans played a significant
role in product creation in the ancient world and for a substantial chunk of
the mediaeval era. In addition to owning the tools and equipment, they
produced and sold the products on the market. They handled their own
business with assistance from their family members. Nevertheless, many
artisans also employ apprentices and a specific class of labourers. Strong
bonds existed between the master artisans and the apprentices, and they
directly dealt with any problems that the family members and apprentices
encountered.

Some apprentices started their businesses after prolonged training, while

others remained financially obligated to their master artisans. Throughout
the mediaeval era, experienced craftsmen formed guilds primarily to
defend the interests of their respective industries. These guilds also
determine the price of the items, the salary of labourers and journeymen
recruited to do the work, and the terms and conditions of their
employment. The ancient and significant section of the mediaeval era saw
many different labourers. Serfs, slaves, and indentured workers are among
them. (Manashree 2019)
4 Chapter One

Managing people, serfs, and indentured labour is one of the stages of

human resource management. Other phases include managing the
Industrial Revolution, the trade union movement, the beginning of the 20th
century's era of social responsibility, the scientific management era from
1900 to 1920, the era of human relations, the era of behavioural science,
the system and contingency approach, and the era of human resource
management from 1980 onward. (Manashree 2019)

The trade union developed in the 1920s, just before India gained
independence. According to various authors, the First World War and
trade unions were responsible for developing the human resource
management concept. The Royal Commission recommended hiring a
labour welfare officer in 1930 to investigate worker complaints. According
to the Factory Act of 1942, if a factory employed 500 or more people, it
was required to hire a labour welfare officer.

The Second World War raised awareness of workers' rights, and from the
1940s to the 1960s, new technology was introduced to assist workers and
expand human resources' application beyond welfare. Personnel
management now refers to a combination of welfare, labour relations, and
administration. Heavy industries began to take off with the second five-
year plan, and professional management gained significance. In the 1970s,
the emphasis was on labour productivity, whereas in the 1980s, it was on
new technology, necessitating new norms and regulations. Human values
and human development were prioritised in the 1990s. As workplaces got
more liberalised and different types of workers began to dominate, this
trend gave rise to human resources management (HRM) and the
development of personnel management. ("Evolution of Human Resource
Management", n.d.)

Western Europe and the United States sowed the seeds of HRM during the
industrial revolution in the 1850s. The wind gradually affected India at the
turn of the 20th Century. (“Evolution and Development of Human
Resource Management (HRM)” 2014)

The evolution of HRM since then can be divided into three categories:

Trade Union Movement Era: Trade union efforts led to the establishment
of personnel procedures, including collective bargaining, grievance
handling systems, arbitration, disciplinary practices, employee benefit
programs, and sensible and logical compensation structures.
 Introduction to Human Resource Management 5

Social Responsibility Era: The era gives importance to social welfare and
the perspective of British industrialist Robert Owen on labour. He thought
the fundamentals of social and economic environments and people face an
impact on their physical, mental, and psychic development. Hence,
improving employees' working and living environments is necessary to
boost productivity. It can be done by removing them from an unfavourable
setting or changing it to incorporate better living and working conditions.

Scientific Management Era: At the start of the 20th century, Frederick

Winslow Taylor popularised the idea of scientific management in the USA
as an alternative to the dominant system of administration by initiative and
incentive to improve the worker's efficiency. Based on his experience on
the shop floor, Taylor developed the following four scientific management
concepts: development and use of the scientific technique; provision for
training and development; management and staff clearly defined; and
harmonious relationships with employees.

Human Relations Era: Since they failed to recognise workers as actual,

aware people with their own needs, attitudes, and feelings, earlier
approaches to human resource management were deemed inadequate by
1920. Between 1925 and 1935, many specialists expressed their opinions
on the human facets of organisational action. (“Evolution and
Development of Human Resource Management (HRM)," 2014)

Human Resource Digitalisation

The Human Resource Management System (HRMS) underwent numerous
modifications over the following two decades, and many new features
were added, including a different human resource information system
(HRIS) for managing personnel, sophisticated employee performance
management software, learning management, and talent features.

After 2010, the introduction of artificial intelligence was the next

significant turning point in developing human resource (HR) technology.
The introduction of artificial intelligence gave HR product architects a
significant opportunity to address complicated issues in the human
resources area.

Artificial intelligence (AI) in the human resource system looks appropriate

in numerous areas. One of the crucial areas where artificial intelligence
may offer the finest solution is recruiting personnel. Studies have been
6 Chapter One

performed to better understand this unusual phenomenon as the millennial

age has begun to assume leadership roles in organisations worldwide.

The new generation was characterised as impatient and a highly motivated

group impacted by business culture and the workplace. It gave rise to the
idea of putting the needs of employees first, and various influential people
like Richart Branson, Vineet Nanayar, and others enthusiastically
supported it. (Ahmer 2018)

Human Resources in the 21st Century

Companies will rely on human resources professionals to serve as capable
leaders who help employers and employees deal with the problems of the
21st-century workplace. People will perceive human resources specialists
as strategic and business decision-makers who advance the organisation.
By selecting the best candidates, training personnel, and adapting to the
shifting environment, the human resource department contributes to the
firm's success Fig 1-1.

Fig. 1-1: Human Resource Network, source

https://cdn.pixabay.com/photo/2020/04/12/11/59/human-resources-
5033959_960_720.png

They will view human resources specialists as strategic thinkers and

business partners who make decisions that advance the organisation. By
selecting the best candidates and offering staff training to help them adapt
 Introduction to Human Resource Management 7

to the changing environment, the human resources department contributes

to the firm's success. ("Major Trends in Human Resources in the 21st
Century", n.d.)

Societal changes: The COVID-19 epidemic, according to global

professional services company Deloitte, has altered the development of
employee-employer interactions, possibly forever. Although it is
impossible to predict where future trends in human resources will go,
Deloitte offers the following four possibilities:

Fashion in the workplace: Companies respond to worker demands and

rival actions.

Talent wars: A skill shortage causes workers to battle for positions.

Employment is work. Workers anticipate finding significance and purpose

outside of their employment, as opposed to in their professional capacities.

Unleashed purpose: The employer and the employee have a sense of unity.

Technology training: The move for businesses from using local servers to
adopting cloud services with unlimited storage will be led by human
resources. Human resources will employ cloud computing specialists to
combine cloud apps, mobile devices, and social media during the
transition. The experts will train workers on cloud operations and integrate
the cloud into a company's daily operations. Developing policies regarding
personal technology and employee data usage will also involve human
resources.

Globalisation Effects: Business is expanding internationally, and there is

cutthroat competition. Globalisation is accelerating at a faster rate and also
making changes in the business market.

The human resources department of a corporation is in charge of hiring

and educating local employees in foreign nations where the company has
offices, as well as newly hired international employees in local offices.
Human resources also teach work ethics to every staff member and how to
comprehend cultural variations in addition to operational training.

Internal changes: The obligation to modernise their technological ways is

one of the developments in human resources. For instance, they will alter
their recruiting strategy to use social media to discover qualified
individuals for open positions. They will boost shared apps between
8 Chapter One

employers and employees and update technology policies to incorporate

conduct and safeguards for an IT property. They will also be able to
evaluate an employee's value to the organisation by connecting their
performance with its business objectives.

The diversity of the workforce will continue to increase in the 21st century
due to the growth of ethnic groupings. The public sees an organisation
with variety as peaceful, stable, and forward-thinking. For employees'
skills to operate in diverse teams, human resources professionals will be
taught to understand, support, and achieve diversity efforts. Human
resources experts will collaborate with business leaders to ensure the
organisation embraces different cultures to preserve a competitive
advantage. (Aslam et al. 2014)

Although many firms were unprepared for the scope of the pandemic,
human resource management was compelled to adjust to COVID-19
quickly. As everyone worked from home, they aimed to alter their
procedures to increase production and employee performance. "Human
resource management" describes managing an organisation's culture and
human resources.

The management of human resources was compelled to adjust quickly.

Following are the ways in which HRM changed with COVID-19:

Widespread adoption of remote work: There is a widespread adoption of

remote work during pandemics, which makes the work easy and simple.

Human resources and core onboarding: Online onboarding and a

digitalised hiring process initiated. Human resource management
departments use task management software and qualitative and
quantitative data to manage employee performance.

Engagement: As organisations maximise employees' well-being

electronically and promote a healthy work-life balance, diversity and
inclusion are essential to a human resource management job.

Development and training: HR experts provide online training and tools to

ensure employees have the necessary skills for remote work.

HR will adjust to flexible and hybrid working after the lockdown. (Evans
2021)
 Introduction to Human Resource Management 9

Human resource departments manage human capital, which includes

people, their abilities, and their skills. Since employees are an
organisation's most valuable asset, HR professionals must balance their
needs with the bottom line. (Evans 2021)

Organisational psychology is where the human resource management

profession gets its inspiration, and it is a crucial technique for managing
organisations. With time, this practice's strategic role started to take shape.
The position of human resource management departments has evolved into
one essential for modern business in the twenty-first century. (Aslam et al.
2014)

In the twenty-first Century, organisations must compete for HR talent

because of worldwide competition. High-achieving adolescents
discovering enormous advantages and financial rewards for satisfying their
materialistic needs are future talents. According to Taylor (2001), a new
generation of highly skilled workers is emerging in this Century. These
individuals are younger, educated, knowledgeable, and highly self-
assured. They are also less concerned with what they can do for the
company than with what the company can do for them. (Aslam et al.,
2014)

The expansion of service firms throughout developed and emerging

nations shifts management attention to employee empowerment. In the
global 21st century, when service companies are expanding quickly and
intellectual capital is the most valuable asset, there are few examples of
using the human asset accounting system. Financial reporting needs to
recognise several intangibles, potentially decreasing the usefulness of the
financial statements. (Gupta 2013)

Challenges of Human Resource Management

Demographic shift: The demographic transition is challenging because of
the dynamic environment. Demographic categories include physical
handicap, gender, age, nation, and religion. By 2008, the proportion of
female employees rose to 48% as their turnout ratio rose. As urbanisation
has advanced, opportunities for women to find employment have
increased.

The choices for where and how employees might work have been
significantly increased by contemporary technology that combines mobile
communication and high-speed internet. For instance, software engineers
10 Chapter One

work from home rather than in offices, receiving their projects over web
connections. Employment preferences are another factor in the diversity of
the workforce.

Knowledge-based economy: Due to the knowledge-based economy, it is

necessary to diversify HRM tactics to compete with existing rivals and
gain a competitive advantage. To simultaneously provide value to
customers and employees, the trend switched from an industry-based
economy to a knowledge-based economy.

Managers in industry-based economies place equal emphasis on

effectiveness and efficiency. Expertise, entrepreneurial skills, innovation,
and a varied workforce are in excellent demand today. (Aslam et al., 2014)

Improve creativity and innovation: To compete in the dynamic

environment, well-known firms emphasise the workforce's abilities and
synergistic power.

As an illustration, Apple and other businesses place their research labs

worldwide to learn about consumer trends and preferences. By learning
about changes, they produce novel and creative products.

Gaining maximum market share: Owing to diversity, manufacturers must

concentrate on the market and market knowledge to understand the needs
and wishes of their customers and produce goods that will capture the
largest possible market share. Teamwork and abilities have improved
through sketching experiences, making it easier to respond quickly to
opportunities in a new market.

Relation between employees and employers: There are changes in the

employee-employer relationship in the twenty-first century as well.
Organisations operate in a fluid environment without centralised control.
Workers work in a welcoming environment and continuously gain
motivation and commitment. Relationships between employees and
employees boost organisational performance as well as create a good work
environment. Employees are devoted to their employers and give their best
in today's highly competitive global environment. They may readily
discuss cutting-edge market trends and strategies with the top
management. Through exchanging ideas, they arrive at new, creative
solutions that are highly beneficial for achieving organisational objectives.
 Introduction to Human Resource Management 11

Reward and compensation system: Employees worked in a concentrated

setting throughout the Industrial Age. No one was compromised in the
decision-making process because top management was responsible.
Managers gave orders to the workforce, and there was no adequate
employee remuneration system. They were paid daily and based on the
number of units produced. Employees are adequately compensated, and
organisations also provide them with awards for their achievements in
finishing tasks given to them and also receive bonuses every month.
Employees work well and help the firm reach its goal thanks to the reward
system.

Managing the cost: The cost of running an organisation has decreased

because of flexible working practices and the usage of technical
equipment. It helps to produce goods quickly and effectively.

Automation offers environmental flexibility, which helps keep costs in

check. The likelihood of errors throughout the production process is
likewise reduced. In the twenty-first century, the concept of employee
staffing and employees as assets, or human capital, is known as human
capital management. Interaction between two people is called counselling,
and it is a process that involves building relationships with other people. It
is helpful for businesses in the twenty-first century regarding employee
training.

The effects of globalisation vary depending on whether a business needs

foreign labour or has a variety of cultural needs. In the twenty-first
century, HRM is necessary for the growth of mindsets, capacities, and
competencies needed for competitive advantage on a global scale. HR thus
provides firms with the success criteria needed for a local and global
competitive advantage. (Aslam et al. 2014)

Employee commitment and engagement: Human resource management

reinvented the notion of internal marketing practice, in which there is a
focus on increasing employee commitment and engagement to improve
organisational performance and lead to profitability. (Mishra, 2022)

The human resource department of a company employs many tactics to

accomplish various objectives, including utilising technological
advancements, managing international business, adhering to current
regulations, confirming ethical issues, monitoring union activities, and
determining the best practice versus best fit. (Loji, Krabi, & Risti, 2012)
Human resource management aims to make the best use of the resources at
12 Chapter One

hand to boost both the business's and its employees' success. Moreover, it
should consider competitive advantage, effectiveness, legal compliance,
work-life balance, and workforce compliance. (Vardarlıer 2016)

Human Resource Philosophy

Policy refers to the art of governing a country, the course of action that a
country's leaders take with a given issue, particularly concerning other
countries, and the principles on which any course of action is based. (New
Webster Dictionary, cited in Ramaraju A, 2019)

It is a somewhat enduring characteristic of a company and provides

parameters for managerial decisions because it is a standing plan.
Therefore, it needs to be carefully developed. There are varied approaches
among organisations; thus, there is no universal procedure for creating and
implementing policies.

The organisational framework may state how the business will interact
with stakeholders. Employees, distributors, clients, vendors, and other key
group members work continuously on critical topics. (Ramaraju A, 2019)

Any policy has two goals: general goals and specific goals. The overall
objectives should reflect the organisation's strategy for the particular area
or function of human resources, underscoring their importance and
contribution to the long-term achievement of organisational goals.

The specific goals are linked to the specific activities in that field, such as
hiring, reviewing, developing, moving around human resources, industrial
relations, incentive systems, etc. This framework must be used to evaluate
various human resource policies, which should centre on the following:

• To make it possible for the organisation to have adequate,

competent, and trained employees.
• To create working conditions that enable employees to grow a
genuine sense of unity with the organisation and do their jobs as
effectively and willingly as possible.
• To instil and strengthen accountability in those who directly
manage human resources, encouraging them to adopt a humanistic
philosophy that protects the employees' fundamental rights and
dignity.