1. the Strategic Role of Human Resource Management 270609(2)

8/3/2019 1. the Strategic Role of Human Resource Management 270609(2)

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HUMAN RESOURCE MANAGEMENT (HRM)

The Strategic Role of Human Resource Management

Strategic Overview:

The days of Personnel Department performing clerical duties such as record keeping, file

maintenance, paper pushing are long over. HR is slowly but surely turning into a strategicpartner in organizations.

The strategic approach to HRM involves making human assets the most important

priority in the organizations.

People can move Mountains!!!

Among the various factors of production which are used in an organization, human

resource is the most important. This is because the efficient use of physical resources ultimately

depends on how the human factor is put to good use on various operations. The most

sophisticated machinery will not produce at an optimum level unless the people who operate itknow how to make it perform at its best and more importantly are motivated to make their

equipment produce efficiently.

People can move Mountains!!!

If theres a will and sufficient skill wonderful things can happen:

Human resources help in transforming the lifeless factors of production into useful

products

Human Resources are capable of enlargement i.e. capable of producing an output that is

greater than the total sum of inputs. Once inspired even ordinary people can deliver

extraordinary results

Human Resources can help an organization achieve results quickly, efficiently and

effectively

Nature of HRM:

HRM 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 whole-hearted cooperation. HRM

has the following features:

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

at all levels of management in an organization

Action oriented: HRM focuses attention on action rather than on record keeping, written

procedures or rules. The problems of employees at work are solved through rational policies

1. THE STRATEGIC ROLE OF HUMAN RESOURCE MANAGEMENT

RAHEJA COLLEGE - SEM. V ACADEMIC YEAR 2009-2010

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Individually oriented: HRM helps employees develop their potential fully. Employeesare encouraged to give their best to their organization

People oriented: HRM is about people at work both as individuals and in groups

Future oriented: HRM helps an organization to meet its goals in the future by providing

for competent and well-motivated employees

Development oriented: HRM tries to develop the full potential of employees. Training is

offered to sharpen and improve their skills

Integrating mechanism: HRM tries to build and maintain cordial relations between

people working at various levels in the organization

Comprehensive function: HRM covers all type of personnel

Auxiliary service: HR departments exist to assist and advise the line or operating

managers to do their personnel work more efficiently. HR manager is a specialist advisor and is astaff function

Inter-disciplinary function: HRM is a multi-disciplinary activity, utilizing knowledgeand inputs drawn from psychology, sociology, anthropology, economics, etc.

Continuous function: According to Terry, HRM is not a one shot deal. It cannot be practiced only one hour each day or one day a week. It requires a constant alertness and

awareness of human relations and their importance in every day operations

Scope of HRM:

As specified by The Indian Institute of Personnel Management

Personnel aspect: manpower planning, recruitment, selection, placement, transfer,

promotion, training & development, lay off and retrenchment, remuneration, incentives,productivity, etc.

Welfare aspect: working conditions and amenities such as canteens, crches, rest and

lunch rooms, housing, transport, medical assistance, education, health and safety, recreationfacilities, etc.

Industrial relations aspect: Union-management relations, joint consultation, collective

bargaining, grievance and disciplinary procedures, settlement of disputes, etc.

Objectives of HRM:



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To help the organization reach its goals

To employ the skills and abilities of the workforce efficiently

To provide the organization with well-trained and well-motivated employees

To increase to the fullest the employees job satisfaction and self-actualization

To develop and maintain a quality of work life

To communicate HR policies to all employees

To be ethically and socially responsive to the needs of society

Importance of HRM:

HRM helps an organization and its people to realize their respective goals thus:

At the enterprise level:

Good HR practices result in attracting and retaining the best people in the organization

Helps in training people for challenging roles, developing right attitudes towards the joband the company, promoting team spirit among employees and developing commitment through

appropriate reward schemes

At the individual level:

Promotes team work and team spirit among employees

Offers excellent growth opportunities to people who have the potential to rise

Allows people to work with diligence and commitment

At the society level:

Employment opportunities multiply

Scarce talents are put to best use. Companies that pay and treat people well always race

ahead of others and deliver excellent results

At the national level:

Effective use of human resources helps in exploitation of natural, physical and financialresources in a better way. People with right skills, proper attitudes and values help the nation to

get ahead and compete with the best in the world.



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Good HR Practices help:

Attract and retain talent

Train people for challenging roles

Develop skills and competencies

Promote team spirit

Develop loyalty and commitment

Increase productivity and profits

Improve job satisfaction

Enhance standard of living

Generate employment opportunities

Traditional HR versus Strategic HR:

Strategic HR shifts attention as against the traditional HRs focus on employee relations, to

partnerships with internal and external groups. Strategic HR is transformational in nature, in that

it helps the people and the organization to adopt, learn and act quickly. Strategic HR is proactive.

History of Personnel Management / HRM:

Industrial Revolution:

This phase saw machines being purchased and technology making rapid progress

Jobs were fragmented where the worker did a small portion of the total job.

Specialization increased speed and efficiency but workers realized they were doing dull, boring

and monotonous jobs

Workers were treated like glorified machine tools

Employers were keen to attain production targets rather than satisfy workers demands

Government hardly protected the interests of the workers



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Scientific Management:

To improve efficiency and speed, F.W. Taylor advocated scientific management

Scientific management is a systematic analysis and breakdown of work into its smallest

mechanical elements and rearranging them into their most efficient combination further

suggested that individuals selected to perform the tasks should be as perfectly matched,physically and mentally.

Employees should also be trained well by supervisors to ensure that the task is performedas per the scientific analysis

Trade Unionism:

Workers joined hands to protect the exploitative tendencies of employers and theprohibitive, unfair labor practices through unions.

Unions were formed to improve the lot of workers through collective bargaining,

resolving the grievances of workers relating to working conditions, pay and benefits, disciplinary

actions, etc.

Human Relations Movement:

The famous Hawthorne experiments conducted by Elton Mayo and his Harvard

colleagues during 1930s and 1940s demonstrated that employees productivity was affected by

not only the way the job was designed and the manner in which the employees were rewardedeconomically, but by certain social and psychological factors as well.

The human relations movement led to wide scale implementation of behavioral science

techniques in industry for the first time, which included supervisory training programs,emphasizing support and concern for workers, programs to strengthen the bonds between labor

and management and counseling programs whereby employees were encouraged to discuss both

work and personal problems with trained counselors

The rise of unionism during this period was due to the passage of the Wagner Act which

gave workers the legal right to bargain collectively with employers over matters concerning

wages, job security, benefits and many conditions of work

Human Resources Approach:

During the early 1960s, the pet milk theory (advocating that happy workers are

productive workers or happy cows give more milk) of human relations scientists had been

largely rejected



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It was recognized that workers were unique in their own complex individuals havingdifferent individual needs and values

The Human Resources Approach assumes that the job or the task itself is the primarysource of satisfaction and motivation to the employees

This approach emphasizes the following:

Not inherent in people to dislike work and if they are helped in establishing objectives

they would want to achieve them

Most people can exercise a great deal more self-direction, self-control and creativity than

are required in their current jobs (Theory Y)

The managers basic job is to use the untapped human potential in the service of the

organization

Managers should create a healthy environment to allow all subordinates to contribute to

the best of their capacities

Managers should provide for self-direction by the subordinates and they must be

encouraged to participate fully in all important matters

Expanding subordinates influence, self-direction and self-control will lead to direct

improvements in operating efficiency

Work satisfaction may improve as a by-product of subordinates making full use of theirpotential

Evolution of the Concept of HRM:

The early part of the last century saw a concern for improved efficiency through careful

design of work

During the middle years of the century, emphasis shifted to the availability of managerial

personnel and employee productivity.

Recent decades have focused on the demand for technical personnel, responses to new

legislation and governmental regulations, increased concern for the quality of working life, TQM

and an emphasis on productivity

Growth In India:

Early Phase:



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Though opinion is that P/HRM as a discipline is recent, its origin dates back to 1800 B.C.

The minimum wage rate and incentive wage plans were included in the Babylonian Code of

Hammurabi around 1800 B.C.

The Chinese as early as 1650 B.C. had in vogue the principle of division of labor and

labor turnover was understood even in 400 B.C.

The span of management and related concepts of management were understood by Moses

around 1250 B.C.

In India Kautilya in his book Arthasastra referred to concepts like job analysis, selection

procedures, executive development, incentive system and performance appraisal

Legal Phase:

The early roots of HRM in India can be traced back to the period after 1920.

The Royal Commission on labor in 1931 suggested the appointment of labor officers to

protect workers interests

After Independence, The Factories Act 1948, made it obligatory for factories employing

500 or more workers

Two professional bodies, IIPM (Indian Institute of Personnel Management) Calcutta and

NILM (National Institute of Labor Management) Bombay came into existence in the 1950s

Welfare Phase:

During the 1960s, the scope of personnel function expanded slightly to cover labor

welfare, participative management, industrial harmony, etc.

During this period, the human relations movement of the West also had its impact on

Indian organizations

The legalistic phase slowly gave way to harmonious industrial relations and good HR

practices

Developmental Phase:

The 1960s and 1970s saw HR professionals focus on developmental aspects of HR

The emphasis was on striking a harmony between employee demands and organizational

requirements



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The two professional bodies IIPM and NILM were merged to form the National Institute

of Personnel Management (NIPM) at Kolkatta

During the 1990s, organizational restructuring and cost cutting efforts have started in a

big way due to the process of liberalization, privatization and globalization (LPG era) forcing

companies to focus attention on employee capabilities, product / service quality, speedy

response, customer satisfaction, etc.

Future of HRM: Influencing Factors

Size of workforce: Corporates have grown in size in recent years due to global

competition thereby warranting an increase in the workforce posing challenges to HR managers

Composition of workforce: A higher percentage of women and minorities alter theequations. Managing heterogeneous and culturally diverse groups will put HR managers to the

test

Employee expectations:List of financial and non-financial demands is ever-growing andexpanding.

Changes in technology:Increased automation, modernization and computerization havechanged the way traditional jobs are handled. There is a continuous need to update knowledge

and skills

Life-style changes: People are now ready to change jobs, shift to new locations,experiment with untested ideas, etc.

Environmental challenges:Air India most over-staffed airline in the world. So too theDTC. AI has 750 employees per aircraft and the cost per employee is over Rs. 5 L per year. DTChas 30000 employees an excess of 15000

Personnel function in future: will involve

Job redesign: The focus of job redesign will increase: Flexitime, job sharing and

alternative work arrangements will come to occupy a centre-stage.

Career opportunities: Apart from pay package, personal growth and self-developmentmay become primary motives

Productivity: new mantra for corporate growth

Recruitment and Selection: Effective selection devices are likely to be used, givingpremium to employee skills, knowledge, experience, ability to get along with people, etc.



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Training & Development: Updating of skills will become a necessity as technologychanges rapidly

Rewards: will be tied to performance. Benefits will accrue to those who show merit

Safety and Welfare: Increasing investments will have to be made by companies to

improve the work atmosphere, climate and job satisfaction level of employees.

Changes in 21st century impacting HRM:

HR as a platform for success: Executives with people management skills would steal the

show

Talent hunting, developing and retaining: The 21st century corporations will be looking

for people with cross-functional expertise, strong academic background and team management

skills

Lean and mean organizations: Organizations will be forced to eliminate low-end jobs and

say goodbye to older employees with limited skills, out-source work to specialized institutions inan attempt to save costs and remain highly competitive

Labor relations: Deregulation, privatization, global competition and the like would in a

way mean the end of the road for Trade Unions

Health care benefits: will be an absolute necessity to attract talented workforce.

Summary:

People have always been central to organizations but their strategic importance is

increasing in todays knowledge based industries. When properly motivated, even ordinary

people can deliver extraordinary results

HRM is responsible for the people dimension of the organization. It is a pervasive force,

action-oriented, development-oriented, future-focused, integrative in nature and is a

comprehensive function

HRM mainly covers three broad areas: personnel, welfare and industrial relations aspects

HRM aims at achieving organizational goals and meeting the expectations of employees;

develop the knowledge, skills and abilities of employees, improve the quality of working life and

manage human resources in an ethical and socially responsible manner



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From an organizational standpoint, good HR practices help in attracting and retaining

talent, train people for challenging roles, develop their skills and competencies, increaseproductivity and profits and enhance standard of living

Strategic HR differs radically from traditional HR in a number of ways

HR can be a source of competitive advantage, when the talents of people working in the

company are valuable, rare, difficult to imitate and well organized to deliver efficient andeffective results

Strategic HRM is the linking of HRM with key goals and objectives with a view to

improve business performance and develop organizational cultures that foster innovation and

flexibility

The field of HRM evolved both in India and elsewhere, over a number of years to its

present level of sophistication and use of proactive methods

The effective use of people is the critical factor in the successful accomplishment ofcorporate goals. To this end HR managers need to understand the needs, aspirations of

employees proactively, face the challenges head on and resolve issues amicably in the years

ahead.

Terminology commonly used in HRM (Human

Resource Management)

Management: the process of efficiently achieving the objectives of the organization with

and through people

HRM: A process of bringing people and organizations together so that the goals of each

one is met effectively and efficiently

Purpose of HRM: HRM seeks to improve the productive contributions of people to the

organization in ways that are ethically and socially responsible

System: Two or more parts working together as an organized whole with clear

boundaries

Productivity: The ratio of an organizations outputs to its inputs

Reengineering: Occurs when more than 70 percent of the work processes are evaluatedand altered

Empowerment: Allowing employees more control over what they do on the job

HRD: A planned way of developing individual employees, groups and the total

organization to achieve organizational goals, in an atmosphere of mutual trust and cooperation



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Job analysis: The systematic collection, evaluation and organization of information

about jobs

HR planning: Process of identifying human resource needs and formulating plans to

meet these needs

Recruitment: The process of finding and attracting capable applicants for employment

Selection: The process of matching the qualifications of applicants with job needs and

choosing the most suitable one

Training: A learning process designed to achieve a relatively permanent change in an

individual that will improve the ability to perform on the job

Employee development: A kind of future oriented training, focusing on the individual

growth of the employee

Competitive advantage: It allows a firm to gain an edge over rivals when competing. Itcomes from a firms ability to perform activities more distinctively and more effectively than

rivals

Strategic human resources management: The linking of HRM with strategic goals and

objectives in order to improve business performance and develop organizational cultures thatfoster innovation and flexibility.

Questions for Practice - PART I

1.1 Define HRM and outline its objectives

1.2 Why is it important for a company to make its human resources into a competitive

advantage? How can HR professionals contribute to doing so?

1.3 What are the important stages in the growth of personnel management in India?

1.4 In what ways can effective HR contribute to profits?

1.5 Critically examine the factors that will influence the future of HRM

Questions for Practice - PART II

Discuss the following statements:

2.1 How do you think the internet will change the way in which HR processes, such

as hiring, compensating, evaluation and benefits are performed?

2.2 Why is a competitive advantage based on heavy investment in human resources

more sustainable than investment in other types of assets?

Questions for Practice - PART III



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Comment on the following statements:

The challenge and the role of HR Department being what it is, it is strange that its status

is not recognized and respected.

All managers are involved in the HRM function.

People are an organizations most valuable assets and do pressures on cost containmentwork against effective management of people?

- Source: Human Resource Management V S P Rao

- Complied by Faculty: L. A. DCosta for Raheja College TYBMS Sem. V Students

(2009-10)



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1. the Strategic Role of Human Resource Management 270609(2)

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