Human Resource Management is concerned with the management of people at work.

People at work are the essential ingredient of every organisations success.

The term human resources (HR) is the total knowledge, skills, creative abilities, talents &
aptitudes of an organisations workforce, as well as the value, attitudes and beliefs of the
individuals involved- according to Leon C. Megginson. It means that the management can
get & use the skill, knowledge, ability etc., through the development of skills, tapping &
utilising them again and again by developing a positive attitude among employees.

MEANING AND DEFINITIONS

Michael J. Jucius defines Personnel Management as the field of management which has to
do with planning, organising, directing and controlling the functions of procuring, developing,
maintaining and utilising a labour force, such that the-
1. Objectives for which the company is established are attained economically
&effectively
2. Objectives of all levels of personnel are served to the highest possible degree, and
3. Objectives of society are duly considered and served.
Another way of looking at MANAGEMENT; MANAGE MEN T; T standing for tactfully.

Scott, Clothier and Spriegel have defined Human Resource Management as that branch of
management which is responsible on a staff basis for concentrating on those aspects of
operations which are primarily concerned with the relationship of management to employees
and employees to employees and with the development of the individual and the group.

Northcott considers human resource management as an extension of general management,
that of prompting and stimulating every employee to make his fullest contribution to the
purpose of a business. Human resource management is not something that could be
separated from the basic managerial function. It is a major component of the broader
managerial function.

French Wendell, defines Human resource management as the recruitment, selection,
development, utilisation, compensation and motivation of human resources by the
organisation.

According to Edwin B. Flippo, Human resource management is the planning, organising,
directing and controlling of the procurement, development, resources to the end that
individual and societal objectives are accomplished. This definition reveals that human
resource (HR) management is that aspect of management, which deals with the planning,
organising, directing and controlling the personnel functions of the enterprise.

According to Pulapa Subba Rao, human resource management is managing (planning,
organising, directing & controlling) the functions of employing, developing, compensating,
and utilising human resources, resulting in the creation and development of human and
industrial relations which would shape the future policies and practices of human resource
management, with a view to contribute proportionately to the organisation, individual and
social goals.

Main Objective of Human Resource Management:
1. To maintain good relations within the organisation.
2. To enable each person to make his maximum personal contribution to the
organisation as a member of the working group.
3. To achieve these things through respect for human personality and well-being of the
individual.
Human Resource Management is concerned with the people at work, their development,
well-being and satisfaction. The basic objective of Human Resource Management is to
assist the entire organisation from top to bottom in bringing about an improvement in
knowledge, skill, habits and attitude that will express itself productively in work.

Some other terms used to denote human resource management are labour management,
labour administration, personnel management, personnel administration, human capital
management, human asset management, employment administration, employee-employer
relations, union relations management, industrial management and the like. Labour
management deals with employment, wages and firing of employees; employees being
treated as a commodity. The industrial relations deals with relations among employees,
trade unions, employers and the government.

Personnel Management and Human Resource Management

Personnel Management
Traditionally the term personnel management was used to refer to the set of activities
concerning the workforce which included staffing, payroll, contractual obligations and other
administrative tasks. In this respect, personnel management encompasses the range of
activities that are to do with managing the workforce rather than resources. Personnel
Management is more administrative in nature and the Personnel Managers main job is to
ensure that the needs of the workforce as they pertain to their immediate concerns are taken
care of. Further, personnel managers typically played the role of mediators between the
management and the employees and hence there was always the feeling that personnel
management was not in tune with the objectives of the management.
The origins of Personnel management can be traced to the concern about exploitation of
people working in factories and was introduced through law of the land in most of the
countries to deal with issues pertaining to grievances and welfare of the workmen.

Human Resource Management
With the advent of resource centric organizations in recent decades, it has become
imperative to put people first as well as secure management objectives of maximizing the
ROI (Return on Investment) on the resources. This has led to the development of the
modern Human Resource Management function which is primarily concerned with ensuring
the fulfilment of management objectives and at the same time ensuring that the needs of the
resources are taken care of. In this way, Human Resource Management differs from
personnel management not only in its broader scope but also in the way in which its mission
is defined. Human Resource Management goes beyond the administrative tasks of
personnel management and encompasses a broad vision of how management would like
the resources to contribute to the success of the organization.

A Paradigm Shift
Cynics might point to the fact that whatever term we use, it is finally about managing
people. The answer to this would be that the way in which people are managed says a lot
about the approach that the firm is taking. Traditional manufacturing units had personnel
managers whereas the services firms have HR managers. While it is tempting to view
Personnel Management as archaic and Human Resource Management as modern, we have
to recognize the fact that each serves or served the purpose for which they were instituted.
Personnel Management was effective in the smokestack era and Human Resource
Management is effective in the 21st century and this definitely reflects a paradigm shift in the
practice of managing people.
Human Resource Management denotes a shift in focus and strategy and is in tune with the
needs of the modern organization. Human Resource Management concentrates on the
planning, monitoring and control aspects of resources whereas Personnel Management was
largely about mediating between the management and employees. Many experts view
Personnel Management as being workforce centered whereas Human Resource
Management is resource centered. In conclusion, the differences between these two terms
have to be viewed through the prism of people management through the times and in
context of the industry that is being studied.

The figure above shows the role of personnel function (on Y-Axis) at different periods of
time during (X-Axis) and thrust areas in each role or period.

Personnel management traditionally is aimed largely at non-managers, whereas HR
Management treats management development as an equally important issue. Traditionally
personnel management viewed organizational culture and leadership as issues concerned
with organizational development, whereas HR Management highlights responsibility for
managing organization culture and leadership issues. Human resource Management
concerns with setting consistent HR policies which reflect and communicate core values of
the company. It is through building culture and sharing common values among people that
companies are trying to ensure that their acts and decision are based on best interest of the
company rather than stressing on conventional rules and procedures, thus achieving the
element of speed.

The strategic significance
However more and more companies have begun to view the issues such as organization
development, employee development, direct employee communication and involvement,
performance management etc. as deliverables of well-conceived HR strategy.
In the industries where there is a strong correlation of intellectual capital and success at
marketplace, the companies took HR management altogether to a different plane of strategic
importance where the role of HR is clear in achieving overall strategic goals of the company.
There are yet some other industries where companies think that industrial relations are still
the major concern in people area, traces of traditional personnel management functioning
can be seen in practice. However, in general across the industries, there has been a shift in
attitudes of personnel / HR professionals and the aspect is gaining importance at strategic
level.

CHARACTERISTICS OF HUMAN RESOURCE MANAGEMENT
1. Human Resource Management is a functional area of General management; it is
management of people at work.
2. Human Resource Management is concerned with the effective utilisation of human
resources.
3. Human Resource Management considers the development of individuals at work, as
an individual and as a member of the group.
4. Human Resource Management is concerned with the achievement of common goals
as well as integration of individual efforts with the common goals.
5. Human Resource Management is concerned with helping people at work to develop
their personalities and capabilities to the maximum possible extent, so that they may
derive great satisfaction from their job.
6. Human Resource Management is a staff activity requiring special knowledge and skill
in understanding and predicting individual behaviour, inter-personal behaviour, group
behaviour and organisational behaviour.
7. Human Resource Management has the central responsibility of organising human
effort and stimulation and releasing the individuals motivation for successfully
achieving individual, organisational and societal goals.
Human Resource Management is an approach, a point of view, a technique of thinking, and
a philosophy of management.



FUNCTIONS OF HUMAN RESOURCE MANAGEMENT
The functions of the Human Resource Management can broadly be classified as:
1. Managerial functions
2. Operative functions



MANAGERIAL FUNCTIONS
Managerial functions in Personnel Management involve planning, organising, directing and
controlling. All these functions influence the operative functions of Human Resource
Management.
1. Planning: Planning pertains to formulating of strategies of personnel programmes
and changes in advance that will contribute to the organisational goals. It involves
planning of human resources, requirements, recruitment, selection, training etc. It
also involves forecasting of personnel needs, changing values, attitudes and
behaviour of employees and their impact on the organisation.
2. Organising: organising is essential to carry out the determined course of action in
order to establish relationships among employees so that they can collectively
contribute to the attainment of company goals.
3. Directing: the willing and effective co-operation of employees for the attainment of
the organisations goals is possible through proper direction. Tapping the maximum
potentials of the people is possible through motivation and command.
4. Controlling: controlling involves checking, verifying and comparing of the actuals
with the plans, identification of deviations if any and correcting of identified
Functions of Human Resource
Management
Managerial
Functions
Planning
Organising
Directing
Controlling
Operational
Functions
Employment
Human
Resource
Development
Compensation
Human
Relations
Industrial
Relations
Recent Trends in
Human Resource
Management
deviations. Auditing training programmes, analysing labour turnover records,
directing morale surveys, conducting separate interviews are some of the means for
controlling the personnel management function and making it effective.

OPERATIONAL FUNCTIONS
The operational functions of human resource management are related to specific activities of
personnel management viz., employment, development, compensation, relations. All these
functions are interacted with managerial functions. These functions are performed in
conjunction with managerial functions.
1. Employment: it is the first operative function of Human Resource Management.
Employment is concerned with securing and employing the people possessing the
required kind and level of human resources necessary to achieve the organisations
objectives. It covers functions such as job analysis, human resource planning,
recruitment, selection, placement, induction and internal mobility.
2. Human Resource Development: it is the process of improving, moulding and
changing the skills, knowledge, creative ability, aptitude, attitude, values,
commitment etc., based on present and future job and organisational requirements.
This function includes performance appraisal, training, management development,
career planning and development, internal mobility, transfer, promotion, demotion,
retention and retrenchment management and change and organisation development.
3. Compensation: it is the process of providing adequate, equitable and fair
remuneration to the employees. It includes job evaluation, wage and salary
administration, incentives, bonus, fringe benefits and social security measures.
4. Human Relations: Human relations is an area of management in integrating people
into the work situations in a way that motivates them to work productively, co-
operatively and with economic, psychological and social satisfaction. It includes
understanding and applying the models or perception, personality, learning, intra and
inter-personal relations, intra and inter-group relations; motivating the employees;
boosting employee morale; developing the communication and leadership skills;
grievance redressal; disciplinary regulations; employee counselling; providing
comfortable work environment and improving quality of work life of employees
5. Industrial Relations: the term industrial relations refers to the study of relations
among employees, employers, government and trade unions. Industrial relations
include trade unionism, collective bargaining, industrial conflicts, workers
participation in the management and quality circles.
6. Recent Trends in Human Resource Management: Human Resource Management
has been advancing at a fast rate. The recent trends include quality of work life, total
quality of human resources, human resource accounting, audit and research, recent
techniques in Human Resource Management.


NATURE OF HUMAN RESOURCE MANAGEMENT
The emergence of human resource management can be attributed to the writings of the
human relations who attached great significance to the human factor. Lawrence Appley
remarked, Management is personnel administration. This view is partially true as
management is concerned with the efficient and effective use of both human as well as non-
human resources. Thus human resource management is only a part of the management
process.
At the same time, it must be recognised that human resource management is inherent in the
process of management. This function is performed by all the managers. A manager to get
the best of his people, must undertake the basic responsibility of selecting people who will
work under him and to help develop, motivate and guide them. However, he can take the
help of the specialised services of the personnel department in discharging this
responsibility.
The nature of the human resource management has been highlighted in its following
features:
1. Inherent Part of Management: Human resource management is inherent in the
process of management. This function is performed by all the managers throughout
the organisation rather that by the personnel department only. If a manager is to get
the best of his people, he must undertake the basic responsibility of selecting people
who will work under him.
2. Pervasive Function: Human Resource Management is a pervasive function of
management. It is performed by all managers at various levels in the organisation. It
is not a responsibility that a manager can leave completely to someone else.
However, he may secure advice and help in managing people from experts who have
special competence in personnel management and industrial relations.
3. Basic to all Functional Areas: Human Resource Management permeates all the
functional area of management such as production management, financial
management, and marketing management. That is every manager from top to
bottom, working in any department has to perform the personnel functions.
4. People Centered: Human Resource Management is people centered and is relevant
in all types of organisations. It is concerned with all categories of personnel from top
to the bottom of the organisation. The broad classification of personnel in an
industrial enterprise may be as follows:
a. Blue-collar workers (i.e. those working on machines and engaged in loading,
unloading etc.) and white-collar workers (i.e. clerical employees),
b. Managerial and non-managerial personnel,
c. Professionals (such as Chartered Accountant, Company Secretary, Lawyer,
etc.) and nonprofessional personnel.
5. Personnel Activities or Functions: Human Resource Management involves several
functions concerned with the management of people at work. It includes manpower
planning, employment, placement, training, appraisal and compensation of
employees. For the performance of these activities efficiently, a separate department
known as Personnel Department is created in most of the organisations.
6. Continuous Process: Human Resource Management is not a one shot function. It
must be performed continuously if the organisational objectives are to be achieved
smoothly.
7. Based on Human Relations: Human Resource Management is concerned with the
motivation of human resources in the organisation. The human beings cant be dealt
with like physical factors of production. Every person has different needs, perceptions
and expectations. The managers should give due attention to these factors. They
require human relations skills to deal with the people at work. Human relations skills
are also required in training performance appraisal, transfer and promotion of
subordinates.

ORGANISATION DESIGN
Human Resource Management is considered as a line function as well as a staff function.

It is considered as a line function because all the functions co-operate in the process of
earning profits for the organisation. Human Resource Management plans, organises and
channelizes their effort towards common goals of the organisation. The Human Resource
manager motivates individuals, creates an atmosphere of sound human relations, industrial
peace and so on. As an activity or function too, the personnel function is a line responsibility,
because each manger has to deal with people, hence he must have sound knowledge about
the same.

Human Resource Management is also considered a staff function as the main function of
the Human Resource manager is to advise the Board of Directors in formation of sound
personnel policies, maintaining good industrial relations between management and the
workers. Besides, he assists and serves the workers and different departments too. He
provides efficient workers to various departments through proper recruitment and training
etc. he keeps necessary personnel records, makes job evaluation, makes performance
appraisals and chalks out the programme of executive development, workers training etc. he
also acts as a mediator between the management and the workers union in case of
industrial disputes.

Human Resource Management requires a constant alertness and awareness of human
relations and their importance in everyday operations. Thus, Human Resource Management
is consistently applied and practised throughout the organisation for highest positive results.

OBJECTIVES OF HUMAN RESOURCE MANAGEMENT
According to Scott, Clothier and Spriegal, The objectives of Human Resource
Management, in an organisation, is to obtain maximum individual development, desirable
working relationships between employers and employees and employers and employees,
and to affect the moulding of human resources as contrasted with physical resources
1. To ensure effective utilisation of human resources.
2. To establish and maintain an adequate organisation structure and establish a
desirable working relationship among all the members of an organisation by dividing
the organisation tasks into functions, positions, jobs and by defining clearly the
responsibilities, accountability, authority for each job and its relation with other jobs in
the organisation.
3. To generate maximum development of human resources within the organisation by
offering opportunities for advancement to employees through training and education
or by effecting transfers or by offering retaining facilities.
4. To secure the integration of individuals and groups with an organisation by
reconciling individual/group goals with those of the organisation in a manner the
employees feel a sense of involvement, commitment and loyalty towards it.
5. To identify and satisfy the needs of individuals by offering various monetary and non-
monetary rewards.
6. To ensure respect for human beings by providing various services and welfare
facilities to the personnel.
7. To achieve and maintain high morale among employees in the organisation by
securing better human relations.

SCOPE OF HUMAN RESOURCE MANAGEMENT
Indian Institute of Personnel Management defines the scope of Human Resource
Management as:
1. The welfare aspect concerned with working conditions and amities such as
canteens, crches, housing, personal problems of workers, schools and recreations.
2. The labour or personnel aspect concerned with recruitment, placement of
employees, remuneration, promotion, incentives, productivity etc.
3. The industrial relations aspect concerned with trade union negotiations, settlement
of industrial disputes, joint consultation & collective bargaining.

According to Strauss and Sayles, Human Resource Management includes:
1. Recruitment of labour, selection & placement.
2. Analysis, description & evaluation of work.
3. Compensation & schemes of appraisal work.
4. Keeping records of the personnel.
5. Welfare programmes
6. Special services like safety, inspection & control.
7. Training & educational programmes.
8. Labour relations.
9. Public relations.
10. Personnel appraisal & development.

According to Dale Yoder, the scope of Human Resource Management should include:
1. Setting general & specific management policy for organisational relationship &
establishing and maintaining a suitable organisation for leadership & co-operation.
2. Collective bargaining, contract negotiation, contract administration & grievance
handling.
3. Staffing the organisation, finding & holding prescribed types & numbers of workers.
4. Aiding to self-development of employees at all levels, providing opportunities for self
development & growth as well as acquiring requisite skills & experience.
5. Developing & maintaining motivation for workers by providing incentives.
6. Reviewing & auditing manpower management in the organisation.
7. Industrial relations research: carrying out studies designed to explain employees
behaviour and thereby effecting the improvement in manpower management.

IMPORTANCE OF HUMAN RESOURCE MANAGEMENT

1. Social significance: It enhances the dignity of people at work by satisfying their social
need.
2. Profession significance: It provides healthy working environment and promotes team
work amongst the people at work.
3. Significance to the Organisation: It helps in accomplishing the goals of the
organisation.
4. Significance to Individuals in the organisation: It facilitates the individuals own growth
and development and provides the individual maximum satisfaction in relation to
work performance.
5. The vital significance of Human Resource Management is largely due to the fact that
the success of the organisation heavily depends on the services of their loyal
employees with genuine desire to be co-operative with the management.

Yodder, Heneman had discussed about the importance of human resource management
from three standpoints, viz, social, professional and individual enterprise.
Social Significance: Proper management of personnels, enhances their dignity by
satisfying their social needs, this it does by:
a) Maintain a balance between the jobs available and the jobseekers. According to
the qualifications and needs
b) Providing suitable and most productive employment, which might bring them
psychological satisfaction
c) Making maximum utilization of the resource in an effective manner and paying the
employee a reasonable compensation in pro portion to the contribution made by him
d) Eliminating waste or improper use of human resources, through conservation of their
normal energy and health
e) By helping people make their own decisions, that are in their interests
Professional Significance: By providing healthy working environment it promotes team
work in the employees. This it does by
a) Maintaining the dignity of the employee as a human-beings
b) Providing maximum opportunities for personnel development
c) Providing healthy relationship between different work groups so that work is
effectively performed
d) Improving the employees working skill and capacity
e) Correcting the errors of wrong postings and proper reallocation work.
Significance for Individual Enterprise: It can help the organization in accomplishing its
goals by
a) Creating right attitude among the employees through effective motivation
b) Utilizing effectively the available human resources
c) Securing willing co-operation of the employees for achieving goals of the enterprise
and fulfilling their own social and other psychological needs of recognition, love,
affection, belongingness, esteem and self-actualization.

Good HR practices help:
1. Attract and retain talent
2. Train people for challenging roles
3. Develop skills and competencies
4. Promote team spirit
5. Develop loyalty and commitment
6. Increase productivity and profits
7. Improve job satisfaction
8. Enhance standard of living
9. Generate employment opportunities.


GUIDING THEORIES IN HUMAN RESOURCE MANAGEMENT
Human resource management principles and techniques for people management in
competitive organisations are drawn from theories found in different disciplines. Indeed, it is
impractical to present all the disciplines and relevant theoretical aspects that have shaped
the understanding of human resource management today. Therefore, it is believed that it is
only important to give the reader a cursory view of some relevant theories underpinning
human resource management and whoever may be interested in knowing more about the
genesis and developments of a specific theory may do so by taking extra homework.

Organisation life cycle theory
Cameron & Whetton (1981) advanced organisation life cycle theory which characterises
organisational development from formation, growth, maturity, decline and death. According
to the theory, the driving force in all these stages is the nature of workforce. At the maturity
stage the organisation cannot continue to grow or survive if there is no organisational
structure that supports human resource creativity, innovation, teamwork and high
performance, which will withstand pressure from competitors.

Role behaviour theory
Role behaviour theory aims to explain and predict the behaviour of individuals and teams in
organisations, which, in turn, inform managers for the purposes of decision making, and
what steps on people management as well as the expected consequences.
Some of the key ideas focus on the need to improve the working environment including the
resources in order to stimulate new behaviour in employees in order for them to cope with
new demands (Prachaska et al 1982), it includes the use of rewards to induce and promote
positive work behaviour, and punishments to control negative behaviour (Rogers 1983).

Resource dependency theory
One of the challenges faced by managers during the economic recessions in the 1970s is
how organisations can best acquire scarce resources and effectively utilise them in order to
remain competitive in the market.
The ability to utilise ones own resources including (financial, technological and labour), and
acquire more from the external environment was one of the areas of concern in many
organisations.
The more organisations were able to harness resources, the more competitive they became.
Therefore, resources were seen as the essence of organisational power (Emerson 1962).
However, overdependence on external resources appeared to be risky due to the
uncertainties that cannot be controlled by the organisation (Pfeffer & Solansick 1978).
Concerning useful labour, the emphasis shifted to seeing employees as scarce resources
that should be acquired effectively, utilised, developed and retained.

Institutional theory
The word institution means different things to different people depending on academic and
professional orientation (Peters 2000). However, it is a discipline that combines politics, law,
psychology, public administration, and economics amongst other things, in order to explain
why certain decisions are made or actions taken and their impact on the organisation.
Commons (1931: 648) defines institutions as collective action in control, liberation and
expansion of individual action.
Collective action covers areas such as custom, law and procedures. The main objective of
collective action is less or greater control of the acts of individuals, which result in either
gains or losses in the process of executing joint transactions. Control is about prohibitions of
certain acts in such a way that the control of one person or organisation leads to liberty of
the others and hence better gains. According to Commons (1931) these institutions establish
relationships of rights, duties, no rights, and no duties which influence behaviour of
individuals. The major role of institutions in society is to reduce uncertainty by establishing a
stable (not necessarily efficient) structure to human interaction. Institutions could be formal,
and have explicit rules, contracts, laws, and rights (institutional arrangements) or informal in
the sense of social conventions that are not designed by anybody. Therefore organisations
should set an appropriate institutional framework that will bind and influence the behaviour of
employees towards an organisational commitment to excellence.
Also put by Brunsson (1999): the process of standardization of procedures affect behaviour.
Employment contracts, performance agreements and other employment related instruments
should therefore be seen as useful aspects of human resource management.

Transaction cost theory
Transaction cost theory is based on the economic view of the costs of conducting business
transactions.
The thesis is that companies will grow if the costs of exchanging resources in the company
are cheaper in comparison to competitors (Commons 1934; Coase 1984; Williamson 1998).
Such costs include bureaucratic employment structures, procedures and the enforcement of
employment contracts.
For that matter employment relationships that may lead to high costs of exchange, should be
minimised.

Comparative advantage theory
The main architect of comparative advantage theory is the economist David Ricardo who
talked of the specialisation and division of labour among nations and firms.
Ricardo postulated that nations should produce goods in which they have a domestic
comparative advantage over others (Ricardo 1891).
Since then, organisations and nations have focused on strengthening internal capacity in
order to have more advantages relative to competitors and hence to reduce production and
distribution costs per unit. Improving internal capacities include having the best human
resources who are best utilised to produce cheaper and better quality goods and services
(Porter 1980; Grant 1991).

General systems theory
No organisation can survive without interacting with its environment.
Organisations get inputs from the external environment, they are processed and the outputs
are released to the external environment, which provides feedback to the organisation.
Customers who are part of the environment will give feedback by using different means
including value judgment on quality, price, style and fashion. Therefore organisations are
seen as systems with components and parts that are related and interconnected in such a
manner that failure of a component or part leads to the failure of another (Laszio 1972;
Haken 1980; Robbins 1990). The system approach to understanding organisations
considers the human resource department as a component of the organisations system that
also has other departments such as accounting, engineering, marketing etc. In order for the
organisation to grow and remain competitive, each department, section or unit should
support each other. One of the organisations inputs from the environment is human
resources. For example, if an organisation makes an error with its recruitment strategy, it will
have a negative effect on the whole organisation. Similarly, if at the input processing stage,
human resources are not utilised in the best possible way, the same will be reflected in the
quality and price of goods and services through feedback mechanisms.
This may include the failure to sell goods or services at the expected prices.

Human capital theory
Human capital theory was initially well developed by Becker (1964) and it has grown in
importance worldwide because it focuses on education and training as a source of capital.
It is now widely acknowledged that one of the key explanations for the rapid development of
Asian countries in the 1970s and 80s is high investment in human capital (Robert 1991;
Psacharopolos & Woodhall 1997).
Human capital theory changes the equation that training and development are costs the
organisation should try to minimise into training and development as returnable
investments which should be part of the organisational investment capital.
Therefore, human resource training and development decisions and evaluations have to be
done based on clearly developed capital investment models.

Strategic contingency theory
There is a growing body of knowledge stipulating that since an organisation operates and
thrives in a complex environment, managers must adopt specific strategies which will
maximise gains and minimise risks from the environment (Peter& Waterman 1982; Scott
1992; Robbins1992). In this premise, the theory contends that there is no one best strategy
for managing people in organisations.
Overall corporate strategy and the feedback from the environment will dictate the optimal
strategies, policies, objectives, activities and tasks in human resource management.

Organisational change theory
Gareth (2009: 291) defines organisational change as the process by which organisations
move from their present state to some desired future state to increase their effectiveness.
Organisations change in response to many developments taking place in the internal and
external environment such as technology, policies, laws, customer tests, fashions and
choices that influence peoples attitudes and behaviour. These developments influence
different aspects of human resource management and in response, organisations have to
change the way organisational structure, job design, recruitment, utilisation, development,
reward and retention are managed (Hersay & Blanchard 1977; Robbins 1992; Johns 1996).
The organisational change theory suggests the improvement of organisational change and
performance by using diagnostic tools appropriate for the development of effective change
strategy in human resource management.

Organisational learning theory
Globalisation has changed knowledge monopoly. Knowledge generated in one part of the
world spreads faster than a decade ago. Today, what matters for organisational
competitiveness is the ability to learn from emerging knowledge and adapt the learning to
suit the organisational environment faster than others. Agyris & Schoen (1978) and Senge
(1992) have emphasised the importance of total organisational learning whereby individuals
and teams muster knowledge related to their work and the environment and share with
common vision, models and strategies for addressing the present and future of the
organisation. Therefore, poor organisational learning leads to poor organisational adaptation
to the environment, less competitiveness, which leads inevitably to decline and ultimate
collapse.


HISTORICAL EVOLUTION OF PERSONNEL MANAGEMENT IN INDIA

In India, the evolution of personnel management is the outcome of mixed reactions of textile
manufacturers to government interventions.
[Dr. Anjali Ghanekar, Everest Publishing House, Human Resource Management Managing
Personnel in the HRD way.]

SOURCES OF PERSONNEL
Every organisation has the option of choosing the candidates for its recruitment processes
from two kinds of sources (Internal and External Sources).
The sources within the organisation itself (like transfer of employees from one department to
other, promotions) to fill a position are known as the internal sources of recruitment.
Recruitment candidates from all the other sources (like outsourcing agencies etc.) are known
as the external sources of recruitment.

The internal sources of recruitment are:-
1. Promotions: Promotion means to give a higher position, status, salary and
responsibility to the employee. So, the vacancy can be filled by promoting a suitable
candidate from the same organisation.
2. Transfers: Transfer means a change in the place of employment without any change
in the position, status, salary and responsibility of the employee. So, the vacancy can
be filled by transferring a suitable candidate from the same organisation.
3. Internal Advertisements: Here, the vacancy is advertised within the organisation. The
existing employees are asked to apply for the vacancy. So, recruitment is done from
within the organisation.
4. Retired Managers: Sometimes, retired managers may be recalled for a short period.
This is done when the organisation cannot find a suitable candidate.
5. Recall from Long Leave: The organisation may recall a manager who has gone on a
long leave. This is done when the organisation faces a problem which can only be
solved by that particular manager. After he solves the problem, his leave is extended.
Merits of Internal Sources
The benefits / advantages / merits of using internal sources of recruitment:-
1. It is time saving, economical, simple and reliable.
2. There is no need of induction training because the candidate already knows
everything about the organisation, the work, the employee, the rules and regulations,
etc.
3. It motivates the employees of work hard in order to get higher jobs in the same
organisation.
4. It increases the morale of the employees and it improves the relations in the
organisation.
5. It reduce executive turnover.
6. It develops loyalty and a sense of responsibility.

Demerits of Internal Sources


The limitations / demerits of using internal sources of recruitment:-
1. It prevents new blood from entering the organisation. New blood brings innovative
ideas, fresh thinking and dynamism into the organisation.
2. It has limited scope because it is not possible to fill up all types of vacancies from
within the organisation.
3. The position of the person who is promoted or transferred will be vacant.
4. There may be bias or partiality in promoting or transferring persons from within the
organisation.
5. Those who are not promoted will be unhappy.
6. The right person may be promoted or transferred only if proper confidential reports of
all employees are maintained. This involves a lot of time, money and energy.


External Sources of Recruitment
These sources lie outside the organisation. They may come through the following sources:
1. Advertisements
2. Employment exchanges
3. Campus recruitment
4. Unsolicited applicants
5. Labour contractors
6. Employee referrals and
7. Field trips

Sources
Advertisement:
Advertising in newspapers, trade journals, and magazines is the most frequently used
method.
In order to be successful, an advertisement should be carefully written. If it is not properly
written, it may not draw the right type of applicants or it may attract too many applicants who
are not qualified for the job.
Therefore, a well- thought out and planned advertisement for an appointment reduces the
possibility of unqualified people applying.
Organisations often spend large amounts of money and time on advertisements. A well-
designed advertising copy should contain the following four basic steps:
a. Attracting attention
b. Developing interest
c. Arousing desire and
d. Generating action.
These four basic steps are together called AIDA formula. Appropriate appeals or pulls must
be given special attention to maximise the pulling effect of advertising copy.
Since potential candidates are first introduced to the company through advertisements,
image building can be made effective at this stage.
There are three different types or methods of advertisement followed by organisations. They
are:
a. Using Post Box Numbers: Some organisations do their own advertising. These
advertisements carry only a post box number instead of the companys name and
address. But this method is generally not advisable as good candidates may feel that
it is not worthwhile to apply for a job without knowing the prospective employer.
b. Engaging Specialised Agencies: Some organisations do not do their own
advertising. They make use of specialised agencies, which advertise positions
without divulging the name of their client.
c. Direct Advertisement: Some organisations do their own advertising and give their
names and address. This direct method is advisable as applicants get an idea about
the organisation they apply to.

2. Employment Exchanges:
An employment exchange is an office set up for bringing together as quickly as possible
candidates searching for employment and employees looking for prospective employees.
The main functions of an employment exchange are registration of job seekers and their
placement in notified vacancies. Employment exchanges have answered a great need in
placing workers in suitable vacancies.
Employment exchanges register unemployed candidates and maintain the records of
their names, qualifications etc.
When the employers intimate the exchange about the vacancies available in their
organisations, the exchange selects the suitable candidates among the employment
seekers who have registered with them and forwards their names to the employers for
consideration.
There are two types of employment exchanges- government employment exchanges
and private employment agencies.

3. Campus Recruitment:
Sometimes, recruiters are sent to educational institutions where they meet the placement
officer or the faculty members who recommend suitable candidates.
This system is prevalent in U.S.A where campus recruitment is a major source. Today
the idea of campus recruitment has slowly caught the fancy of Indian employers.
The advantage of this method is that most of the applicants are present at one place and
the recruitment can be arranged at a short notice.
The recruiters can meet the faculty members and obtain an idea of the course content.
The disadvantage of campus recruitment is that it is neither feasible nor attractive for
filling higher level positions. The method can be used only for entry level positions.

4. Unsolicited Applicants:
Unsolicited applicants are another source. Some candidates send in their applications
without any invitation from the organisation.
A recruiter can use these unsolicited applications for appointment as and when
vacancies arise. However, this source is uncertain.

5. Labour Contractors:
Many organisations employ labour contractors to hire workers. This method is usually
resorted to when the work is of a temporary nature.

6. Employee Referrals:
Friends and relatives of present employees are also a good source from which
employees may be drawn.
Some organisations with a record of good personnel relations encourage their
employees to bring suitable candidates for various openings in the organisation.
This method of recruitment has the advantage of the new recruit being familiar with the
organisation and its culture.
The disadvantage of this system is that it encourages nepotism and cliques of relations
and friends may be formed in the organisation.
7. Field Trips:
An interviewing team makes trips to towns and cities, which are known to contain the
kinds of employees required. These travelling recruiters are sent to educational and
professional institutions.
In this method of recruitment, carefully prepared brochures describing the organisation
and the job it offers are distributed to the candidates before the interviewer arrives. The
arrival dates and the time and venue of interview are given to the candidates in advance.

Merits and Demerits

Merits of External Sources of Recruitment:
1. Fresh talent and skill comes into the organisation.
2. New employees may try to change old habits.
3. New employees may be selected according to the terms and conditions of the
organisation.
4. Highly qualified and experienced employees may help the organisation to come up
with better performance.
5. Since persons are recruited from a large market, the best selection can be made. In
other words, the recruiter has a wide range of candidates to choose from.
6. External sources provide the requisite type of personnel for an organisation, having
the required skill.
7. External sources of recruitment are economical because potential employees do not
need extra training for developing their skills.

Demerits of External Sources of Recruitment:
1. External sources of recruitment reduce the morale of employees because outsiders
are preferred to fill up superior vacancies.
2. External sources of recruitment deny career advancement for employees.
3. The recruiter may not be in a position to properly evaluate outside candidates
because the time at his disposal is very less. This may result in faulty selection of
employees.
4. Outsiders are not fully acquainted with the policies and procedures of the
organisation. Therefore, they should be given training, which is quite expensive.

After discussing the different sources of recruitment, we can conclude that there is no hard
and fast rule whether the recruitment must be internally or externally or exclusive to each
other.
The best management policy regarding recruitment must be to first look within the
organisation and if we are not able to locate the suitable talents, external recruitment
becomes inevitable.
To use the words of Koontz and ODonnel the (recruitment) policy should be to raise talent
rather than raid for it.


HRM in the New Millennium
Human Resources have never been more indispensable than today. The competitive forces
that we face today will continue to face in the future demanding organizational excellence. In
order to achieve this extended quality, organizations need to focus on learning, quality
development, teamwork, and reengineering. These factors are driven by the way
organizations implement things and how employees are treated.

1. HR Can Help in Dispensing Organizational Excellence: To achieve this paradigm
shift in the organization excellence there is a need for organizations to reform the
way in which work is carried out by the Human Resource department. By designing
an entirely new role and agenda that results in enriching the organizations value to
customers, investors and employees, HR can help in delivering organizational
excellence. This can be carried out by helping line managers and senior mangers in
moving planning from the conference room to the market place and by becoming an
expert in the way work is organized and executed.
HR should be a representative of the employees and should help the organization in
improving its capacity for change. HR will help the organizations in facing the
competitive challenges such as globalization, profitability through growth, technology,
intellectual capital, and other competitive challenges that the companies are facing
while adjusting to uncontrollably challenging changes in business environment. The
novel role of HR is to rapidly turn strategy into action; to manage processes
intelligently and efficiently; to maximize employee contribution and commitment and
to construct favourable conditions for flawless change.
2. Human Resource Should be a Strategy Partner: HR should also become a partner
in strategy executions by propelling and directing serious discussions of how the
company should be organized to carry out its strategy.
Creating the conditions for this discussion involves four steps. First HR need to
define an organizational architecture by identifying the companys way of doing
business. Second, HR must be held responsible for conducting an organizational
audit. Third, HR as a strategic partner needs to identify methods for restoring the
parts of the organizational architecture that need it. Fourth and finally, HR must take
stock of its own work and set clear priorities. In their new role as administrative
experts they will need to shed their traditional image and still make sure all routine
work for the company is done well.
3. HR Accountability Should be fixed to Ensure Employee Commitment: HR must
be held accountable for ensuring that employees feel committed to the organization
and contribute fully. They must take responsibility for orienting and training line
management about the importance of high employee morale and how to achieve it.
The new HR should be the voice of employees in management discussions.
The new role for HR might also involve suggesting that more teams be used on some
projects or that employees be given more control over their own work schedules.
4. The New HR Must Become a Change Agent: The new HR must become a change
agent, which is building the organizations capacity to embrace and capitalize on
change. Even though they are not primarily responsible for executing change it is the
duty of the HR manager to make sure that the organization carries out the changes
framed for implementation.
5. Improving the Quality of HR: The most important thing that managers can do to
drive the new mandate for HR is to improve the quality of the HR staff itself. Senior
executives must get beyond the stereotypes of HR professionals as incompetent
support staff and unleash HRs full potential
6. Change in Employment Practices: The balance sheet of an organization shows
human resource as an expense and not as a Capital. In the information age, it is
perceived that the machines can do the work more efficiently than most people
however; technology to work is dependent on people.
The challenges for Employment Practice in the New Millennium will require that there
should be strategic involvement of the people and labour-management
partnerships as they both have to take organization ahead.
7. Benchmarking Tool Must be mastered by HR Professionals: HR professionals
must master benchmarking, which is a tool for continuous improvement- directing the
human side associated with the strategic path adopted by the organization. Through
this, HR department will start appreciating the changes happening within and outside
the environment while expanding the knowledge about how to add value to decision
making at the highest level of the organization.
8. Aligning Human Resources to Better Meet Strategic Objectives: Too often
organizations craft their strategy in a vacuum. Some organizations dont even
include key people during strategy formulation resulting in lacunae between the
actual problems and the solutions implemented- as critical inputs are not sought from
those individuals who are supposed to implement the new strategies.
A past CEO of Sony once said that organizations have access to the same
technology and the same information. The difference between any two organizations
is the people- the human resource. Empowering the workforce is an essential tool
for aligning human resources with the achievement of corporate objectives.
It is the duty of HR manager to hire talented human resource and to provide them
with a positive environment where they will be able to utilize their skills and potentials
and to create an environment in which these individuals are comfortable taking risks.
9. Promote from within and Invest in Employees: Promoting employees from within
sends a powerful message that the organizations employees are valued. New blood
and fresh ideas often come from newcomers to the organization. To avoid stagnation
of the firm, new ideas and approaches are critical. Yet to improve employee morale,
promoting individuals from within the organization is essential. This communicates
that the organization values their employees and invests in their human resources.
10. Review the Recruitment and Selection Process: A key element of human
resource planning is ensuring that the supply of appropriate employees (with the right
skill mix) is on board when needed. This requires a proactive approach whereby the
organization anticipates its needs well in advance. It is important to identify the
competencies being sought. That is, the criteria upon which selection decisions are
to be made should be decided in advance. A firm must identify those skill sets
required by employees to be successful. Charles OReilly suggests that companies
should hire for attitude (perhaps even more so than technical skills). That is, the fit of
the individual with the values of the organization and the culture of the firm should
also be considered when selecting employees. This has been referred to as the
person-organization fit.
It is no longer enough to simply consider the persons fit (and technical skill set) with
the job. Part of the employees fit with the organization should focus on the core
values and beliefs of the organization.
This will increase employees contributions to the overall success of the organization
if they already embrace the core values of the organization prior to their selection
11. Communicate Mission and Vision: If employees are expected to contribute to the
attainment of the organizations strategic objectives, they must understand what their
role is. This can be achieved in part by clearly communicating the mission and vision
statements of the firm. The old adage is certainly true. If a person does not know
where he or she is going, any road will get him or her there.
The mission communicates the identity and purpose of the organization. It provides a
statement of who the firm is and what their business is. Only those employees who
understand this purpose can contribute to the fullest extent possible. The vision
statement provides a picture of the future state of the firm. It should be a stretch to
attain. This keeps all the organizations employees pulling in the same direction with
a common end point. It is much easier to align human resources with corporate
objectives when these employees are familiar with the mission and vision of the firm.
As the mission and vision statements are articulated, organizational members begin
to more closely embrace their very meaning on an individual level. These statements
provide a road map leading employees down the road to achieve organizational
objectives. Employees then identify how they can contribute their unique talents
toward the attainment of these goals.
12. Use Teams to Achieve Synergy: Synergy can be concisely defined as two plus
two equals five.
In other words, the whole is greater than the sum of the parts. So much more can be
achieved as people work together. Through the effective use of teams, organizations
can often achieve synergy. Team goals, however, must be aligned with the
organizations strategic objectives. Aligning team objectives with overall corporate
objectives ensures that people are working toward the same goal

FUTURE CHALLENGES BEFORE THE MANAGERS

Because of continuous changing socio-economic, technological and political conditions, the
human resource managers of the future shall have to face more problems in the
management of labour.
The human resource managers of today may find themselves obsolete in the future due to
changes in environment if they do not update themselves some of the important challenges
which might be faced by the managers in the management of people in business and
industry are discussed below:

1. Increasing Size of Workforce: The size of organisations is increasing. A large
number of multinational organisations have grown over the years. The number of
people working in the organisation has also increased. The management of
increased workforce might create new problems and challenges as the workers are
becoming more conscious of their rights.

2. Increase in Education Level: The governments of various countries are taking
steps to eradicate illiteracy and increase the education level of their citizens.
Educated consumers and workers will create very tough task for the future
managers.

3. Technological Advances: With the changes coming in the wake of advanced
technology, new jobs are created and many old jobs become redundant. There is a
general apprehension of immediate unemployment. In the competitive world of today,
industry cannot hope to survive for long with old technology. The problem, of
unemployment resulting from modernisation will be solved by properly assessing
manpower needs and training of redundant employees in alternate skills.

4. Changes in Political Environment: There may be greater Governments
interference in business to safeguard the interests of workers, consumers and the
public at large. Governments participation in trade, commerce and industry will also
pose many challenges before management. The Government may restrict the scope
of private sector in certain areas in public interest. It does not mean chances of co-
operation between the Government and private sector are ruled out. In fact, there will
be more and more joint sector enterprises.

5. Increasing Aspirations of Employees: Considerable changes have been noted in
the worker of today in comparison to his counterpart of 1950s. The workers are
becoming more aware of their higher level needs and this awareness would intensify
further in the future workers.

6. Changing Psychosocial System: In future, organisations will be required to make
use of advanced technology in accomplishing their goals while satisfying human
needs. In the traditional bureaucratic model, the organisations were designed to
achieve technical functions with a little consideration given to the psychosocial
system. But future management would be required to ensure effective participation of
lower levels in the management of the organisation system.

7. Computerised Information System: In the past, the automation of manufacturing
processes had a major effect upon the systems of production, storage, handling and
packaging, etc. More recently, there has been and in the future there will be the
impact of revolutionary computerised information system on management.
This revolutionary development would cover two primary areas of personnel
management which are as follows:
a. The use of electronic computers for the collection and processing of data, and
b. The direct application of computers in the managerial decision making
process.

8. Mobility of Professional Personnel: Organisations will expand the use of
boundary agents whose primary function will be achieving coordination with the
environment. One interesting fact will be an increase in the mobility of various
managerial and professional personnel between organisations. As individuals
develop greater technical and professional expertise, their services will be in greater
demand by other organisations in the environment.

9. Changes in Legal Environment: Many changes are taking place in the legal
framework within which the industrial relations systems in the country are now
functioning. It is the duty of the human resource or personnel executive to be aware
of these changes and to bring about necessary adjustments within the organisations
so that greater utilisation of human resources can be achieved. This, indeed, is and
would remain a major challenge for the personnel executive.

10. Management of Human Relations: On the industrial relations front, things are not
showing much improvement even after so many efforts by the government in this
direction. Though a large number of factors are responsible for industrial unrest but a
very significant cause is the growth of multi-unions in industrial complexes having
different political affiliations. Under the present conditions, it appears that inter-union
rivalries would grow more in the coming years and might create more problems in the
industry.

Management of human relations in the future will be more complicated than it is today. Many
of the new generation of employees will be more difficult to motivate than their predecessors.
This will be in part the result of a change in value systems coupled with rising educational
levels. Greater scepticism concerning large organisations and less reverence for authority
figures will be more common. Unquestioning acceptance of rules and regulations will be less
likely.

New Role of Human Resource Management
Human Resource Management in the New Millennium has undergone a great revolution by
questioning the accepted practices and re-inventing the organisations as well as structures.
Many traditional practices have been thrown out. As an example, it can be seen that
hierarchies are vanishing and there is greater emphasis on flat organisations. It means a
great deal of specialisation and skills. It also means upgrading the norms and standards of
work as well as performance.

The new role of human resource management is much more strategic than before. Some of
the new directions of the role of
HRM can be summed up as follows:

1. A Facilitator of Change: To carry people through upheaval requires the true
management of human resources.

2. An Integrated Approach to Management: Rather than being an isolated function,
human resource is regarded as a core activity, one which shapes a companys
values. In particular, this can have an impact on customer service.

3. A Mediator: Establishing and balancing the new and emerging aspirations and
requirements of the company and the individual.

These changes, which are taking place, involve more commitment of the organisation to the
development of people by improving performance and cutting costs. As a result of this, the
duration of tenure, which was traditionally long standing, is now limited, future is becoming
less certain, management opportunities are self-determined and motivational factors are
more concerned with enhancing future employability rather than loyalty to the company and,
at the same time, the rewards are going up in terms of higher salaries.
The future creative careers, will require more involved approach to career development,
which will include:

1. Share employees with strategic partner organisations (customers of suppliers) in lieu
of internal moves.

2. Encourage independence: Employees may go elsewhere for career development,
possibly to return in a few years.

3. Fund-groups of employees to set-up as suppliers outside the organisation.

4. Encourage employees to think of themselves as a business and of the organisations
various departments as customers.

5. Encourage employees to develop customers outside the organisation.

6. Help employees develop self-marketing, networking and consultancy skills to enable
them to search out, recognise or create new opportunities for both themselves and
the organisation.

7. Identify skilled individuals in other organisations who can contribute on a temporary
project basis or part-time.

8. Regularly expose employees to new people and ideas to stimulate innovation.

9. Balance external recruitment at all levels against internal promotion to encourage
open competition, competitive tendering for jobs to discourage seeing positions as
10. someones territory which causes self-protective conformity. Forster more cross-
functional teamwork for self-development.

11. Eliminate the culture of valuing positions as career goals in favour of portraying a
career as a succession of bigger projects, achievements and new skills learned. The
concept of position is part of the outside static concept of the organisation. Positions
are out. Processes and projects are in.

12. Abandon top-down performance appraisal in favour of self-appraisal based on
internal customer satisfaction surveys and assessing people as you would suppliers.

13. Replace top-down assessment processes with self-assessment techniques and
measure performance in term of results.