People, not buildings, make a company successful.

HRM is a function of every manager’s job, not just those who work in human
resources.

The human mind is our fundamental resource. - John F. Kennedy

 Management - The process of efficiently completing activities with and through people.
 HRM does not exist in isolation. Rather, it is a subset of the field of management.

 To achieve its objective, management typically requires the coordination of several vital components that
we call functions.
 Toachieve its objective, management typically requires the coordination of several vital components that
we call functions. The primary functions of management that are requiredare:

“POLC”
 Planning: establishing goals
 Organizing: determining what activities need to be completed to accomplish those goals
 Leading: ensuring that the right people are on the job with appropriate skills, and motivating themto levels of
high productivity
 Controlling: monitoring activities to ensure that goals are met

HR- It simply indicates whole HRM department. Where as human resources can be said as –
 Knowledge Worker
 Human Capital
 Human Assets
 Assets beyond the B/S who creates the B/S
 Talent (3 ‘C’ + 2 ‘C’)
 Brain Resource
 Strategic Resource
 The only living resource with unlimited potentialities with Body, Mind, Heart and the Spirit
 People/Employees/Workforce
 Talent Investor

Organizations today are facing challenges on several fronts in their efforts to remain
competitive (Ulrich, 1997; Wright, Dyer, & Takla, 1999). Several fronts are:
 the need to increase productivity
 the prospects of expanding into global markets and technological developments
 responding to changes in the market place
 containing costs
 developing a skilled and flexible workforce
 bringing about significant organizational change
These challenges are emerging in the context of changing needs of the workforce,
changing attitude in a broader society, and heightened legal requirements.
The following factors to be pressing organizational challenges:
• greater competitiveness globally
• rapid technological advances
• some labor shortages
• change in psychological contract
• deal with organizational change
• the need to increase their talent pool
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 • the creation of high commitment work systems
"Destroy every plant the Ford Motor Company owns: every piece of machinery;
every atom of raw or finished material, every finished automobile, and every dollar
on deposit in any bank, and Ford would still be the most powerful man,
economically, on earth. The brains which have built the Ford business could
duplicate it again in short order."

Knowledge Worker Age From

Things Mindset to Whole Person Paradigm

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“Take away my people, but leave my factories, and soon grass will grow on the
factory floors. Take away my factories, but leave my people, and soon we will have a
new and better factory.”
-Andrew Carnegie (1835-1919)

Definition of HRM
 Edwin B. Flippo defines- HRM as “planning, organizing, directing, controlling of procurement,
development, compensation, integration , maintenance and separation of human resources to the end
that individual, organizational and social objectives are achieved.”
 DeCenzo and Robbins – HRM is comprised of the acquisition, development, motivation and
maintenance functions.

In less academic terms, we might say that HRM is made up of four activities:
1 Hiring people
2 Preparing them
3 Stimulating them
4 Keeping them (attract, grow, motivate and retain)

HR (HRM) is the interface between organization and people.

- Morgan Witzel

Strategic HRM
 “The process of linking HR practices to business strategy” (Ulrich, 1997, p. 89); “the process by which
organizations seek to link the human, social, and intellectual capital of their members to the strategic needs
of the firm” (Bamberger & Meshoulam (2000, p. 6).
 Affirms the importance of the effective management of people as a source of competitive advantage.
E-HR
 E.HR: the application of conventional, web, voice and m- technologies to improve
HR administration, transactions and process performance. “Speed” and “agility”
have become key words for HRM.

 E-HR survey in 91 international organizations: 76% have redesigned or introduced

new HR technologies/systems in the past year and 90% of the remaining expect to
do so withinthe coming year.

 While very cutting edge, total E-HR is expensive and time consuming.
Many companies focus on recruitment, web training and web approaches
to reporting, appraisal, and reporting.
- 1998: 17% of Fortune Global 500 companies recruited on the net; 1999, 45%
- $1.7 billion on recruitment in 2003
- Estimated 2.5 million resumes on the internet

Characteristics of HRM
 People dimension (invaluable assets)
 Fundamental function of Management
 Pervasive in nature (every manager’s function)
 Continuous function
 Create ‘Talent’ and Engage them
 Dynamic (Responsive to environmental changes)
 Mutuality-oriented (mutual -- objectives,
 responsibilities, benefits, respect and trust)
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 System (a sub-system of whole)

Why HRM?
1 Organizational effectiveness (HRM makes a significant impact on firm performance)
2 Human capital management (HC is the prime asset – the aim is to develop the
inherent capacities of people)
3 Knowledge management (support the development of firm-specific knowledge)
4 Reward management (enhance motivation, job engagement)
5 Employee relations (harmonious relationship between partners)
6 Meeting diverse needs (stakeholders, workforce)
7 Bridging the gap between rhetoric and reality (HRM is to bridge the gap – and to
ensure that aspirations are translated to effective action

Objectives of HRM
• Goal achievement
(Personal/Functional/Organizational/Societal)
• Goal Harmony (high morale, job satisfaction and
commitment)
• Right people at right place in right time with right cost in right
way
• Developing people for quality and productivity
• Change management
• Quality of Work Life
• Sound labor relations
• Employee engagement
• Employee Retention

Human resource system

1. HR philosophies (values and guiding principles adopted in managing people)
2. HR strategies (defining the direction)
3. HR policies (how values, principles should be applied)
4. HR processes ( formal procedures and methods – put HR plans into effect)
5. HR practices ( informal approaches used)
6. HR programs (which enable strategies, policies, practices to be implemented)

The Michigan School Model

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 Ulrich's Model of Human Resource Management
- HR can be defined by what it does, or by what it delivers
- HR can perform 4 different Roles
• Strategic Partner: HR is responsible for the organizational architecture / structure; work with
executive team to add value and achieve company objectives.
• Administrative Expert: HR makes sure that the work gets done effectively and efficiently;
streamline and automate most operations
• Change Agent: HR helps the organization adopt and profit from change; helps plan for and
overcome resistance to change.
• Employee Champion: Change Agent: HR responsible for motivating, advocating for, and
representing the employees; work with and train line managers to achieve these goals

The Harvard Framework

Characteristics of HRM in Harvard framework

• 1) line managers accept more responsibility for ensuring the alignment of
competitive strategy and personnel policy
• 2) personnel has the mission of setting policies that govern how personnel activities
are developed and implemented in ways that make them more mutually reinforcing
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HRM and Personnel Management differences
HRM:
 places more emphasis on strategic fit and integration,
 is based on a management and business oriented philosophy,
 places more emphasis on mutuality,
 is more holistic,
 specialists are more like business partners than administrators,
 treats people as assets and not only costs.

Hard and Soft HRM

Hard (instrumental) HRM approach:
 employees are viewed as a passive factor of production, an expense
 employees can be easily replaced and seen as disposable.
 Strategic, quantitative aspects of managing HRM as an economic factor

Soft (humanistic) HRM approach:

• stresses active employee participation
• gains employee commitment, adaptability and contribution of their
• competences to achievement of organizational goals
• employees are valued as assets
• emphasizing communication, motivation and leadership

The McKinsey 7S Framework

HRM System
HRM is a system composed of interrelated and interacting parts to achieve desired goals. It is
an open system which consists of input-processing- output and feedback components.

In less academic terms, we might say that HRM is made up of four activities:
1. hiring people 3. stimulating them
2. preparing them 4. keeping them

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 System Model of HRM
 System composed of interrelated & interacting parts to achieve desired goals
 System approach to HRM combines itself with business strategy
 Many firms in developing countries are facing problems due to their traditional practices of
managing people
 The system, functions, components and objectives of modern organizations differ from traditional
organizations.
 HRM system is linked with organizations performance, organizations structure and strategic objectives
of the organizations.
 Open system: consists of input-processing-output & feedback components
 Operates within internal & external environment
HRM System
1. Inputs of HRM
 Human energy & competencies (physical strength, knowledge, skills, attitudes, experiences etc.)
 Organizational strategy and plan (organizational goals, strategy, target)
 Human resource plan (matches future HR demand with supply & indicates the HR requirements)
 Management inventory (record of HR currently available in the organization)
 Job analysis (specifies job requirements, job specifications)
 Labour market (source of external supply for quality human resources)

2. Processing of HRM
A. Acquisition
 Ensures entry of right number of people at the right place at the right time in the organization
 Consists of recruitment, selection & socialization

B. Development
 Ensures proper competencies of employees to handle jobs
 Analyzing development needs
 Employee training
 Management development
 Career development

C. Utilization
 Ensures willingness of employees for boosting productivity by doing jobs effectively
 Consists of motivation, performance appraisal, compensation etc.

D. Maintenance
 Ensures retention of competent employees in the organization
 Labor relations (employer-employee relations & employee discipline, grievance handling)
 Employee welfare (to promote employee safety, health, social security, etc.)

3. Output
A. Organization-related outputs
 Goal-achievement
 Quality of work life (QWL) (Quality of relationship between employees & the total working
environment of the organization.)
 Mechanisms of QWL:
 Learning & development
 Recognition
 Autonomy
 Intrinsic/extrinsic rewards
 Productivity

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  Profits
 Readiness for change

B. Employee-related outputs
 Commitment (achieved through trust, understanding, communication, loyalty etc.)
 Competencies (increased K, S and changed A, unleashed potential)
 Contribution (delivery of results, task accomplishment with excellence)
 Competence (changes in the environment & assume new roles)
 Congruence (related to goals, harmony between individual & organizational goals)
 Cost effectiveness (high cost-effectiveness)

1. Feedback
 Provides information to redesign HRM inputs & processing based on output effectiveness

2. Internal Environment
 Forces in the internal environment are controllable by HRM
 Provide strengths & weaknesses
 They are organizational goals, policies, structure, reward system & organizational culture

3. External Environment
 Forces non controllable by HRM
 Provide opportunities & pose threats
 They are technology PESTLIN and Trade Unions

Union
 An organization that represents the interests of employees
 Shapes the HR policies & practices
 Union representatives are included in major HR decisions
 Recruiting, selection, promotion, compensation, etc.
 Not restricted only to the blue-collar workers

Technology
 Technology is a major factor in deciding about HR policy choices
 Use of sophisticated & efficient technology
 Increased the quality & volume of the products/services
 Reduced the price level
 Coping with the technological environment demands for
 knowledge workers

Organization Culture
 System of shared meaning held by members
 A firm’s way of doing business
 How it treats customers & employees
 Autonomy of the departments
 Degree of employee loyalty expressed
 A common value system
 Strong or weak culture?
 Impact on the behavior, productivity, expectations of the employees
eg - clear guidelines on punctuality, customer service etc.

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Leader’s Style and Experience
 Experiences & leadership style of the operating manager affects HRM activities
 Direction, encouragement, authority to evoke desired behavior
 Facilitates interactions that occur within work groups

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Key HRM Practices ―› (D. Ulrich and W. Brochbank’s Approach)
 Buy Build
 Borrow Bounce
 Bind Bound
The Six “Bs”
Buy - Acquire new talent by recruiting individuals from outside or from other departments or divisions within the
organization.
Build - Develop talent through training, education, formal job training, job rotation, special assignments, and action
learning.
Borrow - Partner with consultants, vendors, customers, and suppliers outside the organization in arrangements that
transfer skill and knowledge.
Bound - Move the people through the organization and into higher positions.
Bounce - Remove low-performing or underperforming individuals.
Bind - Retain employees with high growth potential and valued talent.

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HRM functions (Aswathappa, 2010)

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 The Impact of Diversity on the Organizations

1. Diversity as Competitive advantage

 Resource acquisition argument (attracting)
 Cost argument
 Creativity argument
 Marketing argument
 Problem solving argument
 System argument

2. Diversity as a source of conflict

Managing Diversity in Organization

1. Individual strategies for dealing with diversity

 Understanding
 Empathy
 Tolerance (open mindedness)
 Willingness to communicate
 Working with emotional intelligence

2. Organizational approaches to managing diversity

 Organizational policies (interests and rights)
 Organizational practices (incorporating emotional intelligence)
 Diversity training
 Organizational culture

Competitive Advantage through People

HR managers must see employees as “talent investors” – to be treated as partners and rewarded the
way other investors.
 Putting people first strategy
 Employees first, Customer second
 Assets beyond the Balance Sheet who create the B/S
 Strategic Resource
 Human Capital
 The War of Talent
 Resources with unlimited Potentialities

Competitive Advantage through People

As people offer competitive advantage to a firm, the HRM is most happening function as
of now.
An organization enjoys competitive advantage when it is the only one which can offer a
product that could deliver the unique customer experience at a price and at quality while
its competitors cannot do so.

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How do people lend competitive advantage?
There are several ways –
o First, people offer skills, capabilities, systems, practices, speed, language, bonding and behaviors
that help execute firm’s strategies successfully.
o Second, by aligning HR plans to business plans. The integration of line managers and HR
professionals work as partners to ensure that an integrated HR planning process occurs.
o Third, innovation is the key to competitive advantage that people can only make it possible.
o Fourth, people can provide flexibility as they possess
 unlimited potentiality.
o Fifth, people can convert an adverse situation into an opportunity.
o Finally, people make the change happen. Trends shaping HRM

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