BBA II Year SUBJECT: HUMAN RESOURCE MANAGEMENT III Sem

Unit 1: Human Resource Management

 Introduction to HRM Concept & Scope of HRM

 Functions of HRM
 Importance of HRM
 Role of HR Manager
 Organisational Structure for HRM

INTRODUCTION:
HRM is the study of activities regarding people working in an organization. It is a managerial
function that tries to match an organization’s needs to the skills and abilities of its employees.
Human resources management (HRM) is a management function concerned with hiring,
motivating and maintaining people in an organization. It focuses on people in organizations.
Human resource management is designing management systems to ensure that human talent is
used effectively and efficiently to accomplish organizational goals.

 1] Definitions of HRM:
According to the Invancevich and Glueck: “HRM is concerned with the most effective use
of people to achieve organizational and individual goals. It is the way of managing people at
work, so that they give their best to the organization”.

According to Dessler (2008) : the policies and practices involved in carrying out the “people”
or human resource aspects of a management position, including recruiting, screening, training,
rewarding, and appraising comprises of HRM.

 2] Scope of HRM:
The scope of HRM is indeed vast. All major activities in the working life of a worker –
from the time of his or her entry into an organization until he or she leaves the organizations
comes under the purview of HRM.
The major HRM activities include HR planning, job analysis, job design, employee hiring
and executive remuneration, employee motivation, employee maintenance, industrial relations
and prospects of HRM.

The scope of Human Resources Management extends to:

1] Human Resource Planning.

2] Design of the Organization and Job.
3] Selection and Staffing.
4] Training and Development.
5] Organizational Development.
6] Compensation and Benefits.
7] Union/Labour Relations.

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BBA II Year SUBJECT: HUMAN RESOURCE MANAGEMENT III Sem

Human
Resource
Planning
Design of
Union/Labour
Organization
Relations and Job

Human
Resource Selection
Compensation Management and
and Benefits Staffing

Training and
Development
Organizational
Development

Figure 1.1: Scope of HRM

1] Human Resource Planning: The objective of HR Planning is to ensure that the

organization has the right types of persons at the right time at the right place. It prepares human
resources inventory with a view to assess present and future needs, availability and possible
shortages in human resource. Thereupon, HR Planning forecast demand and supplies and
identify sources of selection. HR Planning develops strategies both long-term and short-term,
to meet the man-power requirement.

2] Design of Organization and Job: This is the task of laying down organization
structure, authority, relationship and responsibilities. This will also mean definition of work
contents for each position in the organization. This is done by “job description”. Another
important step is “Job specification”. Job specification identifies the attributes of persons who
will be most suitable for each job which is defined by job description.

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BBA II Year SUBJECT: HUMAN RESOURCE MANAGEMENT III Sem

3] Selection and Staffing: This is the process of recruitment and selection of staff. This
involves matching people and their expectations with which the job specifications and career
path available within the organization.

4] Training and Development: This involves an organized attempt to find out training
needs of the individuals to meet the knowledge and skill which is needed not only to perform
current job but also to fulfil the future needs of the organization.

5] Organizational Development: This is an important aspect whereby “Synergetic

effect” is generated in an organization i.e. healthy interpersonal and inter-group relationship
within the organization.

6] Compensation and Benefits: This is the area of wages and salaries administration
where wages and compensations are fixed scientifically to meet fairness and equity criteria. In
addition labour welfare measures are involved which include benefits and services.

7] Union-Labour Relations: Healthy Industrial and Labour relations are very important
for enhancing peace and productivity in an organization. This is one of the areas of HRM.

 3] Objectives of HRM:
The primary objective of HRM is to ensure the availability of competent and willing workforce
to an organization. The specific objectives include the following:

1) Human capital: assisting the organization in obtaining the right number and types of
employees to fulfill its strategic and operational goals.

2) Developing organizational climate: helping to create a climate in which employees are

encouraged to develop and utilize their skills to the fullest and to employ the skills and abilities
of the workforce efficiently

3) Helping to maintain performance standards and increase productivity through effective job
design, providing adequate training and development, providing performance-related feedback
and ensuring effective two-way communication.

4) Helping to establish and maintain a harmonious employer/employee relationship.

5) Helping to create and maintain a safe and healthy work environment.

6) To provide organization with well-trained and well-motivated employees.

7) To increase the employees satisfaction and self-actualization.

8) To develop and maintain the quality of work life.

9) To communicate HR policies to all employees.

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 4] IMPROTANCE OF HRM:
1] Maximising productivity and profitability.
2] High quality of work.
3] Helping employees to achieve the set goals.
4] Improving team work.
5] Reducing the gap between demand and supply.
6] Building a corporate image.

 5] Functions of HRM
HRM plays the centre stage role in an organisation to meet the challenges of a dynamic and
competitive environment. Due to the changes in the business environment, the work,
workplaces and demographics HR managers need to reconfigure their roles. However, in
general the HRM functions are broadly of two categories: Managerial and Operational

HRM Functions
A] Managerial Functions
a] Planning
b] Organizing
c] Directing
d] Controlling

B] Operative Functions
A] HR Sourcing
a) Job Analysis.
b) Human Resource Planning.
c) Recruitment.
d) Selection.
e) Placement.
f) Induction and Orientation.
B] Performance and Development
a) Performance Appraisal
b) Training
c) Management Development
d) Career Planning and Development
e) Transfer
f) Promotion

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BBA II Year SUBJECT: HUMAN RESOURCE MANAGEMENT III Sem

g) Demotion
h) Change and Organisation Development
C] Compensation Management
a) Job Evaluation
b) Wage and Salary Administration
c) Incentives
d) Bonus
e) Social Security Measures
D] Integration
a) Employee Engagement
b) Counselling
c) Employee Welfare
E] Employee Relations
a) Grievance Management
b) Disciplinary Management
c) Union Management

I. Managerial Functions:
Managerial functions of human resource management involve planning, organising, directing
and controlling. All these functions influence the operative functions.
A) Planning: It is a predetermined course of action. Planning pertains to formulating strategies
of programmes and changes in advance that will contribute to the organisational goals. In
other words, it involves planning of human resources, requirements, recruitment, selection,
training etc. It also involves forecasting of HR needs, changing values, attitudes and
behaviour of employees and their impact on the organisation.

B) Organising: Organising is essential to carry out the determined course of action. In the
words of J.C. Massie, an organisation is a “structure and a process by which a co-operative
group of human beings allocates its task among its members, identifies relationships and
integrates its activities towards a common objective.” Thus, an organisation establishes
relationships among the employees so that they can collectively contribute to the attainment
of company goals.

C) Directing: The next logical function after completing planning and organising is the
execution of the plan. The willing and effective co-operation of employees for the
attainment of organisational goals is possible through proper direction. Tapping the
maximum potentialities of the people is possible through motivation and command. Co-
ordination deals with the task of blending efforts in order to ensure successful attainment
of an objective.

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D) Controlling: Controlling involves checking, verifying and comparing of the actuals with
the plans, identification of deviations if any and correcting of identified deviations. Thus,
action and operation are adjusted to pre-determined plans and standards through control.
Auditing training programmes, analysing labour turnover records, directing morale
surveys, conducting separate interviews are some of the means for controlling the HRM
function and making it effective.
II. Operative Functions
The operative functions of human resources management are related to specific activities
of managing employees, viz., employment, development, compensation and relations. All
these functions are interacted with managerial functions. There are five major operative
functions that HR managers carry out.
A] HR Sourcing
B] Performance and development.
C] Compensation management
D] Integration
E] Employee relations

1. HR Sourcing: It is the first operative function of Human Resources Management (HRM).

It is concerned with employing the people possessing the required kind and level of human
resources necessary to achieve the organisational objectives. It covers functions such as job
analysis, human resources planning, recruitment, selection, placement, induction and
orientation.

i) Job Analysis: It is the process of study and collection of information relating to the operations
and responsibilities of a specific job. It includes:
 Collection of data, information, facts and ideas relating to various aspects of jobs
including men, machines and materials.

 Preparation of job description, job specifications, job requirements and employee

specifications which will help in identifying the nature.

 Providing the guides, plans and basis for job design and for all operative functions of
HRM.
ii) Human Resources Planning:
It is a process for determination and assuring that the organisation will have an adequate
number of qualified persons, available at proper times, performing jobs which would meet the
needs of the organisation and which would provide satisfaction for the individuals involved. It
involves:
 Estimation of present and future requirements and supply of human resources based on
objectives and long range plans of the organisation.

 Calculation of net human resources requirements based on present inventory of human

resources.
iii) Recruitment: It is the process of searching for prospective employees and stimulating them
to apply for jobs in an organisation. It deals with
 Identification of existing sources of applicants and developing them.
 Creation/identification of new sources of applicants.
 Stimulating the candidates to apply for jobs in the organisation.
 Striking a balance between internal and external sources.

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BBA II Year SUBJECT: HUMAN RESOURCE MANAGEMENT III Sem

iv) Selection: It is the process of ascertaining the qualifications, experiences, skills, knowledge
etc., of an applicant with a view to appraising his/her suitability to a job. This function includes:
 Creating and developing valid and reliable testing techniques.
 Formulating interviewing techniques.
 Checking of references.
 Setting up a medical examination policy and procedure.
 Line manager’s decision.
 Sending letters of appointment and rejection.
 Employing the selected candidates who report for duty.

v) Placement: It is the process of assigning the selected candidate with the most suitable job in
terms of job requirements. It is matching of employee specifications with job requirements.
This function includes:
 Counselling the functional managers regarding placement.
 Conducting follow-up study, appraising employee performance in order to determine
employee adjustment with the job.
 Correcting misplacements, if any.

vi) Induction and Orientation: Induction and orientation are the techniques by which a new
employee is rehabilitated in the changed surrounding and introduced to the practices, policies,
purposes and people etc., of the organisation.
 Acquaint the employee with the company objectives, policies, career planning and
development, opportunities, product, market share, social and community standing,
company history, culture etc.

 Introduce the employee to the people with whom he has to work such as peers,
supervisors and subordinates.

 Mould the employee’s attitude by orienting him to the new working and social
environment.

2. Performance and 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.

i) Performance Appraisal: It is the systematic evaluation of individuals with respect to their

performance on the job and their potential for development. It includes:
 Developing policies, procedures and techniques.
 Helping the functional managers.
 Reviewing of reports and consolidation of reports.
 Evaluating the effectiveness of various programmes.

ii) Training: It is the process of imparting to the employees technical and operating skills and
knowledge. It includes:
 Identification of training needs of the individuals and the company.
 Developing suitable training programmes.
 Helping and advising line management in the conduct of training programmes.
 Imparting of requisite job skills and knowledge to employees.
 Evaluating the effectiveness of training programmes.

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iii) Management Development: It is the process of designing and conducting suitable

executive development programmes so as to develop the managerial and human relations skill
of employees. It includes:
 Identification of the areas in which management development is needed.
 Conducting development programmes.
 Motivating the executives.
 Designing special development programmes for promotions.
 Evaluating the effectiveness of executive development programmes.

iv) Career Planning and Development: It is the planning of one’s career and implementation
of career plans by means of education, training, job search and acquisition of work experiences.
It consists of transfer, promotion and demotion.

vi) Transfer: It is the process of placing employees in the same level jobs where they can be
utilised more effectively in consistence with their potentialities and needs of the employees and
the organisation. It also deals with:
 Developing transfer policies and procedures.
 Guiding employees and line management on transfers.
 Evaluating the execution of transfer policies and procedures.

vii) Promotion: It deals with upward reassignment given to an employee in the organisation
to occupy higher position which commands better status and/or pay keeping in view the human
resources of the employees and the job requirements. This function covers.
 Formulating of equitable, fair and consistent promotion policies and procedures.
 Advising line management and employees on matters relating to promotions.
 Evaluating the execution of promotion policies and procedures.

viii) Demotion: It deals with downward reassignment to an employee in the organisation.

Develop equitable, fair and consistent demotion policies and procedures.
ix) Change and Organisation Development: Change implies the creation of imbalances in the
existing pattern or situation. Organisation development is a planned process designed to
improve organisational effectiveness and health through modifications in individual and group
behaviour, culture and systems of the organisation using knowledge and technology of applied
behavioural sciences.

C. Compensation Management:

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,
social security measures etc.

i) Job Evaluation: It is the process of determining relative worth of jobs.

 Select suitable job evaluation techniques.
 Classify jobs into various categories.
 Determining relative value of jobs in various categories.

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BBA II Year SUBJECT: HUMAN RESOURCE MANAGEMENT III Sem

ii) Wage and Salary Administration: This is the process of developing and operating a suitable
wage and salary programme. It covers:
 Conducting wage and salary survey.
 Determining wage and salary rates based on various factors.
 Administering wage and salary programmes.
 Evaluating its effectiveness.
iii) Incentives: It is the process of formulating, administering and reviewing the schemes of
financial incentives in addition to regular payment of wages and salary. It includes:
 Formulating incentive payment schemes.
 Helping functional managers on the operation.
 Review them periodically to evaluate effectiveness.
iv)Bonus: It includes payment of statutory bonus according to the Payment of Bonus Act, 1965
v) Fringe Benefits: These are the various benefits at the fringe of the wage. Management
provides these benefits to motivate the employees and to meet their life’s contingencies. These
benefits include:

 Housing facilities.
 Educational facilities to employees and children.
 Canteen facilities.
 Medical, maternity and welfare facilities.
vi)Social Security Measures: Managements provide social security to their employees in
addition to the fringe benefits.

D. Integration:
Practicing various human resources policies and programmes like employment, development,
compensation and interaction among employees create a sense of relationship between the
individual worker and management, among workers and trade unions and the management.
It is the process of interaction among human beings. It includes:
 Employee engagement
 Understanding and applying the models of perception, personality, learning, intra- and
inter-personal relations, intra- and inter-group relations.
 Motivating the employees.
 Developing the communication skills.
 Developing the leadership skills.
 Grievance Management.
 Handling disciplinary cases by means of an established disciplinary procedure.
 Counselling the employees in solving their personal, family and work problems and
releasing their stress and tensions.

E. Employee 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 management.

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BBA II Year SUBJECT: HUMAN RESOURCE MANAGEMENT III Sem

 Role of HR Manager in an Organisation

HR manager plays a pivotal role to achieve organizational objectives. It is human
resource/work people who perform task and achieve company goals. HR manager is a guide,
philosopher, friend, path-finder, path identifier, problem solver, competence maker of the
human resource.

Various roles played by the HR manager in an organisation.

A: The pivotal role of HR Manager to achieve organizational objectives are
1. Advisory Role 2.Welfare Role 4. Developmental Role 5. Mediator’s Role 6. Counsellor’s
Role 8. Spokesperson Role 9. Motivator’s Role.

B: The specialist role of HR Manager are

1. The Service Provider 2. The Executive 3. The Facilitator 4. The Consultant.

C: Role of HR Manager in strategic management are

1. HR’s Role in Executing Strategy 2. HR’s Role in Formulating Strategy

D: Role of HR Manager are

1. Identify Organisational Development Needs 2. Provide Inputs for Preparing Promotion
Policies.

Role of HR manager is discussed in brief as under:

1. Advisory Role:
One of the major roles of HR manager is, to advise the top management in the matter relating
to management and development of human resource, in order to achieve organizational objects.
Looking to the company’s vision, mission and long range planning, HR executive advises the
higher management to formulate appropriate HR policies, procedures which may create a
perceptible change in the minds of the workers’ to help the transformational process of
dynamism.

2. Welfare Role:
HR executive looks to the welfare aspect of the employee’s viz., canteen, rest-room, hospital,
transportation, housing accommodation, school, etc. His one of the principal roles is to provide
welfare facilities to the employees for their betterment and well-being.

3. Developmental Role:
Development of workers for attaining company goals is made by the HR manager through
improvement of knowledge, skill, abilities, aptitude, attitude, value, beliefs etc. A dynamic
organization needs dynamic employees and transformation of employee’s mind-set to the
process of dynamism is possible only when all the potential areas for growth and development
are reinforced.
HR manager takes all possible measures for growth and development of employees through
formulation of HR policies in the matter of training, career planning and development,
counselling etc.

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4. Mediator’s Role:
HR manager works as a link personality between trade unions and top management in order to
eliminate the differences of opinions cropped up in process of settlement of disputes. He takes
initiative to sort out problems through collective bargaining/ bipartite negotiation process.

5. Counsellor’s Role:
Because of illiteracy and ignorance workers cannot take decision in their personal problems
and they need advice to sort out such problems, viz. education of children, medical treatment,
marital matter, family problems, etc. HR manager, as he comes close to the workers because
of his nature of work, develops understanding between them and advises, guides the workers
in right direction.

6. Spokesperson Role:
HR executive works as a spokesperson of the company especially, in the matter of depicting
organization health, condition, strength etc. to the employees while negotiating for settlement
of industrial disputes. He also acts as a representative of the workers when they are non-
unionized/unorganized and cannot represent their case properly to the top management. Under
such circumstances HR manager places their grievances, problems, demand to the top
management for settlement.

7. Motivator’s Role:
One of the functions of HR manager is to motivate the employees to achieve their own goals,
as well as organizational goals HR manager performs such role by way of introducing reward
schemes. HR manager’s role of establishing mutual understanding, mutual confidence and
mutual trust helps to motivate the employees to excel in the level of their performance.

8. Executive Role:
HR manager plays an important role to execute the policies, programmes, decisions.
Formulation and execution tasks are interwoven and equally important for achievement of
organizational goals. HR manager acts as an executor of the policy decisions in the company,
for smooth functioning and effectiveness of the organization.

9. Decision Maker’s Role:

HR manager is the supreme person to make decisions in respect of management and
development of human resource. Organizational policies, programmes objectives concerning
human resource are formulated by him.

10. Coordinator’s Role:

HR executive coordinates the task of developing, interpreting of HR programmes, policies
which are put into operation by the line people, and develops a team spirit amongst them.

11. Strategist Role:

HR manager helps to accomplish business strategy of the organization through introducing and
implementing HR strategies.

18. Monitoring Role:

HR manager acts as regulator/monitor to ensure, that HR policies, procedures, programmes, so
formulated are monitored effectively to meet the objectives.

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Some important Roles and Responsibilities of HR Manager are also

It is important for the HR manager to place his role on the same lines as that of the organization.
Within this environment, the HR professional has to be a strategic partner, an employee
advocate, and a change mentor to be able to survive the changing environment. Depending on
the size of the organization, an HR manager has the responsibility of looking at all the functions
that deal with the needs and activities essential for people management.
Some of roles and responsibilities are as follows:

1. Recruiting and hiring – It is a process of discovering sources of manpower and employing

effective measures for attracting that manpower in adequate numbers to facilitate the selection
of an efficient working force in an organization.

2. Training and development – These processes help in enhancing and enabling the capacities
of people to build their strengths and confidence in order for them to deliver more effectively.

3. Competency development – Competency is a cluster of related knowledge, skills, and

attitude that affect a major part of one’s job. It can be improved by means of training and
development.

4. Organization development – It is an organization-wide effort to increase its effectiveness

and viability and move towards growth.

5. Communication – It is an activity that involves conveying meaningful information. At all

times, the HR must convey all relevant information to the employees.

6. Performance management – It focuses on improving the performance of the organization,

employees, and various other services.

7. Employee relations – This is a concept that works towards bettering the relations among
the employees, as well as between the employee and the management.

8. Coaching, mentoring, and counselling – It is a practice of supporting an individual and

helping him overcome all his issues in order to perform better.

9. Wages, salary, and compensation benefits – These benefits are provided to the employees
to keep them motivated towards their work and the organization.

10. Leadership development – This activity refers to enhancing the quality and efficiency of
a leader in an organization.

11. Team building – It focuses on bringing out the best in a team to ensure development of an
organization, and the ability to work together closely to achieve goals.

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 Organisation structure For HRM

Organisation structure means the systematic arrangement of people working for the
organisation in order to achieve certain goals .It is the framework of authority relationships
among individuals and groups in an organisation.
 According to Fred Luthans, “Organisation structure represents the skeleton
framework for organisation behaviour.”

 In the words of Henry Albert, "Organisation structure is the framework within which
managerial and operating tasks are performed."

 In the words of Carlisle, “Organisation structure is the system of relationships,

formally prescribed and informally developed that governs the activities of the people
who are dependent upon each other for the accomplishment of common objectives.”

 Organization chart
The formal relationships in an organization are explained in an organization chart. The boxes
represent the various important positions in an organization. The distance of the box from the
top indicates its position in the hierarchy. The closer the box position to the top, the higher is
its status and vice-versa. The lines joining the various positions represent the formal reporting
relationships usually between a superior and a subordinate. Although the organization chart is
a speculative illustration of the structure yet it is an extremely useful tool for understanding the
organization structure of a firm.

Figure-1 Organisation Chart

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 Types of organisation structures

1] Line organisation structure

This is also known as military organization and the line of authority flows from the top most
executive to the lowest subordinate. In this type of structure every employee is accountable to
one superior i.e. there is unity of command. The authority relationships are clear and there is
strict discipline. But there is lack of specialization and flexibility.

Advantages
 Tends to simplify and clarify authority, responsibility and accountability relationships.
 Promotes faster decision making.
 Simple to understand.
Disadvantages
 Specialists are not given importance in planning.
 Key persons are overloaded with jobs and tasks.

Figure 2 – Line Organisation Structure

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2] Functional Organizational Structure

Here the departments are grouped according to functions like employment, training, salary,
welfare, and services etc. A specialist heads each department and has specialized men under
him. The operating executives are free from the necessity of performing work outside their
special fields and are offered expert assistance and advice as needed in the performance of their
jobs and tasks.

Advantages

 Functional organization has the advantage of specialization.

 Every operating executive carefully concentrates on his function and gets expert advice
and assistance.
Disadvantages

 Lines of authority are not clear.

 In the absence of unity of command, co-ordination and control are also hampered.

Figure 3 – Functional Organisation Structure

3] Line and Staff Organization Structure

This structure has been evolved in order to achieve the benefits of both the line as well as the
functional organization. The organization structure is basically that of line organization, but
staff officers who are functional experts are engaged to advise the line officers to perform their
duties. Under it staff positions are attached to line executives. Personal department provides
advice and assistance on personal matters to all departments without discouraging unity of
command.

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Advantages
 Line and staff organization is more suitable in large enterprises.
 Line and staff structure allows higher flexibility and specialization.
Disadvantages
 Even through a line and staff structure allows higher flexibility and specialization it
may create conflict between line and staff personnel.
 Staff people may dislike their lack of authority and this may cause line and staff conflict.

Figure 4 – Line and Staff Organisation Structure

4] Divisional Organization Structure

In this case, the organisation is divided into divisions which could be based on the product,
Markets or Geographic area. Each division has its own set of functions like finance, marketing
etc., which are like small micro organisations within one large organisation.

Advantages
 Key interdependencies and resources within the division are coordinated towards an
overall outcome.
Disadvantages
 Too much duplication of resources, skills, and expertise as each division has its own
function.

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Figure 5 – Divisional Organisation Structure

5] Matrix organization structure

A matrix type of organisational structure combines the traditional departments seen in

functional structures with project teams. In a matrix structure, individuals work across teams
and projects as well as within their own department or function.

For example, a project or task team established to develop a new product might include
engineers and design specialists as well as those with marketing, financial, personnel and
production skills. These teams can be temporary or permanent depending on the tasks they are
asked to complete. Each team member can find himself/herself with two managers - their
normal functional manager as well as the team leader of the project.
An example of a matrix structure is illustrated below

Figure 6 – Matrix Organisation Structure

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Advantages
 Can help to break down traditional department obstacles and as such improving
communication across the entire organisation.
 Avoid the need for several departments to meet regularly, so reducing costs and
improving coordination.
 Likely to result in greater motivation amongst the team members.
 A good way of sharing resources across departments – which can make a project more
cost-effective.
Disadvantages
 Members of project teams may have divided loyalties as they report to two line
managers. Equally, this scenario can put project team members under a heavy pressure
of work.
 There may not be a clear line of accountability for project teams given the complex
nature of matrix structures.
 Difficult to co-ordinate.
 It takes time for matrix team members to get used to working in this kind of structure.
 Team members may neglect their functional responsibilities.

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