1 – Understanding the Nature and Scope of Human Resource Management

Introduction

HRM is concerned with the management of an organization’s human resources. Managing human resources is the most critical and challenging task management must undertake. It is essential because it is the key to long-term viability in today’s competitive world. It is difficult because no two people are alike (they have different needs, ambitions, aspirations, mental makeup, and backgrounds). Can you think of any additional distinctions?!). Consider the job of a human resource manager, who must address not only the diverse demands of his or her employees but also the overall company goal. Before diving into human resource management, it’s essential to refresh your memory of what management entails. Mary Parker Follett defines management as “the art of getting things done through people.” It is that field of human behaviour in which managers plan, organise, staff, direct, and control human, physical, and financial resources in an organised effort to achieve desired individual and group activities with optimum efficiency and effectiveness,” according to another definition. Human, financial, operational, and information resources are all significant resources that the firm must manage. Human resource management is the only resource that is a live element of the organisation. This live part radiates positive energy, which leads to the organization’s planning, organising, regulating, coordinating, and directing the rest of its resources. This sub-system will eventually contribute to the organization’s overall growth. As a result, human resources are an essential sub-system in the management process.

1.1 Human Resource Management

HRM is vital for all managers since failing to manage human resources might result in the following issues:

1. Hire the incorrect individual for the job
2. Have a high turnover rate
3. Workplace misfits
4. Waste time on ineffective interviews
5. Cause employee dissatisfaction and even unrest;
6. Allow a lack of training to undermine a department’s effectiveness.
7. Engage in any unequal labour practices
8. Investigate labour-related legal issues.

Remember that you can make unique plans, draw excellent organisation charts, set up modern assembly lines, and employ complex financial controls as a manager. You still fail if you hire the wrong people or don’t motivate your subordinates. On the other hand, many managers — presidents, generals, governors, and supervisors – have been effective despite poor plans, organisations, or controls. They were successful because of their ability to grow their employees.

Human Resource Management (HRM) brings individuals and organisations together to achieve mutual goals. It is part of the management process involved with the organization’s human resource management. It aims to get the best out of people by gaining full cooperation.

It can be defined as the art of effectively and efficiently processing, developing, and maintaining a qualified workforce to meet an organization’s goals.

It is focused on making the best use of people to achieve organisational and personal objectives.

People Resource Management manages an organization’s vibrating human resources so employees and the company can achieve their goals. Human resource management is, in fact, an organization’s most valuable asset. The quality of its human resources will determine its fate.

1.1.1 Definitions

M L Cuming states, “Human Resource Management is concerned with obtaining the best possible staff for an organization and having got them looking after them so that they want to stay and give their best to their jobs.”

Dale Yoder defines Human Resource Management as the part of management that effectively deals with the control and use of manpower as distinguished from other sources of power.

According to F. E. L. Brech, Human Resource Management is a part of management progress that is primarily concerned with an organization’s human constituents.

Edison defines Human Resource Management as the science of human engineering.

According to Leon C. Megginson, the term human resource refers to “the total knowledge, skill, creative abilities, talents and aptitudes of an organization’s workforce, as well as the values, attitudes and beliefs of the individuals involved.”

Human resource management is a growing field that has evolved from administration to personnel and human resource management. The following sections discuss the breadth of each of these fields:

1. Administration: A department called administration was created in the early days of the development of diverse management disciplines. The goal of this department was to hire, monitor, supervise, and recompense the organization’s workforce and keep track of the general operation.

With the advancement of industrialization and the introduction of more systematic and scientific management, a natural outgrowth of administration known as personnel management arose. It gained prominence and eventually became a full-fledged and distinct profession of management.

2. Personnel Management: As defined by the Institute of Personnel Management in the United Kingdom (IPM) and adopted by the Indian Institute of Personnel Management (IIPM): “Personnel management is a responsibility shared by all those who manage people, as well as a description of the work performed by specialists. It’s the element of management that deals with people at work and the connections within a company. It applies to all spheres of employment, not only industry and commerce”.
3. Human Resource Management: As competition and globalisation have increased, it has become clear that the only way to maintain a competitive advantage, or even to stay in the game, is to have resources that are distinct from those of competitors, and the only way to do so is to attract and retain the right human resource within the organisation. As a result, human resource management sprang from the field of personnel management. The distinctions between the two are based on philosophical shifts rather than functional differences. On the one hand, personnel management has the concept of keeping human resources in the organisation. In contrast, HRM has the philosophy of developing human resources and considers human resources to be the organization’s most significant resource.

1.2 HRM Functions

In some ways, all managers are HR managers because they are involved in recruiting, interviewing, selecting, and training tasks. Nonetheless, most businesses have a human resources department with its top executive. How do the responsibilities of this HR manager and his or her team relate to the duties of “line” managers regarding human resources?

HR managers are in charge of both the line and the workforce. Let’s start with a definition of line and staff managers:

Line managers have the authority to direct subordinates’ work; they are always someone’s boss. Line managers are also in charge of achieving the organization’s basic objectives.

HR managers are usually line managers in their departments, with titles such as V.P. (HR), Senior Manager (Recruitment), Senior Manager (Training), etc.

On the other hand, staff managers are tasked with assisting and advising line managers in achieving these fundamental objectives. HR managers are typically staff managers in areas such as recruiting, hiring, and remuneration.

One major corporation, for example, divides line supervisors’ responsibilities for efficient human resource management into the following categories:

1. Assigning the appropriate individual to the appropriate position.
2. Recruiting new personnel for the company (orientation).
3. Educating personnel on how to perform new tasks.
4. Improving each person’s work performance in the department.
5. Developing seamless working ties with the department and gaining innovative cooperation.
6. Instructing subordinates on their obligations and duties.
7. Improving the skills of each member of the department.

Creating and sustaining a department is number eight on the list.

1. Creating and implementing a successful performance management system.
2. Managing the organization’s pay management system.
3. Creating individual career plans for each employee.
4. Recruitment, selection, training and development, and grievance handling are conducted at various levels and departments within the organisation.
5. In small businesses, line managers may be able to handle all of these personnel responsibilities independently. However, as the company grows, it will require the aid, specialised knowledge, and guidance of a separate human resource department.

The human resource department provides this expert help. The HR manager performs three distinct tasks in this capacity:

1. A Line Function: The HR manager is in charge of the actions of the employees in his or her department and those in linked service areas. In other words, he or she has line authority within the HR department.
2. A Coordinative Function: HR managers are also responsible for coordinating personnel activities, a task known as functional control. The HR manager and department serve as the top executive’s right hand, ensuring that line managers follow the company’s HR objectives, rules, and procedures (for example, adhering to its sexual harassment policies).
3. Functions of the staff (service): The primary responsibility of HR managers is to assist and advise line managers. HR can help with hiring, training, evaluating, rewarding, counselling, promoting, and firing staff. It also manages many benefit programmes (health and accident insurance, retirement, vacation, and so on). It assists line managers in complying with equal employment and workplace safety rules and resolving grievances and labour relations. It serves as an innovator by disseminating “up-to-date knowledge on current trends and new methods of solving problems, such as the current interest in implementing six-sigma quality programmes and forming “learning organisations.” It also advocates for employees, helping establish how management should treat employees, ensuring that employees can challenge unfair practices, and representing employees’ interests within its primary responsibility to senior management. HR now plays a strategic role in most businesses, assisting the CEO in developing and implementing the company’s strategy.

What exactly does it mean to have a competitive advantage?

An organization can perform operations extraordinarily well (taking advantage of attractive possibilities to maximise returns on investment) and acquire a competitive advantage over competitors.

1.3 Objectives of Human Resource Management

1. Advising management on human resource policies is necessary to ensure that the organisation has a highly motivated and performing staff and employees who are capable of coping with change and meeting its legal employment requirements.
2. Attracting, hiring, rewarding, maintaining, and developing the organization’s human resources.
3. Managing crises and challenging human relations circumstances to guarantee that they do not obstruct the organization’s ability to achieve its goals.
4. Establishing a line of communication between the workforce and the company’s management.
5. In human resource management, acting as a keeper of organisational norms and values.

1.4 Nature and Scope of Human Resource Management

1. It is the most significant management subsystem. Human resources are an essential component of any business. Every organisation requires labour. Management is concerned with attaining commercial goals through the use of people. Human Resource Management becomes an element of management as a result. It is a subsystem of management that encompasses all management principles.
2. Human Resource Management concerns the management of human beings who operate in an organisation. It involves hiring and firing workers and employees and is focused on staff training, organization, control, and other benefits.
3. HRM is ubiquitous. Subordinate workers must fulfil every management function at every level, and employees are required in every functional area, whether production, marketing, or finance. As a result, HRM becomes prevalent.
4. HRM Has a Broad Scope: HRM may be used to cover a wide range of business activities, including hiring, training, development, and remuneration. As a result, it has a broad application across an organization’s levels, departments, and hierarchies.
5. Human Resource Management entails coordination and cooperation. It attempts to create a harmonious environment within the organisation and builds relationships based on mutual trust and confidence.
6. HRM aspires to employee happiness: Human Resource Management attempts to provide employees the highest level of satisfaction while also maximising their contribution to the firm.
7. Human Resource Management (HRM) aims for effective leadership and motivation. HRM guides and directs employees’ energies and provides solutions to their difficulties. It inspires and motivates people to provide their best services and contributions to the company.

1.5 Personnel policies and processes

Personnel policies and processes differ. It is critical to comprehend how policies and procedures differ.

The following is an example of Tata Steel’s personnel policy, as stated in the Statement of Objectives. The company tries to look after its employees in the following ways:

• By having a realistic and generous understanding and acceptance of their needs and rights, as well as an informed awareness of the industry’s social problems;
• By providing adequate wages, good working conditions, job security, an effective mechanism for redressing grievances, and suitable opportunities for promotion and self-development through in-company and external programs;
• By treating them as individuals, instilling in them a sense of self-worth and a better understanding of their role in the organisation, as well as satisfying their desire for self-expression through a closer relationship with management;
• Instilling a sense of belonging through human and purposeful activities as an integral part of human relations ensures their willing cooperation and loyalty.

1.6 Principles of HRM

“principle” refers to a fundamental truth or law as the foundation for reasoning or action. Because human resource management is such a broad field of endeavour, it should be guided by a set of rules or laws. These principles are given out to serve as a guide for all types of businesses.

Characteristics of principles

These principles should be generally relevant and simple to implement in any form of organisation. The HR principles are as follows:

1. A general or fundamental truth.
2. Applied to originations in general.
3. It helps managers develop policies, programmes, and procedures, such as principles of equitable remuneration or scientific worker selection.
4. It can be used at all levels of the company.
5. It is dynamic, resulting in employee satisfaction and motivation.

1.7  Evolution of HRM

HR has progressed through six stages in its history:

• Stage I: Pre-Industrial Era (1400-1700 AD)
• Stage II: The Factory System and the Industrial Revolution (1700-1900 AD)
• Stage III: Scientific Management, Welfare Work, and Industrial Psychology (1900-1935 AD)
• Stage IV: Maintenance Function of Industrial Relations and Personnel Management During the Golden Age of Industrial Relations and Personnel Management (1935-1970)
• Stage V: Control of Labour Tradition (1970-1990)
• Stage VI: Professional Tradition (1990- till date)

The Initial Stage

Even though human resource management is a relatively new discipline, its roots are in 1800 BC.

1. For example, the Babylonian Code of Hammurabi, which was written approximately 1800 BC, includes the minimum wage rate and incentive wage programmes.
2. The Chinese invented the division of labour as early as 1650 BC, and they comprehended labour turnover as early as 400 BC.
3. In India, Kautilya mentioned several concepts, such as job analysis, selection methods, executive development, incentive systems, and performance appraisal, in his work Arthasastra.

Stage 1: Pre-Industrial ERA (1400-1700 AD)

It began in 1400 AD and lasted until 1700 AD. At this time, there was no explicit Human Resource Management function within the organisation. Several significant changes occurred during this first stage, which served as the seeds for modern Human Resource Management.

First, there was the end of feudalism, the liberation of labour from the land, and the establishment of the free employment relationship, the foundation of modern labour markets.

Second, there was a transition from subsistence agriculture to a commercial mixed economy, the emergence of the urban economy, a diffusion of economic control, and wealth and income distribution.

Third, the number of cities and villages dramatically increased, as did a growing middle class comprised of skilled craftsmen and merchants.

Stage II: The Factory System and the Industrial Revolution (1700-1900 AD)

Industrial relations began in the United Kingdom in the 18th century, in the United States in the 19th century, and in India in the second half of the 20th century. It was made possible by using machines to replace human effort and talent. Establishing the ‘factory’ system was one of the contributions of industrial relations. Factories significantly increased output while creating a new class of workers and managers. It resulted in the division of labour. It required the supervision of a vast number of employees. Personnel practises autocracy by introducing the industrial system based on the notion of commodity labour. The terms on which labour was acquired were structured to maximise the employer’s profit. As a result, the “Human Factor” was utterly ignored in favour of materials, market, and production.

Stage III: Scientific Management, Welfare Work, and Industrial Psychology (1900-1935 AD)

Scientific Management and Welfare Work are two different and concurrent movements that originated in the nineteenth century and fused around World War I to establish the area of Human Resource Management, with contributions from Industrial Psychology.

Scientific management deals with inefficiencies in labour and management by reorganising production methods and rationalising work.

Welfare work is everything done for the employees’ comfort and improvement, whether intellectual or social, that is not mandated by law or required by industry. It represents efforts to address labour issues by improving the working conditions of employees.

The application of psychological principles to increase the efficiency of industrial workers was known as industrial psychology.

Fredrick Scientific Management by William Taylor can be summarised as follows:

1. It is science, not a rule of thumb, that determines whether or not something is true.
2. Harmony rather than discord
3. Collaboration rather than individualism
4. Maximum output, rather than limited output.

Scientific Management’s Contribution to Human Resource Management

1. Taylor’s functional management proposal highlighted the necessity for distinct Human Resource functions in organisations.
2. Taylor established the viability of job analysis as a basis for hiring, training, evaluating, and compensating employees.
3. Taylor established that labour and occupations can be researched, analysed, altered, and improved systematically.
4. He emphasised the need for a thorough selection process and practical training approaches.
5. Taylor popularised the concept of unequal remuneration based on production.
6. He emphasised the importance of management winning over and leading workers.

Industrial Psychology

Industrial psychology arose from scientific management. Its goal was to improve human efficiency by focusing on the workers’ overall well-being and lowering the physiological and psychological expenses of employment. Contemporary psychologists Hugo, Munsterberg, and William Gilbreth used individuality in the selection, research, and motivation of employees.

Welfare Work in Major Areas

Efforts were undertaken in the 19th and early 20th centuries to enhance working conditions for manufacturing workers. During this time, the welfare work movement grew in popularity. Welfare work, like Scientific Management, attempted to handle labour problems more systematically. It has been defined as everything done for the employees’ comfort and intellectual or social development that is not a necessity of industry or required by law, in addition to the salaries provided. The fundamental goal of welfare work was to:

1. Avoiding labour unrest and unionisation
2. Encouraging effective management and employee relations
3. Efforts to boost employee productivity and decrease turnover

Some industries in the United States hired welfare secretaries to handle welfare programmes around 1900 AD.

Among the welfare measures were:

1. Provide workers with a richer and more satisfying existence.
2. Raise the workers’ level of living.
3. Absorb the shocks imposed on employees by industrialization and urbanisation.
4. Promotes a sense of belonging among employees, which reduces absenteeism, labour turnover, and strikes, among other things.
5. Prevent social ills such as alcoholism, gambling, and prostitution, among others.

During this stage, there have been several significant developments.

The Factories Acts of 1881 and 1891 were passed out of concern for the well-being of workers.

These behaviours were restricted to women’s and children’s working hours.

The All-India Trade Union Congress (AITUC) was established in 1919.

In 1919, the League of Nations founded the International Labour Organization as an independent body. Its headquarters are in Geneva, Switzerland, at the International Labour Office. The fundamental goals of social justice are as follows:

1. It approved an International Labour Convention and proposed that workers’ claims be protected in case of their employer’s insolvency.
2. It drafted resolutions on the role of businesses in job creation, employment policy as a component of overall development, and migrant workers’ rights.

In 1931, the Royal Commission on Labour (J H Whitley Commission) suggested abolishing the Jobber System, appointing labour officers, and establishing Works Committees to improve worker conditions. Later, Section 3(1) of the Industrial Dispute Act of 1947 established a Works Committee. Section 49 of the Factories Act of 1948 mandated the employment of Labour Welfare Officers in all units employing 500 or more workers. These protections have already been put in place.

Stage IV: Maintenance Function of Industrial Relations and Personnel Management in the Golden Age (1935-1970)

Following World War I, there was a severe downturn. The rise in unions and collective bargaining following the Great Depression increased the demand for Human Resource Management. During this period, the emphasis changed towards Human Resource Management’s Industrial Relationship Function.

From 1945 to 1970, the primary focus of the employment relationship was on labour relations, and the human resource management function grew in importance. World War II followed the pro-union legislation, creating an unprecedented need for labour, resulting in enormous union prestige and fuelling a fantastic boom in union membership.

Between 1948 and 1958, the industrial relations side of human resource management reached its pinnacle. Because many firms needed to operate inside a collective bargaining framework of labour relations, the overall focus of human resource management was on industrial relations.

During this time, there were a lot of big changes.

1. The Industrial Disputes Act of 1947 was the first step. It established permanent machinery for settling industrial disputes and made these awards binding and legally enforceable.
2. Another milestone was the formation of the Indian Labour Conference, a tripartite group tasked with investigating India’s industrial relations issues. It was formed to foster collaboration between the government, employers, and labour organisations.
3. Another significant characteristic was a shift in the government’s attitude toward labour and its difficulties. Between 1947 and 1956, many labour laws were passed to defend the interests of industrial workers. These rules cover various labour issues, including seniority, wage rates, paid holidays, and disciplinary matters.
4. In 1957, the focus changed from legal enactments to voluntary agreements. In fact, through Works Committees/Joint Management Councils (JMC), recognition of unions, grievance procedures for workers, workers participation schemes, and other means, the period between 1957 and 1965 can be seen as an attempt to move away from legalism and toward voluntarism, which had dominated India’s industrial relations.
5. Many political and international events occurred after this time, affecting labour relations. India fought three wars between 1962 and 1971, one with China and two with Pakistan. In 1966, the government created the National Commission of Labour (NCL) to investigate the situation. Some of the recommendations, such as those dealing with worker training, induction, education, working conditions, and social security, are in various levels of implementation.

Legalists currently dominate Indian industrial relations at the plant level. Many of these laws reflect the government’s socialist leanings. On the other hand, in addition to management and union initiatives in certain circumstances, the government has undertaken steps to foster a bipartite collective bargaining position.

Stage V: Control of Labour Tradition (1970-1990)

The trade union, which is a product of capitalist industrialization, arose in the 19th century in Britain and other industrialised countries in the West, primarily to protect workers from the injustice and exploitation meted out by capitalist owners during the progress of industrialization. Many countries’ labour movements formed political parties and engaged in political and economic struggles. Over time, the labour class was gradually integrated into the greater society as employers accepted their demands, first for collective bargaining and subsequently for worker participation in management. As a result, in the twentieth century, they rose to prominence and power in industry and society. During the 1980s and 1990s, however, trade union membership declined significantly. The following are some of the reasons for the loss of control of labour tradition:

1. Trade unions arose under the guidance of outsiders, such as social workers and nationalist leaders, rather than workers. Political leaders were in charge. Furthermore, the political leadership was split along ideological lines.
2. Governments progressively assumed the wage-welfare roles of trade unions, enacting a slew of labour laws to preserve employees’ jobs while simultaneously providing for various welfare measures. This, on the other hand, weakened trade unions and slowed the expansion of the industry’s collective bargaining system. In fact, despite having the world’s highest number of labour laws, India lacks a central statute that recognises trade unions.
3. The social composition of the labour force has shifted significantly. Since the mid-1950s, a new generation of employees has developed in their sectors, primarily from the upper castes who are also young, educated, and skilled. To them, a labour union is only an agency that must supply them with services in exchange for their membership and political support. When a union cannot provide people with benefits, they quit and join those who promise to do so. As a result, inter-union rivalry is fierce, and recognised unions, in particular, struggle to maintain worker support on a long-term basis.
4. Increased unemployment, underemployment, and rising prices have disproportionately impacted the working class. This system not only causes workers to be preoccupied with job security, wages, and other material benefits but also to strive for consumption, which is conspicuous by its very nature. As a result, they become more individualistic.
5. Because the bulk of Indian businesses are small and medium-sized, trade unions in these businesses must also be small. The union movement’s political division also contributes to its small stature. The financial strength of unions is also due to their limited size.
6. The extent of the relationship between unions and political parties at various levels varies greatly, ranging from a single party’s complete “ownership” of unions to parties such as the Congress Party, which give unions varying degrees of autonomy.

Despite their flaws, unions in India often wielded tremendous power at both the national and negotiating levels, particularly until the early 1970s or so, thanks to their affiliations with political parties and the assistance they received from the government.

Causes of Failure

1. Development under the direction of a third party.
2. The government assumed wage-and-welfare responsibility and enacted a slew of labour rules that crippled labour unions.
3. There have been significant changes in the social mix of the labour force.
4. As unemployment and prices rose, unions became increasingly individualistic.
5. Because most Indian organisations are small and medium-sized, the trade union’s limited size, poor performance, and financial strength further weakened it.
6. The nature of the link between the union and political parties varies, allowing the parties to provide the union with varying degrees of autonomy.

Stage VI: Professional Tradition (1990- till Date)

Personnel management has evolved and become more professionalised throughout time. Professional management is defined as management in which professional managers make decisions, where capital and control have been separated, and where firm owners are functionless owners.

Advanced, specialised formal education and training necessitates specialised formal education and training. They should also specialise in a managerial discipline (like production, finance, marketing, personnel, etc.).

Personnel management became a professional field of management at this point.

Personnel Manager’s academic qualifications: To be classified as a profession, an occupation must have advanced specialised formal education and training.

1. Qualifications differ from one organisation to the next and from one country to the next. They have gone through various transformations over the years. Postgraduate degrees or diplomas in Social Science, Sociology, Social Work, Personnel Management and Industrial Relations, Labour Welfare, Labour Laws, and an MBA with a specialisation in Human Resource Management and Industrial Relations are among the qualifications required.
2. In India, there are no formal educational requirements for the position of Personnel Manager. However, in public sector enterprises such as Indian Railways, BHEL, and SAIL, technical managers with no experience or qualifications are assigned to this position. Therefore, having knowledge or a degree is now more important than ever for the position of human resource manager.

The qualities of a professional institution are as follows:

1. Professional organisations: A profession is organised as an organisation with its experts. Professionals have formed various administrative groups, associations, and institutions, each with a sizable membership of persons with a background in human management. These organisations include the National Institute of Personnel Management, the Indian Labour Economics Society, the All-India Management Association, the International Personnel Management Association, and the American Society of Personnel Administration.
2. Members of the profession must always retain a positive attitude toward their work and society, be interested in continuous skill and knowledge acquisition, and feel a sense of stewardship, individual initiative, and a right to expert and financial recognition.
3. Ethical Rules: Various professions, such as medicine and accounting, have moral codes. However, there are no such ethical norms in the profession of people.

As a result, the above analysis cannot infer that personnel management in India fully satisfies the characteristics to be classified as a profession. In the coming years, the scenario may change as organisations’ demands for professionally qualified individuals rise.

1.8 importance of Human Resource Management

At three levels, the importance of human resource management can be discussed:

1. As a tool for an organization’s expansion, Its survival and growth primarily depend on its competency and effective administration. Human Resource Management is a vital component of any organization’s life. Without HRM, the other production resources, such as materials, machinery, and money, would never be turned into output. Training, supervision, and motivating leadership are all used by human resource management to make workers more productive and motivated.
2. As a go-between for the employee and the boss, Human resource management is the relationship between people and management. It seeks to balance available employment and job searchers based on their and the company’s needs. It aids the organisation in the efficient use of human resources and the elimination of waste. Its importance is also established by eliminating waste and creating a healthy and favourable atmosphere for employee development.
3. As a specialised function, Human Resource Management has become a professional field. It carries out company strategy with the help of people. The advancement of human resource management as a profession is gaining traction. It isn’t regarded as a line function anymore. It entails collaboration. As a specialist role, the achievement of employee goals is solely your responsibility. It has shifted its focus away from staff management and toward employee development. Human resource managers face difficulties such as skill development and individual capacity utilisation.