SHRM – Unit 1 and 2

SHRM : Walker (1992) defines SHRM as “The means of aligning the management of
HR with the strategic content of the business”. It is creation of mission, setting of
organizational objectives with full consideration of external and internal forces,
formulation if specific policies, to achieve objectives and assurances of implementation
of the policies with a view to make the objectives of the organization are accomplished.

HRD :It is a continuous process to ensure the development of employee dynamism,

effectiveness, competencies and motivation in a systematic and planned manner.

MISSION: Mission statement of an organization should be specific enough, so that

people understand what it does and how it differs from its competitors. For example:
Public Broadcasting System (PBS): To create content that educates, informs and
inspires, Google: To organize the world’s information and make it universally
accessible and useful

VISION : This is what the organization aspires to be, which is much different than what
a company is (mission statement). Appropriate vision statement of organizations, help
drive decisions and goals. Here are some examples of some good vision statements:
Disney: To make people happy, Ford: To become the world’s leading Consumer
Company for automotive products and services.

Core Values: Core values support the vision, shape the culture, and reflect what is
valued by the organization. They form the organization’s principles, beliefs, or
philosophy of values. Core values should be limited in number. For e.g

Making it Happen, Demonstrating Passion, Having High Standards are the core values
of Geese

BARRIERS OF STARTEGIC HRM:

 Short term mentality: Short-term mentality and focus on the current performance of
SFIRM is the first barrier. Every manager act, long-term focus, because the
organization has been established with long-terms objectives/focus.

Strategic inability: Very often SHRM does not think strategically and he cannot think
it to due in capability. This type of inability may arise for many reasons as lack of
technical knowledge, insufficient training and the like.

Lack of appreciation: Sometimes top managers do not recognize the activities of

strategic human resource management. So SHR manager does not get interested in
doing any innovative venture. A few appreciations may get them a substantial mental
boost up.

Failure understands role: General managerial roles may not be fully understood by
be managers. This failure is due to lack of knowledge about the specialty of a degree
of responsibility. This failure may create distance between these managers.

Difficulty in quantifying outcomes: Many outcomes may not be quantified. But

SHRM tries to enjoy the contribution. This is not always possible. Participation work
etc. type function cannot be quantified because of their intangibility.

Wong perception on human assets: Investment in human assets may be regarded

as high risk than that of technology and information. Though these technologies are
run by the human resources. This wrong perception may inhibit the progress.

Resistance: SHR Managers may be resisted because of the incentives for change
that might arise. The change implemented demand some incentives for efforts to
execute the changed program. If these incentives are not given reasonable, they may
create barriers SHRM.

Distinguish between HRD and HRM?

HRD is a continuous process to ensure the development of employee dynamism,

effectiveness, competencies and motivation in a systematic and planned manner. On
the other extreme, Human Resource Development (HRD) is a wing of HRM that
keeps focusing on the growth and development part of the organisation’s manpower.
 There are many people, to whom HRM and HRD convey the same meaning, but this is
not true. We have compiled an article here, to make you understand the differences
between HRM and HRD.

HRM can be defined as the effective selection and utilization of employees to best
achieve the goals and strategies of the organization as well as the goals and needs of
employees. Human Resource Management (HRM) is a branch of management; that
is concerned with making best possible use of the enterprise’s human resources, by
providing better working conditions, to the employees. It involves those activities that
arrange and coordinates the human resources of an entity. Further, it aims at
maintaining good relations at various levels of management.

5) Typical HRD functions:

HRD functions include the following:

1. Employee training and development,

2. Career planning and development,

3. Succession planning,

4. Performance appraisal,

5. Employee’s participation in management,

6. Quality circles,

7. Organization change and organization development.

OBJECTIVES AND BUSINESS GOALS:

Successful businesses are based on both goals and objectives, as they clarify
the purpose of the business and help identify necessary actions Goals are general
statements of desired achievement, while objectives are the specific steps or actions
you take to reach your goal.
A goal is a broad, over-arching destination. "We want to achieve 50% market share in
two years," or, "I want to compete in and complete a triathlon within 18 months." It
does not define how you will achieve this market share; it does not describe a strategy
to get there or offer the specific tasks necessary to achieve the strategy. It simply is
out there as a destination or target.

An objective is a specific, measurable activity you will take to work towards a broader
goal. For example: "As part of our goal to achieve 50% market share in two years, we
will introduce a new product in each market segment every six months." Or, "To
achieve my goal of completing a triathlon, I will engage a running coach to help me
improve my cardio conditioning, pacing, and running technique."

Role of HRD professionals within the organization.

With change in the organizational environment, global economy, technology, work

force the roles played by the HRD professionals has also undergone a lot of change.
At present the HRD Professionals are playing the following roles.

Strategic adviser - helps the decision makers on issues related with HRD.
Administrator – provides coordination and support services for the delivery of HRD
programs and services.
Evaluator – identify the impact of an intervention on individual or organizational
effectiveness.
HR systems designer and developer- assists the HR management in designing and
developing HR systems in an organization to increase its performance.
Needs Analyst – The role of identifying ideal and current performance and
performance conditions and determining causes of discrepancies.

Organizational Change agents- helps management in designing and implementing

change strategies to transform the organization. The result is more efficient work
teams, intervention strategies, and quality management and change reports.

Organization Design Consultant- advises the management on work systems design

and efficient use of available human resources.
Instructional Designer or Learning Programme Specialist -identify the needs of the
employees and develop and design the required learning programmes. They also
prepare materials and other learning aids for these programmes.

Career Counselor - assists individual employees to assess personal competencies,

values, and goals and to identify, plan, and implement development and realistic
career actions.

Coach or a Performance Consultant - advises line managers about the appropriate

intervention designed to improve the performance of the group or an individual.

Researchers - They are responsible for developing or testing new information (theory,
research, concepts, technology, models, hardware, and so on) and assess the human
resource development practices and programmes with the help of appropriate
statistical procedure to find out their effectiveness and then they communicate the
results to the top level management.

current challenges for HRD

Compliance with Laws and Regulation : Keeping up with changing employment laws
is a struggle for business owners. Many choose to ignore employment laws, believing
they don’t apply to their business. But doing so could mean audits, lawsuits, and
possibly even the demise of your company.

Solution:

No matter how large or small your business, it’s important to make sure you’re in
compliance with local, state, and federal labor laws. There are regulations on
everything from hiring practices, to wage payment, to workplace safety. Take a few
minutes to read through the U.S. Department of Labor’s Employment Law Guide.

Change in the management

As a business grows, its strategies, structure, and internal processes grow with it.
Some employees have a hard time coping with these changes. A lot of companies
experience decreased productivity and morale during periods of change.

Solution:

Business owners should focus on communicating the benefits of the change for
everyone. Regular staff meetings are a good place to start. When your team
understands the why, how, and when of the change, they’ll be more likely to get on
board.

Leadership Development

A recent study showed more than a third of companies are doing an average job, at
best, at implementing leadership development programs. Thirty-six percent of
companies surveyed in Brandon Hall Group’s State of Leadership Development Study
admitted that their leadership development practices are below average.

Solution:

Leadership development is critical in keeping your management team engaged and

motivated, and prepares them to take on more responsibilities in the future. Make it
part of the culture. Create opportunities for them to use their strengths every day.
Accomplishing goals will motivate them and give them a chance to develop their skills.

Workforce Training and Development

Investing in the training and development of lower-level employees is another common

HR problem. Some businesses have trouble finding the resources to do so.
Employees on the front lines are some of your hardest workers, and may not have the
time to take a training course.

Solution:

Training and development doesn’t have to take a lot of time or money. Recruit
managers and senior leadership in mentoring their subordinate employees. You could
also provide online training courses so people can go at their own pace. Invest in your
workforce and you will have a loyal, productive team.

Adapting to Innovation

Technology is constantly changing. Businesses must be quick to adapt, or risk being

left in the dust by their competitors. The challenge for small business owners is getting
employees to embrace innovation and learn new technology.

Solution:

Communication is critical. With any change, make sure your team understands the
why, when, and how. Set clear goals for the adoption of initiatives and provide
employees with the training they need to get comfortable with it.

Compensation

Many companies are struggling with how best to structure employee compensation.
Small businesses have to compete not only with businesses of a similar size, but also
with corporations with big payroll budgets. Plus, you have to factor in the cost of
 benefits, training, taxes, and other expenses, which can range from 1.5 to 3 times the
employee’s salary.

Solution:

Even though salary is important, it isn’t always the most important factor for job
candidates. Creating a system to reward employees for excellent performance is one
way to make up for a lower salary. In addition, consider offering incentive programs
such as profit sharing or bonuses, which can be a win-win for the employee and the
company.

Understanding Benefits Packages

The Affordable Care Act has been a pain point for many small businesses in the past
few years. Rising healthcare costs mean companies must either pass these costs on
to employees, or take a hit to their bottom line. Since good benefits packages can be
a deciding factor for potential hires, understanding them is key.

Solution:

For small business with fewer than 50 employees, there are many options for offering
healthcare benefits. One option is purchasing a plan through the Small Business
Health Options Program (SHOP) marketplace. Doing this gives you the opportunity to
take a tax credit, which can help offset costs.

And don’t forget about benefits such as:

 Unlimited vacation time

 Flex time
 Free snacks
 Wellness programs
 Commuter benefits

These benefits are affordable ways to offer extra perks—and they’re extremely popular
with today’s workforce!
Recruiting Talented Employees

Attracting talent is a huge investment of time and money. It’s difficult for entrepreneurs
to balance between keeping a business running, and hiring the right people at the right
time. In addition, it’s impossible to know whether a candidate will actually be a good fit
until they’ve worked for you for a period of time.

Solution:

One of the best ways to find the right people for your business is to use a staffing
company. They provide temp-to-hire solutions that allow you to try out new employees
with little to no risk. You’ll save time, money, and frustration, and maybe even find a
future executive or business partner.

Retaining Talented Employees

Competition for talented employees is fierce. Start-ups and small companies don’t
have big budgets for retirement plans, expensive insurance plans, and other costly
items that their larger competitors do—at least, not yet. Employee turnover is
expensive and can negatively impact business growth.

Solution:

Onboarding is highly effective for employee. Research shows having a structured

onboarding process means employees are 58 percent more likely to stay with a
company for three years or more. Read our article on 5 Employee Onboarding
Technology Solutions Your Company Needs to Be Using to learn about your options.

Workplace Diversity

Multiple generations. Ethnic and cultural differences. These are just a few of the many
factors that make workplace diversity a continual challenge for small businesses. The
risk of lawsuits for failing to protect employees from harassment is real.

Solution:
Creating a culture of teamwork and respect will keep the work environment positive
and productive. In addition, implementing a diversity training program is a must.
Employers are responsible for setting standards of behavior in the workplace.
Standards and a system of accountability should be set up early on.

Functions of HRM

activities or are involved in determining or changing the structure of the organization

HRM functions can be dived into primary (directly involved with obtaining, maintaining
and developing employees) and secondary (either provide support for general
management).

PRIMARY HRM FUNCTIONS:

1) Human resource planning activities are used to predict how changes in

2) Equal employment opportunity activities are intended to satisfy both the legal
and moral responsibilities of an organization through the prevention of
discriminatory policies, procedures and practices. This includes decisions
affecting hiring, training, appraising and compensating employees.

3) Staffing (recruitment and selection) activities are designed for the timely
identification of potential applicants for current and future openings and for
assessing and evaluating applicants in order to make selection and placement
decisions.

4) Compensation and benefits administration is responsible for establishing and

maintaining an equitable internal wage structure, a competitive benefits
 package, as well as incentives tied to individual, team or organizational
performance.

5) Employee (labor) relations activities include developing communications

system through which employee can address their problems and grievances.
In an unionized organization, labor relations will include the development of
working relations with each labor union, as well as contract negotiations and
administration.

6) Health, safety and security activities seek to promote a safe and healthy work
environment. This can include actions such as safety training, employee
assistance programs, health and wellness programs.

7) Human resource development activities are intended to ensure that

organization members have the skills or competencies to meet current and
future job demands.

SECONDARY HRM FUNCTIONS:

1) Organization/job design activities are concerned with interdepartmental

relations and the organization and definition of jobs.

2) Performance management and performance appraisal systems are used

for establishing and maintaining accountability throughout an organization.

3) Research and information systems are necessary to make enlightened

human resource decisions

Frame work HRM competencies?

Framework Components

Because a competency framework must align with a business’s vision and long-term
goals, specific competencies vary between businesses. Despite this, the four-tier
structure of the framework generally is similar for all. The top tier includes personal
attributes such as honesty, commitment and taking personal responsibility to grow and
change. The second tier includes leadership and management skills that enable HR
to motivate people and manage operations and tasks. The third tier includes across-
the-board core HR competencies such as ethics and accountability that all staff
members must possess. The fourth tier includes competency requirements that apply
to specific HR roles.

HRD practices

The HRD aims at helping people to sharpen their capabilities and acquire
competencies. The process of acquisition of capabilities and competencies is
facilitated by HRD mechanisms like performance appraisal, training, OD, feedback
and counseling, potential development, job-enrichment, rewards etc.

The researches indicate the following HR practices that effective first adopted( Pfeffer,
194) are,

 Financial incentives for excellent pefromance

 Work organization practices that motivate employee effort and capture the
benefits of know-how And Skill
 Rigorous selection and selectivity in recruiting
 Higher than average wages
 Employee share-relationship plans
 Extensive information sharing
 Decentralisation od decision making and empowerment
 Work organization based on self managing teams
 High investment in training and development
 Having people do multiple jobs and job rotation
 Elimination of status symbols
 A more compressed distribution salaries across and within levels
 Promotion from within
 A long-term perspective
 Measurement of Hr practices and policy implementation

A coherent view of employment relation current challenges for HRM

Quality challenge : Organizations have become quality conscious and are constantly
striving to meet high standards. Producing quality products and services at competitive
prices is a major challenge for all corporates today.
Eople challenge: Employees have to be professionals, systematic and trustworthy to
man world class organizations. If they make commitment, they should be able to
deliver services on time and of promised standards. They should be competent,
innovative, proactive, change -oriented, systems driven and entrepreunerial. The
challenge lies in how to recruit, develop and retain such world class employees?
Technology
All world class organizations are into modern technology, if not their product line does
not need one. Obtaining world class technology, absorbing it, adapting it, and
continuously improving on it, for strategic advantage is another challenge faced by the
corporate world.

Is strategic assessment needed?

The significance of strategy evaluation lies in its capacity to co-ordinate the task
performed by managers, groups, departments etc, through control of
performance. Strategic Evaluation is significant because of various factors such as -
developing inputs for new strategic planning, the urge for feedback, appraisal and
reward, development of the strategic management process, judging the validity of
strategic choice etc.

The process of Strategy Evaluation consists of following steps-

1. Fixing benchmark of performance - While fixing the benchmark, strategists

encounter questions such as - what benchmarks to set, how to set them and
how to express them. In order to determine the benchmark performance to be
set, it is essential to discover the special requirements for performing the main
task. The performance indicator that best identify and express the special
requirements might then be determined to be used for evaluation. The
organization can use both quantitative and qualitative criteria for
comprehensive assessment of performance. Quantitative criteria includes
determination of net profit, ROI, earning per share, cost of production, rate of
 employee turnover etc. Among the Qualitative factors are subjective evaluation
of factors such as - skills and competencies, risk taking potential, flexibility etc.
2. Measurement of performance - The standard performance is a bench mark
with which the actual performance is to be compared. The reporting and
communication system help in measuring the performance. If appropriate
means are available for measuring the performance and if the standards are
set in the right manner, strategy evaluation becomes easier. But various factors
such as managers contribution are difficult to measure. Similarly divisional
performance is sometimes difficult to measure as compared to individual
performance. Thus, variable objectives must be created against which
measurement of performance can be done. The measurement must be done
at right time else evaluation will not meet its purpose. For measuring the
performance, financial statements like - balance sheet, profit and loss account
must be prepared on an annual basis.
3. Analyzing Variance - While measuring the actual performance and comparing
it with standard performance there may be variances which must be analysed.
The strategists must mention the degree of tolerance limits between which the
variance between actual and standard performance may be accepted. The
positive deviation indicates a better performance but it is quite unusual
exceeding the target always. The negative deviation is an issue of concern
because it indicates a shortfall in performance. Thus in this case the strategists
must discover the causes of deviation and must take corrective action to
overcome it.
4. Taking Corrective Action - Once the deviation in performance is identified, it
is essential to plan for a corrective action. If the performance is consistently less
than the desired performance, the strategists must carry a detailed analysis of
the factors responsible for such performance. If the strategists discover that the
organizational potential does not match with the performance requirements,
then the standards must be lowered. Another rare and drastic corrective action
is reformulating the strategy which requires going back to the process of
strategic management, reframing of plans according to new resource allocation
trend and consequent means going to the beginning point of strategic
management process.
Competency:

1. Every job has a requirement of specific set of competencies to undertake it

efficiently, and the individuals who would perform the job need to be laced with
those competencies. One of the interesting and worth mentioning aspect of this
term is that it focuses not on what a person can do but on what a person can
learn. This forward looking approach makes it quite popular amongst training
providers and recruitment experts.
2. Competencies with their specific behavioral indicators facilitate the
demonstration of appropriate skills and behaviors, it is not a set of tasks
performed like a robot neither it is an underlying capacity which is never
demonstrated.
3. Competency also includes motivation and self-knowledge, a desire and
willingness to demonstrate effective performance

Competency includes the following elements:

strategic capability

strategic capability can be defined as the resources and competences of an

organisation needed for it to survive and prosper.

The importance of strategic capability is the focus of this chapter. There are three key
concepts that underpin the discussion. The first is that organisations are not identical,
but have different capabilities; they are ‘heterogeneous’ in this respect. The second is
that it can be difficult for one organisation to obtain or copy the capabilities of another.
For example, Sainsbury’s cannot readily obtain the whole of Tesco’s retail sites, its
management or its experience. The third arises from these: if an organisation is to
achieve competitive advantage, it will do so on the basis of capabilities that its rivals
do not have or have difficulty in obtaining. In turn this helps explain how some
organisations are able to achieve superior performance compared with others. They
have capabilities that permit them to produce at lower cost or generate a superior
product or service at standard cost in relation to other organisations with inferior
capabilities.1 These concepts underlie what has become known as the resource
based view of strategy2 (though it might more appropriately be labelled the
‘capabilities view’): that the competitive advantage and superior performance of an
organisation is explained by the distinctiveness of its capabilities.

benchmarking?

Benchmarking is a principal tool to asset managers in their efforts to integrate human

resource plan and practices with the strategic business plan. Operating bench marks
help managers evaluate their units position and performance on critical workforce such
as retention, Training , Learning and productivity

According to Bogan and English (1994), benchmarking organizations encourage the

following

 Employee potential
 Holistic, systematic learning and thinking in addition to problem solving
 Cross functional team working.
 A corporate culture that rewards meaningful difference or departures from the
status quo.
 Reward and recognition system in support of the new culture
 Transformation of employees from change resistors into change champions.
 Development of skills and behaviours

HRD audit?

A Human Resources Audit (or HR Audit) is a comprehensive method (or means) to

review current human resources policies, procedures, documentation and systems to
identify needs for improvement and enhancement of the HR function as well as to
assess compliance with ever-changing rules and regulations. An Audit involves
systematically reviewing all aspects of human resources, usually in a checklist fashion.

Sections of review include:

 Hiring and Onboarding

 Benefits
  Compensation
 Performance evaluation process
 Termination process and exit interviews
 Job descriptions
 Form review
 Personnel file review

The purpose of an HR Audit is to recognize strengths and identify any needs for
improvement in the human resources function. A properly executed Audit will reveal
problem areas and provide recommendations and suggestions for the remedy of these
problems. Some of the reasons to conduct such a review include:

 Ensuring the effective utilization of the organization’s human resources

 Reviewing compliance in relation to administration of the organization
 Instilling a sense of confidence in management and the human resources
function
 Maintaining or enhancing the organization and the department’s reputation in
the community
 Performing “due diligence” review for shareholders or potential
investors/owners
 Establishing a baseline for future improvement for the function

Because of the multitude of laws affecting each stage of the employment process, it
is extremely important for an employer to regularly conduct an HR analysis of their
policies and practices. This helps to identify regulatory compliance issues if they exist
and avoids potentially costly fines and/or lawsuits, if otherwise ignored. An employer
overlooking regulatory compliance with their human resource practices could face:

 A fine of $1,100 for any violation of the appropriate payment of overtime for
non-exempt employees in accordance with the Fair Labor Standards Act.
 Penalties as high as $10,000 each occurrence for failing to post required safety
notices or keeping accurate records.
 Fines up to $1,000 per employee for non-compliance with the Federal
Immigration Reform Act.
While penalties such as these help define the risk of non-compliance and signify the
importance of conducting periodic HR Audits, an Audit can also ensure that policies
and procedures are fair and consistent across the organization and strengthen
employee satisfaction. By maintaining a satisfied and productive workforce, an
employer lessens the expense associated with costly turnover of staff. Losing one
employee is estimated to cost a company 50 – 150% of the lost employee’s salary in
time and money spent to replace that employee.

“The team at strategic HR inc. consistently delivers whatever we ask of them…they

offer excellent advice and deliver quality services. They approach our relationship as
a partner, and act accordingly.”

recent trends in HRD?

Equal Pay & Unconscious Biases

Equal pay for women will continue to be an important issue going into 2019. According
to Reuters (an international news agency headquartered in London, United Kingdom):

 Females make only 80 cents for every dollar earned by men

 Woman graduates make 82% as much as their male counterparts
 Women on US Corporate Board of Directors is only 12%
 Women owned companies average 60% lower revenues than male owned
companies

In a recent Harvard Global Online Research study, including over 200,000

participants, it showed that 76% of people (BOTH men AND women) are gender
biased and tend to think of men as better suited for careers and women as better
suited as homemakers. This bias spills over into the workplace every day.

Considerations:

 Evaluate compensation practices and review employee compensation to

determine if there’s pay inequity in your organization.
  Review employment practices to minimize the impact of any hidden or overt
biases that would be holding women back and/or paying them less for their skills
than deserved.
 Look for ways in your organization to help grow and develop female employees
into leadership roles.
 Implement training programs for employees to understand how biases can
affect employees and the company’s success.

Salary History Ban

Many states have legislated a ban on asking job candidates about their salary history
as a means to prevent current or previous pay inequality from following a person
throughout their career. Determining a candidate’s compensation based on their salary
history can perpetuate existing wage inequalities that are the result of gender bias or
discrimination.

Considerations:

 Even if you’re not in a state where the ban is in place, its best to start focusing
away from salary history and instead find avenues to better identify the candidate’s
expectations, how they align with the need and expectations of the position you’re
trying to fill, and the potential career path the job has to offer. Some things to
consider:
 Instead of asking for salary history, tell the candidate outright what the salary
range is for the role, and then see if they want to continue the conversation.
 Take a data-driven approach. Research compensation standards for the role
you’d like to fill and consider their skills, background, and education to determine
a final offer.
 Review your hiring practices. Implement strategies to help you identify the key
skills and experience needed for the job and develop interview questions to
objectively measure candidates against that criteria. Standardized interview
questions, candidate evaluation forms and training everyone involved in the
interview process can help ensure a more objective selection process where the
best candidate is selected based on critical skills and experience versus where
they are salary-wise at the time of hire.
The Tight Labor Market & Lower Retention

According to the June Job Openings and Labor Turnover Survey, there were just
shy of 6.7 million open positions in April. The number of vacancies is pulling well ahead
of the number the Bureau of Labor Statistics counts as unemployed. This year is the
first time the level of the jobs available exceeds unemployed since the BLS started
tracking these numbers in 2000. (Source: HR Today, August 2018)

According to recent studies, 3.4 million Americans quit their jobs so far in 2018,
which is twice the amount of those who were laid off from jobs, costing employers
millions. (Source Wall Street Journal, July 2018)

Considerations:

 If you want to solve the skills gap for your company specifically, start investing
in training, goal-setting, performance metrics and learning. Apprenticeships are
on the rise in the US, consider hiring entry-level staff you can mold into the right
employee.
 Flexibility in the workplace is no longer a request by moms and/or Gen
Xers. Both genders and every generation are looking for workplace flexibility for
their own reasons. To stay competitive, organizations will need to figure out how to
accommodate these requests for flexibility such as flexible starting and ending
times and options to work from home as needed—perhaps even adjusting the
normal work day to a 5 – 6 hour day.
 Instead of agonizing over a wage increase you can’t afford, consider looking to
intangible benefits like flex-scheduling, financial wellness programs or workplace
collaboration opportunities. A 2016 Aflac Workforces Report found 60% of
employees are likely to accept a lower salary in exchange for better benefits.
 Ensure you have a structured and effective onboarding program. Research
links effective onboarding to reduced turnover and increased retention. In one
study, employees were 60% more likely to remain with the organization for more
than three years when there is a structured onboarding program.1

Gig Workforce
According to a report by Gallup, “The Gig Economy and Alternative Work
Arrangements”, approximately 36% of U.S. workers participate in the gig economy
through either their primary or secondary jobs. According to Freelancing in
America more than 55 million Americans do freelance work, and 79% of them prefer
freelance work to a traditional job.

Considerations

To attract and retain the gig workforce, you’ll need to make shifts in how you handle
these freelancers all while staying in compliance with the laws around employee
versus contractor. An added complication can be determining whether this individual
is truly a contractor, or should they be classified as an employee. It’s a fine line and
the Department of Labor has been watching closely.

Rising Health Care Costs

The rise of employer sponsored health plan costs will continue in 2019 and expected
to approach $15,000 per EE in 2019*. Expect total cost of providing medical and
pharmacy benefits will rise 5% for the 6th consecutive year. According to a National
Business Group on Health Survey (NBGH) health benefit costs are still rising at two
times the rate of wage increases and three times general inflation. “…Making this cost
trend unaffordable and unsustainable over the long term”.

Considerations:

 Many large employers are holding down costs by steering employees towards
cost-effective service providers such as telehealth options and high-value in-plan
provider networks.
 Offering more choices in plan offerings like PPOs (preferred-provider
organizations) allow employees to select plans that best fit their needs (and their
pocket books).
 Spousal surcharges. Next year, 33 percent of large employers will impose a
surcharge for spouses who can obtain coverage through their own employer, and
the average annual spousal surcharge will be $1,200. Only six percent of
 respondents will exclude spouses entirely when similar health coverage is available
through the spouse’s own employer.
 Behavioral health benefits.Three in 10 large employers will conduct in-house
campaigns next year to reduce the stigma around mental health conditions and
treatment. More than half will offer self-directed online resources.
 Opioid restrictions.A majority of large employers (55 percent) are greatly
concerned about the impact of prescription opioid abuse in the workforce.
Employers are working with their partners to implement multiple strategies to
change prescribing patterns and increase access to alternative therapies, such as
acupuncture, physical therapy and chiropractic care.

Artificial Intelligence

HR technology companies are developing and promoting more and more Artificial
Intelligence (AI) capabilities. Some of the technologies being developed can help HR
professionals track and reveal troubling patterns in real-time to address such issues
as employee engagement, turnover, and absenteeism (to name a few). Automating
repetitive tasks and improving workforce productivity are two of the top potential
outcomes from implementing AI technology.

Considerations

As with any technical solution, careful consideration should be given on the pro’s and
con’s of different programs and have a clear purpose in mind before
implementing. Establish clear goals and how AI can enhance the employee
experience and benefit the organization before implementing it.

Other important compliance and legal updates to be aware of in 2019:

Mandatory E-Verify Included in Trump’s 2019 Budget Proposal

In his proposal, President Trump allocates $23 million to be invested in expanding the
E-Verify program to mandatory nationwide use. Since 1996, E-Verify has been
voluntary for most employers. It also has become mandatory for federal contractors,
certain state contractors, and employers that want to implement science, technology,
engineering and mathematics (STEM) when hiring foreign graduates of U.S.
universities. Although it is not currently required at a federal level, many states have
laws that either require or encourage some employers to use E-Verify. We may see
other states follow-suit in 2019.

New FLSA Rule

The U.S. Department of Labor (DOL) intends to issue a Notice of Proposed

Rulemaking to announce a new proposed salary threshold for the Fair Labor Standard
Act’s (FLSA’s) white-collar exemption from overtime pay—but likely not until January
2019.

Under the current Act, salaried employees who are managers and those with certain
“specialized skills” like a professional degree or training in a specific field are exempt
from being able to earn overtime pay if they make:

 More than $455 per week; or

 Over $23,660 a year

A halted 2016 rule would have doubled the salary threshold, requiring employers to
pay overtime to salaried employees unless they make:

 More than $913 per week; or

 Over $47,476 a year

That raised cap would have made over 4 million more salaried workers eligible for
overtime.

In 2018, the US Labor Department Secretary R. Alexander Acosta suggested during

his confirmation hearing that the maximum for mandatory overtime pay should be
increased to around $33,000. it’s unclear what the new rule will look like, but the new
proposal is expected to be less sweeping. Lawmakers are expected to begin the ruling
process in January 2019.

IRS Raises HSA, HDHP Dollar Limits for 2019

The annual contribution limits for health savings accounts (HSAs) are going up in
2019, the Internal Revenue Service (IRS) announced May 10. The maximum out-of-
pocket limits for an HSA-eligible high-deductible health plan (HDHP) also will be
increased for inflation, according to Revenue Procedure 2018-30. For self-only plans,
the contribution limit (employer + employee) for calendar year 2019 is $3,500; this
represents a $50 increase over the 2018 limit. For family plans, the 2019 limit is
$7,000, a $100 increase from 2018.

This is just a sampling of some of the key trends we have in store for us in 2019. As
HR professionals, it is going to be imperative for us stay alert and informed about the
continued changes to our workforce, recruitment and retention policies, and legalities
in order to be competitive and in compliance.

Framework of Strategic HR Management Process

Designing HRD interventions involves a process, which include a 4-step sequence;

Need assessment

Design

Implementation and

Evaluation.

Need Assessment Phase: A need can be either be a current deficiency such as poor
employee performance/ new challenge that demands a change in the way the
organization operates. Example: In 1980’s, Ford Motor Company, because of the poor
quality of its car and truck loosed its market share to foreign competitors. Ford framed
HRD Programs to train employees in quality improvement and problem solving
techniques. Identifying needs involves examining organization, environment, job
tasks and employee performance. The information can be used to Establish
priorities for the HRD efforts. Define specific training HRD objectives. Establish
evaluation criteria.

b. Design phase: If the intervention involves same type of T&D program the following
activities are typically carried out. a) Selecting specific objectives of the program:
Translate the issues identified into class objectives.
b) Developing an appropriate lesson plan for the program: It should contain what
should be done in HRD program.

c) Developing appropriate materials for the trainees.

d) Determining who will deliver the program Full time HRD Professional is
employed- depends on expertise and work schedules of professionals. If he is not
available, it depends on managers, supervisors, outside consultants (depends on
willingness, ability, availability, cost).

e) Selecting appropriate management Developing the content of the program On

the job/off the job (setting) Lectures, role play (techniques) Work books, ppt,
videos (materials) Develop in-house material/purchase.

f) Scheduling the program Consider the following a) Lead-time available to

participants b) Program length c) Location d) Regular duties.

c. Implementation phase Executing the program as planned Creating an

environment that enhances learning Resolving problems

a. Evaluation phase: Participants’ reaction to the program How much they

have learned Whether they use what they learnt Whether the program improved
organization effectiveness The following information will help in making better
decision

Offering a particular program in future Budgeting/resource allocation.

2. Elaborate on the various challenges faced by an organization with suitable

examples.

Challenges: 1. Changing Workforce Demography’s

2. Competing in a global economy 3. Eliminating skill gap 4. Meeting the need for
lifelong individual learning 5. Facilitating organizational learning 1.Changing
Workforce Demography’s The following changes predicted to occur in the year 2020.
Africans, Americans will make up about 11% of U.S.Workforce- same 95
Hispanics will increase to 14% from 9% Asians will increase to 6% from 4% Whites
will decrease to 68% from 76% Women will increase to 50% from 46% in 2020.
Shift in age composition. People of age group 55-64 is predicted to increase from
10% to 20% is 2019. 65 yrs to increase 5%.

2.Competing in a Global Economy This will require more than educating and training
to meet new challenges. Companies have to conduct quality improvement processes
and introduce change effects (i.e.) learn culture and communicate and conduct
business among different cultures in other countries.

3.Eliminating the skill gap: Young adults entering the work force are unable to meet
current job requirements. Example: How Haiess learn how to operate new equipment
if they can’t read and comprehend operating manuals. Japan and Germany teach
students the basic skill needed by most employers.

4. The need for life long learning Because of rapid changes, all the organization face,
it is clear that employees must continue the learning process through out their career
in order to meet the challenges. Example: Professional employees learning may mean
taking advantage of continuing education opportunities. Managers attending seminars
that address new management approaches. Action plan: Establishing
Multimedia-learning centers.

What is Multimedia learning? These centers offer a variety of instructional

technologies that can be matched to each trainee’s unique learning needs. It can also
provide teleconferencing facilities for technical and professional employees to
participate in a seminar that is conducted away.
5. Facilitating organizational learning Learning organization must follow the basic 5
principles System thinking Personal mastery Mental models Building shared
vision Team learning. If organizations are going to make fundamental change, they
must be able to learn, adapt change. Here the HRD Professional must emphasis on
how learning relates to performance and relationship between learning and
fundamental change.

Action plan: 1. Developing employee skills 2. Effectively using new technology 3.

Developing new organization structure 4. Building cultures that foster learning’s
innovation.

1. Explain the HRD process model with an example.

2. A Framework for the HRD Process

3. Framework for the HRD Process HRD efforts should use the following four
phases (or stages): Needs assessment Design Implementation Evaluation
4. Training & HRD Process Model
5. Needs Assessment Phase Establishing HRD priorities Defining specific
training and objectives Establishing evaluation criteria
6. Design Phase  Selecting who delivers program Selecting and developing
program content Scheduling the training program
7. Implementation Phase Implementing or delivering the program
8. Evaluation Phase Determining program effectiveness – e.g., • Keep or change
providers? • Offer it again? • What are the true costs? • Can we do it another
way?
9.

4. Elaborate on the various roles of HRD professionals.

5. Explain the links to HR, strategy and business goals with examples.

The He system and HR strategies adopted have to be in conformity with the business
goals. The business goals include:
Business excellence, including profitability and other outcomes the organization is
expected to achieve

 Internal operational efficiency

 Internal customer satisfaction
 Employee motivation and commitment
 Cost-effectiveness and cost consciousness among employees
 Quality orientation
 Technology adoption
 These goals should be linked to

Communication strategy : Employees should be motivated to share information which

would lay the foundation for the future. Business groups should not indulge themselves
from their surroundings any longer.

Accountabilty, ownership and commitment

Committed employees increase the chance of high productivity. Performance

management process, rewards and recognition, career planning work culture
contribute to enhance accountability.

Cost reduction: its one of the important strategies in the corporate world. HRD audits
suggests ways of cost reduction through total employee involvement.

Developing entrepreunal sprit wmong employees

This effort should aim at enabling employees at all levels to take charge of their tasks
with full autonomy, accountability, cot effectiveness, and service orientation.

6. Give a brief account of the evolution of HRM as a functional area in any organization.

7. In what ways does the HRD function relate to the organization’s strategy? Give
contextual examples.

8. What does ‘Human Resource Planning’ mean? Discuss in detail.

HRP: Human Resource Planning: Meaning, Definition and Features

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HRP: Human Resource Planning: Meaning, Definition and Features!

Meaning Human Resource Planning:
Human resource is the most important asset of an organisation. Human resources
planning are the important managerial function. It ensures the right type of people, in
the right number, at the right time and place, who are trained and motivated to do the
right kind of work at the right time, there is generally a shortage of suitable persons.

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The enterprise will estimate its manpower requirements and then find out the sources
from which the needs will be met. If required manpower is not available then the work
will suffer. Developing countries are suffering from the shortage of trained managers.
Job opportunities are available in these countries but properly trained personnel are
not available. These countries try to import trained skill from other countries.

In order to cope human resource requirements, an enterprise will have to plan in

advance its needs and the sources. The terms human resource planning and
manpower planning are generally used interchangeably. Human resource planning is
not a substitute for manpower planning. Rather the latter is a part of the former i.e.,
manpower planning is integrated with human resource planning.

Definition Human Resource Planning:

Important definitions of human resource planning are discussed here to
understand the concept in right perspective:
According to E.W. Vetter, human resource planning is “the process by which a
management determines how an organisation should make from its current manpower
position to its desired manpower position.

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Through planning a management strives to have the right number and the right kind
of people at the right places, at the right time to do things which result in both the
organisation and the individual receiving the maximum long range benefit.”
Dale S. Beach has defined it as “a process of determining and assuring that the
organisation will have an adequate number of qualified persons available at the proper
times, performing jobs which meet the needs of the enterprise and which provide
satisfaction for the individuals involved.”

In the words of Leon C. Megginson, human resource planning is “an integration

approach to performing the planning aspects of the personnel function in order to have
a sufficient supply of adequately developed and motivated people to perform the duties
and tasks required to meet organisational objectives and satisfy the individual’s needs
and goals of organisational members.”

On the analysis of above definitions, human resource planning may be viewed as

foreseeing the human resource requirements of an organisation and the future supply
of human resources and making necessary adjustments between these two and
organisation plans, and foreseeing the possibility of developing the supply of human
resources in order to match it with requirements by introducing necessary changes in
the functions of human resource management.

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Here, human resource means skill, knowledge, values, ability, commitment, motivation
etc., in addition to the number of employees. Though accomplishment of
organisational objectives and goals is the primary concern of the human resource
planning, concern for the aspirations of the people and their well-being has equal
importance in it. In fact, the human resources planning must result in humanisation of
work environment.

Features of Human Resource Planning:

From the study of various definitions, the following features of human resource
planning can be derived:
1. Well Defined Objectives:
Enterprise’s objectives and goals in its strategic planning and operating planning may
form the objectives of human resource planning. Human resource needs are planned
on the basis of company’s goals. Besides, human resource planning has its own
objectives like developing human resources, updating technical expertise, career
planning of individual executives and people, ensuring better commitment of people
and so on.

2. Determining Human Resource Reeds:

Human resource plan must incorporate the human resource needs of the enterprise.
The thinking will have to be done in advance so that the persons are available at a
time when they are required. For this purpose, an enterprise will have to undertake
recruiting, selecting and training process also.

3. Keeping Manpower Inventory:

It includes the inventory of present manpower in the organisation. The executive
should know the persons who will be available to him for undertaking higher
responsibilities in the near future.

4. Adjusting Demand and Supply:

Manpower needs have to be planned well in advance as suitable persons are available
in future. If sufficient persons will not be available in future then efforts should be .made
to start recruitment process well in advance. The demand and supply of personnel
should be planned in advance.

5. Creating Proper Work Environment:

Besides estimating and employing personnel, human resource planning also ensures
that working conditions are created. Employees should like to work in the organisation
and they should get proper job satisfaction.

Benchmarking

Best Practices Benchmarking® is a powerful tool to gain competitive insight and

provides “evidence-based” views of performance throughout product and organization
lifecycles. In general, it is the application of what is learned in benchmarking that
delivers the marked and impressive results so often noted. We supplement the
traditional metrics-focused approach with an analysis of why and how practices
produce exceptional results. Many industry leaders and companies use our
benchmarking tool to identify the gaps in the process to improve and enhance
performance.
 Types of Benchmarking

There are two primary types of benchmarking:

o Internal benchmarking: comparison of practices and performance between teams,

individuals or groups within an organization
o External benchmarking: comparison of organizational performance to industry peers
or across industries

These can be further distilled as follows:

o Process Benchmarking: Demonstrate how top performing companies accomplish

the specific process in question. Such benchmarking is collected via research,
surveys/interviews, and site visits. By identifying how others perform the same
functional task or objective, people gain insight and ideas they may not otherwise
achieve. Such information affirms and supports decision-making by executives.
o

o Performance Metrics: “Performance metrics” give numerical standard against which

a client’s own processes can be compared. These metrics are usually determined via
a detailed and carefully analyzed survey or interviews. Clients can then identify
 performance gaps, prioritize action items, and then conduct follow-on studies to
determine methods of improvement.
o

o Strategic Benchmarking: Identify the fundamental lessons and winning strategies

that have enabled high performing companies to be successful in their marketplaces.
Strategic benchmarking examines how companies compete and is ideal for
corporations with a long-term perspective.

Learn About Process, Performance and Strategic Benchmarking.

Importance of Benchmarking

Benchmarking is #1 most used global management tool, yet most companies fail to
use benchmarking to their full advantage. We have developed more than 25 types of
benchmarks below to help companies look forward and build winning strategies,
tactics and plans

By closely working with the client, Best Practices, LLC can identify improvement
opportunities and make recommendations to address each opportunity. Contact us to
learn more about how benchmarking can help your business achieve best-in-class
performance.

For more information on how we define best practices and our benchmarking research
methodol

10. Explain why organizations should opt for HRD audit

What are competencies? It is widely accepted that a competency is a cluster of

knowledge, skills, abilities, and other characteristics necessary for an efficient working
performance. The collection of competencies that are relevant to the performance in
a particular job, profession, or organization is called a competency model. The broader
framework which integrates, organizes and aligns the different competency models is
called a competency framework. Types of competencies Competencies can be either
technical or behavioral. Technical competencies primarily reflect the knowledge-based
requirements of a specific job category (e.g., HR professionals). The behavioral
competencies are more general and at surface level can apply across multiple job
categories. Behavioral competencies describe the specific and observable behavior
associated with effective job performance and reflect the ways in which knowledge is
applied. More precisely, the competence human resource expertise is an
indespensabe technical competence which presupposes specific knowledge, and the
other Competencies like communication or ethicalpractice are behavioural
Competencies which are also very important for the working performance of the HR
professionals but, at the same time, they are necessary and required in other job
categories i.e. professions. Why competencies matter? Competencies focus on
factors that influence individuals’ and organizations’ success. They provide a set of
statements that can be used to highlight personal achievements, but also identify
learning needs or gaps in people resources. The competencies for HR professionals
are a vital part of the following processes:  Recruitment and selection – by providing
unbiased criteria and conditions for attracting and choosing suitable candidates; 
Performance management – by providing fair and unbiased statements to help
managers and other staff discuss and assess performance;  Learning, training and
development – by helping the organization and individuals to identify their learning,
training and development needs more easily;  Career development – by providing
clear expectations of what skills, knowledge and behaviors are needed at each level
and by showing individuals how they can acquire new or further develop their current
skills. 33 HR professionals career levels The competency models for HR professionals
generally identify four career levels. These career levels reflect different types of
responsibilities for which HR professionals are accountable in their job positions, or
more specifically, earlier career levels (i.e., early career and mid-level) reflect
responsibilities that are more transactional in nature, whereas more senior career
levels (i.e., senior and executive levels) reflect responsibilities that are more strategic
in nature. The job of HR professionals differs qualitatively across career levels. Table
1.Career levels and description of their basic characteristics Career level Basic
characteristics Early Specialist in specific support functions or generalist with limited
experience Formal title: HR assistant, junior recruiter or benefits clerk Mid Generalist
or a senior specialist Manages projects or programs Formal title: HR manager,
generalist or senior specialist Senior Very experienced generalist or specialist. Formal
title: senior manager, director or principal. Executive The most senior leaders in HR
Formal title: holds the top HR job in the organization 34 HR professionals career levels
The competency models for HR professionals generally identify four career levels.
These career levels reflect different types of responsibilities for which HR
professionals are accountable in their job positions, or more specifically, earlier career
levels (i.e., early career and mid-level) reflect responsibilities that are more
transactional in nature, whereas more senior career levels (i.e., senior and executive
levels) reflect responsibilities that are more strategic in nature. The job of HR
professionals differs qualitatively across career levels. Table 1.Career levels and
description of their basic characteristics Career level Basic characteristics Early
Specialist in specific support functions or generalist with limited experience Formal
title: HR assistant, junior recruiter or benefits clerk Mid Generalist or a senior specialist
Manages projects or programs Formal title: HR manager, generalist or senior
specialist Senior Very experienced generalist or specialist. Formal title: senior
manager, director or principal. Executive The most senior leaders in HR Formal title:
holds the top HR job in the organization METHODOLOGICAL APPROACH First
phase: In the first phase of the creation of the Competencies framework

Benchmarking Is An Essential Business Concept

In a world where common sense prevailed, benchmarking would seem prosaic. It is

quite simply the systematic process of searching for best practices, innovative ideas
and highly effective operating procedures that lead to superior performance. What
could be more straight-forward? No individual, team or operating unit -- no matter how
creative or prolific -- can possibly parent all innovation. No single department or
company can corner the market on all good ideas.

In view of this reality recognizing human limitations, it makes eminently good sense to
consider the experience of others. Those who always go it alone are doomed to
perennially "reinvent the wheel," for they do not learn and benefit from others'
progress. By systematically studying the best business practices, operating tactics and
winning strategies of others, an individual, team or organization can accelerate its own
progress and improvement.
The history of innovative adaptation is arguably as old as humankind. For millennia
people have observed good ideas around them and adapted those ideas to meet their
needs and situations. Fred D. Bowers, Digital Equipment Corporation's benchmarking
program manager, muses that the second person to light a fire" is humankind's first
benchmarker. Bowers' logic: the second fire-starter observed the first fire-starter and
then borrowed the practice. Consider a few other noteworthy borrowings from the
annals of early benchmarking history:

 Lowell, Massachusetts - In the 1800s, British textiles mills were absolutely the
best in the world. In contrast, American mills were still in their infancy when it
came to producing all types of textiles. Francis Lowell, a New England
industrialist, set out to change this situation by upgrading business technology
in the United States. Lowell traveled to England where he studied the
manufacturing techniques and industrial design of the best British mill factories.
He saw that the British plants had much more sophisticated equipment but the
British plant layouts did not effectively utilize labor. In short, there was room for
improvement.
 In 1815, Francis Lowell built a factory that employed much of the technology in
the British plants but was designed to be much less labor intensive than the
British facilities. It was a splendid example of innovative adaptation. In 1820,
this textile mill center became known as Lowell, Massachusetts. By 1840, just
two decades later, Lowell had grown to become the second largest city in
America and the largest manufacturing complex in the country. This dynamic
growth was largely fueled by one man's vision and his ability to creatively adapt
practices observed in the world's best mills.
 Ford Motor Company - In 1912, a curious Henry Ford watched men cut meat
during a tour of a Chicago slaughter house. The carcasses were hanging on
hooks mounted on a monorail. After each man performed his job, he would
push the carcass to the next station. When the tour was over, the tour guide
said, "Well, sir, what do you think?" Mr. Ford turned to the man and said, Thanks
son, I think you may have given me a real good idea." Less than six months
later, the world's first assembly line started producing magneto's in the Ford
Highland Park Plant. Henry Ford articulated his vision in this way: "The man
who places the part will not fasten it. The man who puts in the bolt does not put
 in the nut, and the man who starts the nut will not tighten it." The idea that
revolutionized modern manufacturing and automotive history was imported
from another industry.
 Toyota - In 1950, General Motors was the world leader in the automobile
industry, and Toyota was just a small supplier to the Japanese domestic car
market. At this time, the founder of Toyota sent his son, Eliji Toyoda, to the
United States on a mission to study American manufacturing processes and
practices. During his visit, Eliji Toyoda visited General Motors, Chrysler, Ford
and even Studebaker. He took extensive notes describing all that he saw. No
detail was too small for his attention. Also during his visit, Toyoda visited
American supermarkets, where he was impressed by the speed and precision
with which grocers restocked their shelves at night so that supplies were
replenished in time for customers to shop during day-time hours. The
observations and insights from Toyoda's study visits were transported back to
Japan, where they were adopted, adapted and improved. As history has
recorded, these visits planted the seeds for what would develop into Toyota's
now famous just-in-time total-quality- control program. Toyota launched its U.S.
presence on the west coast and then expanded across the country. During the
next three decades, the Japanese car maker flexed its muscles and began
challenging the far larger American competitors. By 1983, Toyota had captured
23% of the United States auto market. In the same year, Eliji Toyoda became
chairman of Toyota. In 1984, General Motors signed a joint venture agreement
with Toyota to manufacture Toyota products in the United States. "I'm
convinced that GM's main reason for this joint venture is to see how Toyota
runs a factory," observed a vice president of the Boston Consulting Group at
the time. The wheel had turned full circle. Now General Motors was studying
Toyota to learn about its winning strategies.
 Remington Rifle Company - In the 1980s, the Remington Rifle Company, a
division of giant DuPont corporation, was wrestling with a technical problem.
Market research revealed that customers wanted shinier rifle shells. The plant
managers didn't pay much attention to what seemed a nitpicking piece of
market research. After all, Remington was a company that manufactured some
of the oldest and best known rifles in the world. Surely that is what mattered
most, they reasoned. But marketing executives persisted in their requests to
 respond to the customer feedback. Unfortunately, the company's engineering
teams made little progress in their efforts to solve the problem. As luck would
have it, a short distance away from the Remington Rifle Company plant in
Arkansas was a Mabelline cosmetics plant that produced shiny lipstick
cartridges. Remington employees, who drove past the Mabelline plant each day
on their way to and from work, surmised that the lipstick maker might have
important lessons to impart. After all, the lipstick cases were not much different
in size and shape from rifle shells. The site visit to the neighbouring plant paid
off and enabled the Remington team to solve the production difficulties that
previously had proven so nettlesome.

In view of these historic examples of innovative adaptation, the obvious wisdom of

studying others' best practices would seem self-evident. Learning by borrowing from
the best and by adapting their approaches to fit your own needs is the essence of
benchmarking. Surely there is nothing new or revolutionary in this prescription for
improvement. Or is there?
For every example of innovative adaptation that graces the halls of history, there are
many more examples of organizations, groups and people that have declined to look
outside themselves for solutions. The fact is not remarkable that people have on many
noteworthy occasions been inspired through the benchmarking process. By exposing
organizations and people to new ideas and approaches, the benchmarking experience
often spurs extraordinary insights and breakthrough thinking.
What is truly remarkable is that benchmarking has not sooner been embraced as a
fundamental business process and skill. Only in the late Eighties and early Nineties
has benchmarking become widely regarded as a skill that should be communicated
and utilized in day-to-day business operations. Benchmarking has broad applications
in problem-solving, planning, goal setting, process improvement, innovation, re-
engineering, strategy setting and in various other contexts. Quite simply,
benchmarking is a fundamental business skill that supports quality excellence.

Benchmarks and Benchmarking

Benchmarking's linguistic and metaphorical roots lie in the land surveyor's term, where
a benchmark was a distinctive mark made on a rock, wall or building. In this context,
a benchmark served as a reference point in determining one's current position or
altitude in topographical surveys and tidal observations. In the most general terms, a
benchmark was originally a sighting point from which measurements could be made
or it implied a standard against which others could be measured.
In the 1970s, the concept of a benchmark evolved beyond a technical term signifying
a reference point. The word migrated into the lexicon of business, where it came to
signify the measurement process by which to conduct comparisons. In the early
1980s, Xerox Corporation, a leader in the business process of benchmarking, referred
to benchmarking in rather narrow terms that focused primarily on comparisons with
one's primary competitors. "Benchmarking is the continuous process of measuring
products, services, and practices against the toughest competitors or those companies
recognized as industry leaders," observed former Xerox CEO David Kearns.
During the decade of the Eighties, the definition of benchmarking grew in scope and
focus. No longer were the metrical objects or benchmarks of primary interest.
Benchmarking came to refer to the outreach activity of comparing yourself against
others. Various practitioners offered the following definitions:

 "A process for rigorously measuring your performance versus the best-in- class
companies and for using the analysis to meet and surpass the best- in-class."
[Kaiser Associates, a management consulting firm that has actively promoted
benchmarking.]
 "A standard of excellence or achievement against which other similar things
must be measured or judged." [Sam Bookhart, former manager of
benchmarking at DuPont Fibers.]
 "Benchmarking is the search for industry best practices that lead to superior
performance." [Robert C. Camp, a Xerox Corporation manager, author of
Benchmarking: The Search For Industry Best Practices, and one of the
foremost benchmarking experts at Xerox Corporation.]

The distinction between benchmarking and benchmarks continues to perplex many

managers. In our view, benchmarking is the on- going search for best practices that
produce superior performance when adapted and implemented in one's own
organization. Emphasis should be placed on benchmarking as an on-going outreach
activity; the goal of the outreach is identification of best operating practices that, when
implemented, produce superior performance.
Benchmarks, in contrast to benchmarking, are measurements to gauge the
performance of a function, operation or business relative to others. In the electronics
industry, for instance, a benchmark has long referred to an operating statistic that
allows you to compare your own performance to that of another or to an industry
standard. Operating statistics employed as benchmarks provide incomplete
comparisons. In a sense, they are "superficial," for they draw attention to performance
gaps without offering any evidence or explanation for why those gaps exist. At times,
the performance gaps surfaced through benchmark comparisons may reflect
significant differences in operating systems and procedures; on other occasions,
benchmark variances may reflect differences in the way different organizations track
and measure the performance of their systems.
The root causes of operating differences usually cannot be discerned from the
"benchmarks" alone. In this respect, the benchmarks are like divining rods that lead
the organization to hidden opportunities to innovate and improve performance.
Benchmarking is the actual process of investigation and discovery that emphasizes
the operating procedures as the things of greatest interest and value. Consequently,
"Best Practices Benchmarking®" can be described as the process of seeking out and
studying the best internal and external practices that produce superior performance.
One measures this performance through various financial and non-financial
performance indicators.
Best Practices Benchmarking®, which includes but isn't limited to the study of statistical
benchmarks, can -- and should -- be applied at many levels of the organization and in
many different contexts. The benefits of benchmarking have been well recognized in
certain industries and operating areas. For instance, many benchmarking projects
have targeted critical technical functions such as distribution and logistics, billing, order
entry and fulfillment, and training. However, benchmarking is also an advanced
business concept with general management applications for high-level functions such
as strategic planning, restructuring, financial management, succession planning and
supplier and joint venture management.
Managing Change
The pace of change is so rapid today that no single organization can ever control or
dominate all effective operating practices and good ideas. To be a marketplace leader,
one must look outward - as well as inward -- for constant improvement and new ideas.
Customers everywhere are broadcasting the same message to their suppliers:
"Faster, cheaper, better." The old school of thought, which held that "if it ain't invented
here, it can't be any good," is a curse in today's high-velocity markets. Don't reinvent
what others have learned to do better. Today's rallying cries -- Borrow shamelessly!",
"Adopt, adapt, advance!", "Imitate creatively!" and "Adapt innovatively!" -- are anthems
of business pragmatism.
Benchmarking teams, with a mandate to look far and wide for better operating
practices, are arguably one of the best sentinels senior management can post along
the watchtowers of the organization. They can sound the alarm when the first signs
appear on the horizon that the organization has fallen behind the competition or has
failed to take advantage of important operating improvements developed elsewhere.
Best Practices Benchmarking® provides employees and managers the tool, the
rationale and the process to accept change as constant, inevitable and good. "Change
has no constituency," observes General Electric CEO Jack Welch, who has
established benchmarking for best practices as an essential part of GE's on-going
management and improvement efforts. "People like the status quo. They like the way
it was."
The on-going adaptation of best practices helps an organization avoid being
ambushed by unexpected change. A company can accelerate its own rate of
improvement by systematically studying others and by comparing its own operations
and performance with the best and most effective practices of highly innovative and
successful companies. The search for best practices quickly draws you outside the
confines of your own culture and personal habits. Best Practices Benchmarking ® is
therefore a pragmatic approach to managing change and performance improvement.
Many organizations have demonstrated the power of Best Practices Benchmarking®.
Bell Laboratories, the research arm of American Telephone & Telegraph Co., has
notably showcased the positive behavioral effects of best practices. In a fascinating
program focused on AT&T engineers, Bell Labs demonstrated that the company could
effectively manage individual behavioral change, which leads directly to performance
improvement, through an individual best practices strategy.
During a six-year period, Bell Labs trained 248 engineers in its switching systems
business unit to emulate the work and social habits of the unit's best performers. The
strategies used by the best practitioners were hardly lofty or the stuff taught at the
world's best technical or business schools. These best practices were fundamental
skills designed to make people more effective and efficient. The program called for the
engineers to learn from each other various important business practices and skills.
These practices included how most effectively to manage work-in-baskets" that
otherwise filled up with memos, correspondence, mail and reading, how to accept
constructive criticism, and how to seek help instead of wasting time by insisting on
solving problems individually.
The results were impressive: engineers who went through the Bell Labs best individual
engineer practices program boosted their productivity by 10% in eight months! This
productivity boost saved Bell Labs the money spent on the program after one year,
and returned more than six times the investment after two years.
AT&T is not the only major corporation to experiment with a best practices strategy in
managing its business. General Electric currently embraces a best practices program
that is descended from several earlier management initiatives. More than 40 years
ago, then GE Chairman Ralph Cordiner pursued a best business practices strategy
when he assembled an internal team of top managers and instructed them to identify
and institutionalize the era's best operating practices.
In 1951, [Cordiner] assembled a brainy team of GE executives, plus consultants and
professors, including Peter Drucker, to recommend ways to improve GE's
management. They studied fifty other firms, pored over the personnel records of 2000
GEers, did time-motion studies of executives at work, and interviewed countless GE
managers. Two years later, they emerged with the Blue Book, a five-volume, 3,463-
page management bible. Buried in endless pages of stultifyingly elaborate
prescriptions are such powerful concepts as management by objective - - as well as
some of the most revolutionary ideas [current GE CEO Jack Welch would later
espouse. This discussion of decentralization, for instance, sounds a lot like Welch's
principle of speed: 'A minimum of supervision, a minimum of time delays in decision
making, a maximum of competitive agility, and thus maximum service to customers
and profits to the company.' "
GE's Blue Book and every other best practices compendium face the same challenge:
How do you avoid bureaucracy when codifying and institutionalizing today's most
effective operating practices? The easiest way to fully leverage an identifiable best
practice is to declare it a mandatory SOP (standard operating procedure).
Paradoxically, an organization risks turning its current best practices into future
bureaucratic tendencies as soon as it rigidly mandates and codifies them in hefty
operating manuals. The road to competitive ruin is paved with once-effective operating
procedures that have outlived their time. Companies implementing best practice
strategies must carefully balance the benefits of current SOP compliance with the
benefits of future innovation. Tomorrow's best practices will inevitably evolve beyond
or diverge from today's best practices. By their nature, best practices are dynamic and
progressive. For this reason, Best Practices Benchmarking® is often called an
"evergreen" process: it renews the organization each time it is repeated.
Consequently, best practice champions regard benchmarking as on-going business
process that is fully integrated with continuous improvement in their organizations.

Three Primary Benchmarking Types

Benchmarking gained tremendous influence and currency in the Nineties.

Correspondingly, front- line employees and operating managers applied basic
benchmarking skills in scores of different business situations. Among these
applications, three distinct types of benchmarking proliferated. They include:

 process benchmarking,
 performance benchmarking, and
 strategic benchmarking.

Process Benchmarking: Process benchmarking focuses on discrete work processes

and operating systems, such as the customer complaint process, the billing process,
the order-and-fulfillment process, the recruitment process or the strategic planning
process. This form of benchmarking seeks to identify the most effective operating
practices from many companies that perform similar work functions. In recent years,
process benchmarking has grown in stature in the United States. Many of the most
impressive American benchmarking success stories refer to process benchmarking.
Its power lies in its ability to produce bottom-line results. If an organization improves a
core process, for instance, it can then quickly deliver performance improvements.
These performance improvements may be calculated through increased productivity,
lower costs or improved sales, but their net effect frequently translates into improved
short-term financial results. For this reason American managers, seeking performance
improvements that will show up on their quarterly score cards, embrace process
benchmarking.
Performance Benchmarking: Performance benchmarking enables managers to
assess their competitive positions through product and service comparisons.
Performance benchmarking usually focuses on elements of price, technical quality,
ancillary product or service features, speed, reliability and other performance
characteristics. Reverse engineering, direct product or service comparisons and
analysis of operating statistics are the primary techniques applied during performance
benchmarking. The automotive, computer, financial services and photo copier
industries, among others, regularly employ performance benchmarking as a standard
competitive tool.
Strategic Benchmarking: In general terms, strategic benchmarking examines how
companies compete. Strategic benchmarking is seldom industry-focused. It roves
across industries seeking to identify the winning strategies that have enabled high
performing companies to be successful in their marketplaces. Numerous Japanese
corporations are accomplished strategic benchmarkers. A U.S.-based management
consultant who specializes in working with Japanese corporations operating in the
United States tells this story: "My clients begin by asking, 'What companies are really
good?' Then we set up a trip in which the chairman or CEO of my client will go to visit
these really good companies. Unlike American companies that begin a benchmarking
project by determining what specific activity or process they want to examine, my
Japanese clients are interested in fundamental lessons and winning strategies. They
feel as if they already understand their processes." It is not surprising that Japanese
corporations, which characteristically focus on long-term time horizons, should be
most interested in strategic benchmarking. Strategic benchmarking influences the
longer-term competitive patterns of a company. Consequently, the benefits may
accrue slowly. Organizations seeking short-term benefits, such as those reflected in
quarterly performance reports, usually find that process benchmarking produces
results more rapidly.
Applications and Benefits

Benchmarking is a remarkably versatile business tool. Roland Loesser, the chief

financial officer of the Sandoz Corporation's American operations, observes:
"Benchmarking is powerful because it can be applied to virtually every function in our
companies." Moreover, front-line managers are using it in many new and creative
ways. Some of the more frequent applications include:
Setting and refining strategy: Today's markets are in a dynamic state of flux.
Consequently, important insights can be gleaned by studying the experiences and
competitive strategies of others. Bath Ironworks, for instance, benchmarked the
strategies and operations of 10 shipyards in Holland when the Cold War's end
rendered the 108-year-old shipyard's business strategy completely out-of-date. Bath,
the U.S.'s fourth largest shipyard and Maine's largest private employer, had assumed
that the country's need for combat vessels would remain strong for the rest of the
century. (Since 1977, 86% of the vessels Bath delivered were Naval combat ships.)
To quickly rethink its strategy and adjust to the "sea change" in the post-Cold War
economy, Bath studied the strategy of the Royal Schelde shipyard in Vlissingen,
Holland. Royal Schelde and other Dutch shipyards had already reorganized to
accommodate merchant ship building and the manufacturing of other complex
structures, such as bridges. "Contingency plans can be developed and implemented
much faster and at far less cost [through benchmarking] than if developed from
scratch," observes Bath Iron Works' manager of quality improvement William R. Tip"
Koehler. The strategic lessons learned by other organizations and industries can help
your own company refine its strategy, project the possible outcomes of changing its
present course, and forecast potential cataclysmic shifts brought on by changing
market circumstances.
Re-engineering work processes and business systems: Benchmarking is a
necessity for companies engaged in re-engineering their processes and systems.
Benchmarking gives you the ability to see things differently. It is like setting up a
satellite dish outside your offices. Suddenly, signals from throughout the world can
penetrate your organization. Benchmarking enables a company to get outside its
conditioned responses or customary structures of thinking. When GTE re- engineered
eight core processes of its telephone operations, it examined the best practices of
some 84 companies from diverse industries to help the company re-think the rules of
the game for each of its core functions. Re-engineering without benchmarking is likely
to produce flat 5- 10% improvements, not the spectacular 50-75% performance
improvements often seen with radical re-design. Benchmarking enables true re-
engineering. Through the study of outside best practices, a company can identify and
import new technology, new skills, new structures, new training and new capabilities.
Continuous improvement of work processes and business systems: Not every
benchmarking project or initiative will yield major-magnitude change and system
breakthroughs. Benchmarking also provides a potent source for incremental changes
and improvements. Benchmarking exchanges frequently yield "golden nuggets" that
are weighed in ounces rather than pounds. KPMG Peat Marwick, the Big Six
accounting firm, borrowed the concept of a supermarket's Express Checkout to start
an express line in its word processing pools. The change enabled work teams with
minor document changes to go through an expedited process. This small change was
of great value to word processing departments that handled high volume work orders.
It solved the long-standing and nettlesome problem of work assignments with small
changes being stalled in long work queues. Moreover, this innovative adaptation of a
supermarket operating practice improved cycle time and boosted internal customer
satisfaction. Additionally, it can be applied to many other service functions, such as
copying, graphics production and research.
Strategic planning and goal setting: The unexpected missteps of blue-chip
organizations such as IBM, American Express, Westinghouse and General Motors
have provided the world an important lesson: In the 1990s, market changes can be
swift and powerful, economically hobbling even the most powerful corporations.
Consequently, a growing number of companies enable their strategic planning and
goal setting process through benchmarking. Benchmarking helps organizations
anticipate market changes and validate goals and targets. One can only wonder how
much sooner these battered giants might have responded to shifting market realities
if they used benchmarking as an integral part of their strategic planning and goal
setting process.
By reviewing the products, prices, practices, strategies, structures and services of
competitors and other industry front-runners, managers can validate the adequacy of
their own goals, plans and strategies. For instance, Mutual Life Insurance Company
of New York requires all executives to find benchmarking information on their primary
and secondary competitors as part of the company's newly revamped planning
process. Says MONY Quality Officer Jan Howard: "Planning without awareness of
what your competitors are doing is like flying a plane over the Alps in heavy fog without
any instrument controls."
Problem solving: Benchmarking frequently demonstrates its value in the problem-
solving process. Ironically, most corporate problem-solving processes do not
methodically look outside the team or organization for solutions. Standard problem-
solving processes provide a structure that make work groups more effective; they also
prompt teams to root their analysis in empirical data, which supports management by
fact -- rather than by fancy. But most problem-solving processes indirectly encourage
teams to reinvent the wheel because they seldom encourage work groups to consider
external experience in developing their solutions. As an enabling tool for problem-
solving, benchmarking frequently produces elegant answers for thorny operating
issues. Consider the following case from the Xerox Corporation, where benchmarking
has been deeply integrated into the organization's fundamental quality and problem-
solving efforts.
Plagued by high associate turnover in its corporate legal department, Xerox looked for
solutions both internally and externally. Internal analysis revealed various causes for
the problem; external analysis, however, turned up important insights. Xerox's
benchmarking partners shared the same recruitment and selection process and all
suffered from the same high associate turnover. Once recognizing that its essential
recruitment strategy produced sub-optimal results, Xerox adjusted its recruitment
strategy rather than trying to fine-tune the process. In retrospect, this decision makes
excellent sense because the best and brightest law students are usually geared to
work for high-paying and high-powered law firms -- not for corporate law departments.
Many fine lawyers decide to move to corporations after practicing for several years at
a firm. The common experience of all the benchmark partners gave Xerox confidence
to move away from traditional recruitment on law school campuses to a more radical
strategy. This strategy emphasizes recruitment of experienced lawyers, who wish to
make lateral career moves away from law firms and into corporate practices. Arguably,
Xerox would never have gleaned this insight if not for its benchmarking investigation.
Education and idea enrichment: A Zen-like management riddle asks: "How does a
fish know it is wet?" The fish spends all its life in water and knows no other condition.
The riddle probes how people, who grow accustomed to operating in certain ways,
know there are other approaches -- perhaps better ways -- of performing the same
task. Benchmarking is a tool for achieving idea enrichment and general education.
Each benchmarking trip is a learning safari. Successful benchmarkers return to their
organizations with valuable trophies -- new ideas and approaches for accomplishing
old tasks. By regularly benchmarking critical functions, organizations ensure they
remain open to new ideas, changing trends and evolving technology. If seeing is
believing, then benchmarking is an effective process to ensure that managers and
front-line operators see other approaches to accomplishing the activities over which
they preside.
Market performance comparisons and evaluations: Human nature encourages
people to reflect positively on the organizations and colleagues with which they work.
Naturally, people want to validate their efforts. Correspondingly, organizations and
individuals frequently presume the products and services they provide to customers
are also of high quality. Yet without carefully comparing them to competitor's offerings,
they cannot fairly evaluate their relative standing. However fancy gives way to fact
when you benchmark your company's products, features and performance against
competitors'. This type of performance benchmarking is common in many industries.
Mortgage bankers, for instance, compare their interest rates, service fees and product
types on a weekly basis. Consumer Reports has long evaluated the features of various
products and J.D. Powers has "benchmarked" customer satisfaction levels among
automobile owners. Financial World magazine rates the financial performance and
management of America's top cities. All these industry and professional ratings
provide a fact-based market performance test that employs the essential skills of
benchmarking. By heeding these and other types of performance benchmarks,
organizations can assess the adequacy of their products, services, features and
performance. Such information can help them manage by customer- focused facts.
Catalyst for change: Al Kuebler of 1992 Malcolm Baldrige National Quality Award
winner AT&T Universal Card Services observes an operating truth that every
benchmarking manager has observed: "Tell me and I forget, show me and I remember,
involve me and I understand." Benchmarking is an effective catalyst for change
because it involves employees in the personal discovery of more effective operating
practices. Benchmarking exposes people to new approaches, systems and
procedures. It is first-person experience that helps an employee visualize the final goal
of prospective change. In this respect, benchmarking demystifies change, making it
more tangible and less threatening. Consequently, benchmarking helps manage
organizational change.

A Utilitarian Tool
Managers and employees are inundated with a series of highly abstract yet
exceedingly important challenges. These include general mandates to oversee such
intangible concepts as change management, innovation, creativity, organizational
learning, speed or cycle time reduction, process simplification and re- engineering. For
many managers concerned with such matters as serving customers, meeting daily
deadlines, reducing costs and growing revenues, these concepts seem perplexing. It's
difficult to get your thoughts and your hands around these high sounding but abstract
concepts.
Consider the company that wanted to establish its position as the leading innovator in
its industry. To achieve this goal, it proposed performing an "innovation audit." The
concept was powerful: audit or assess the company's structure, culture, work
processes, technology and managerial systems to determine their positive or negative
influences on innovation. The magnitude of this task quickly grew daunting. How would
the team define creativity and innovation? What would be the actual goal of such an
audit? What systems or processes would be the focus of such an audit? What systems
if any would be excluded? Arguably since every system and process in the company
could influence organizational innovation, the company should consider them all. To
avoid attempting to "boil the ocean" on its first foray into this field, the organization
refocused on the new product development process. If the company improved this
process, it would produce more successful product launches. This success would
advance the company in becoming the industry leader in innovation -- regardless of
how it defined innovation." Benchmarking in the new product development process
provided an excellent, results-oriented approach to exploring the larger innovation
theme. As the company in the example, any benchmarker needs to focus its study. A
focused study turns the abstract concept into the concrete.

Benchmarking is an easily grasped, functional tool. As utilitarian as a fireplace poker,

it can test and probe the hottest management concepts. Benchmarking doesn't
support abstract postulations about arcane management concepts. It promotes the
active discovery of systems that embody the concepts in real-world situations. Don't
sit in isolation, for instance, while meditating how to compete through cycle-time
reduction. Study the best practices of other organizations that have learned to perform
critical functions more quickly than your own company. Benchmarking offers a kind of
low tech "virtual reality" for organizations eager to simulate operational experiences in
their own environments. What better way to project a system's impact in your own
company than to examine the performance effects of that system already implemented
in another organization? "Ideas are a commodity," observes Dell Computer CEO
Michael Dell. " Execution of them is not." As a managerial tool, benchmarking provides
a double benefit: it provides a way to access new ideas and to test or evaluate the
implementation challenges they may present in your own organization.
A full list of benchmarking benefits cited by practitioners reaches as high as Everest.
Bottom-line summaries almost always suggest that benchmarking:

 Improves organizational quality,

 Leads to lower cost positions,
 Creates buy-in for change,
 Exposes people to new ideas,
 Broadens the organization's operating perspective,
 Creates a culture open to new ideas,
 Serves as a catalyst for learning,
 Increases front-line employees' satisfaction through involvement,
empowerment and a sense of job ownership,
 Tests the rigor of internal operating targets,
 Overcomes front-line employees' natural disbelief that they can perform better,
 Creates an external business view, and
 Raises the organization's level of maximum potential performance.

Finally, benchmarking for best practices generates one more benefit that is arguably
the most important of all. It teaches organizations new lessons in competitiveness.
"Benchmarking taught the managers how to compete," observed Sam Bookhart,
formerly benchmarking manager at E.I. DuPont de Nemours & Company, Inc. "It
wasn't just the marketing manager. It was the technical manager and the
manufacturing manager and the accounting manager. It taught them how to compete
and that resulted in dramatic changes in culture and in improved product and service
quality."
In the rough-and-tumble marketplace of the 1990s and beyond, few organizations can
afford to ignore these lessons of competitiveness. There's a simple litmus test to
determine benchmarking's applicability to your organization. Ask yourself: Can my
organization afford to stop improving? Can my organization afford to stop learning?
Can my organization afford to stop competing for its position in the marketplace? If
your answer to any of these questions is "yes," then put this book aside; it will not
benefit you. However, it's difficult to imagine many organizations -- public or private,
for- profit or non-profit -- that can respond "yes" to these inquiries. Every organization
strives to maintain and enhance its position over time. That is the essence of
competitiveness. That's also why this book is dedicated to benchmarking for best
practices, the art and science of winning through innovative adaptation!

HRM is concerned with the human beings in an organization. “The management of

man” is a very important and challenging job because of the dynamic nature of the
people. No two people are similar in mental abilities, tacticians, sentiments, and
behaviors; they differ widely also as a group and are subject to many varied influences.
People are

 responsive, they feel, think and act therefore they can not be operated like a
machine or shifted and altered like template in a room layout. They therefore
need a tactful handing by management personnel.”
 HRM is the process of managing people of an organization with a human
approach. Human resources approach to manpower enables the manager to
view the people as an important resource. It is the approach through which
organization can utilize the manpower not only for the benefits of the
organization but for the growth, development and self satisfaction of the
concerned people.
 Thus, HRM is a system that focuses on human resources development on one
hand and effective management of people on the other hand so that people will
enjoy human dignity in their employment.
HRM is involved in providing human dignity to the employees taking into account their
capacity, potentially, talents, achievement, motivation, skill, commitment, great
abilities, and so on. So, that their personalities are recognized as valuable human
beings. If an organization can trust, depend and draw from their bank account on the
strength of their capital assets, they can trust, depend and draw more on their
committed, talented, dedicated and capable people. This is what the HRM is involved
in every business, managerial activity or introduction.

The principal component of an organization is its human resource or ‘people at work’.

According to Leon C. Megginson from the national point of view Human Resources
as, “the knowledge, skills, creative abilities, talents and aptitudes obtained in the
population; whereas from the . view point of the individual enterprise, they represent
the total of inherent abilities, acquired knowledge and skills as exemplified in the
talents and aptitudes of its employees.”

Human resource has a paramount importance in the success of any organization

because most of the problems in organizational setting are human and social rather
than physical, technical or economical failure. In the words of Oliver Shelden, “No
industry can be rendered efficient so long as the basic fact remains unrecognized that
it is principally human.”

Human Resources Management is concerned with the “people” dimension in

management. Since every organization is made up of people acquiring their services,
developing their skills, motivating them to high level of performance and ensuring that
they continue to maintain their commitment to the organization are essential to achieve
organizational objectives. This is true regardless of the type of organization,
government, business, education, health, recreation or social action. Getting and
keeping good people is critical to the success of every organization, whether profit or
non-profit, public or private.

Definitions of HRM

There are two different definitions. The first definition of HRM is that “It is the process
of managing people in organizations in a structured and thorough manner.”(4) 5 This
covers the fields of staffing (hiring people), retention of people, pay and perks setting
and management, performance management, change management and taking care
of exits from the company to round off the activities. This is the traditional definition of
HRM which leads some experts to define it as a modem version of the Personnel
Management function that was used earlier.The second definition of HRM
encompasses “The management of people in organizations from a macro perspective,
i.e. managing people in the form of a collective relationship between management and
employees.

This approach focuses on the objectives and outcomes of the HRM functions. It means
that the HR function in contemporary organizations is concerned with the notions of
people enabling, people development and a focus on making the “employment
relationship” fulfilling for both the management and employees.

In simple words, Human resource management is management function that helps

manager to recruit, select, train and develop organization members. Or HRM is a

process of making the efficient and effective use of human resources so that the set
goals are achieved.

In general terms, Human Resource Management is “concerned with the people

dimension in management. Since every organization is made up of people, acquiring
their services, developing their skills, motivating them to high levels of performance
and ensuring that they continue to maintain their commitment to the organization are
essential for achieving organizational objectives. This is true regardless of the type of
organization government business, Education, Health, regression or social action.”(6)

In the words of Dunn and Stephens, “The HRM is the process of attracting, holding
and motivating all manager line and staff.”(7) The National Institute of Personnel
Management (NIPM) of India has defined human resource as “that part of
management which is concerned with people at work and with their relationship within
an enterprise. Its aim is to bring together and develop into an effective organization
of the men and women who make up an enterprise and having regard for the well-
being of the individuals and of working groups, to enable them to
make their best contribution to its success.”(8)

Evolution and developments of HRM

The history of development of HR management in India is comparatively of recent

origin. But Kautilya had dealt with some of the important aspects of human resources
management in his “Arthasastra,” written in 400 B.C. Government in those days
adapted the techniques of HRM as suggested by Kautilya. In its modem sense, it has
developed only since independence. Though the importance of labour officers was
recognised as early as 1929, the appointment of officers to solve labour and welfare
problems gained momentum only after the enactment of the Factories Act of 1948.
Section 49 of the Act required the appointment of Welfare Officers in companies
employing more than 500 workers. At the beginning, Government was concerned only
with limited aspects of labour welfare. The earliest labour legislation in India dealt with
certain aspects of Indian labourers (Regulation of Recruitment, Forwarding and
Employment) sent to various British colonies in 1830. Important phases of evolution
of HRM are presented in Exhibit:

Table 1.1 Evolution and Developments of HRM in India

Period Development Status Emphasis Status

Outlook
1920s1930s Beginning Pragmatism of Statutory, Clerical
capitalists welfare
paternalism
1940s - 1960s Struggling for Technical, Introduction of Administrative
recognition legalistic Techniques
1970s Achieving Professional Regulatory, Managerial
conforming,
imposition
1980s Sophistication Legalistic, Standards on Executive
impersonal other functions
 1990s Promising Human productivity Philosophical
values, through
people

RECENT DEVELOPMENTS:

Recent developments in the area of human resources management include treating

the employees as economic, social, psychological and spiritual men and women. The
important aspects of development of human resources management year wise is
shown below:

• In the year 1995, emphasis has been shifted to human resources development
(HRD).

• In the year 1998, emphasis on HRD, cultural diversity, teamwork and participative
management has been continuing. Further, the emerging areas are total quality in
management in HRM, empowering the employees and developing empowered teams
and integrating HRM with strategic management as the top management, realised that
HRM is the core of competencies of the 21st century corporations.

• In the year 1999, second National Commission on Labour was setup to study the
labour conditions.•

 In the year 2001, emphasis has been on 'smart sizing of the organisations'.

• In the year 2002, emphasis has been shifted to positive attitude of the
candidate/employee rather than skill and knowledge.

• In the year 2003, shift from intelligence quotient (IQ) to emotional quotient (EQ).

• In the year 2004, shift from skilled workers to knowledge workers.

• In the year 2005, shift from hierarchical structure to flexible and virtual structures.

• In the year 2006, HRM has become the core of strategic management level.

• In the year 2007, the concept of HRM has been relegated to human capital
management.

• In the year 2008, emphasis has been on retention management and development

of own human resources by companies through alliances with universities/colleges.

In the same year, there was decline in business operations due to global economic
recession and crisis.

• In the year 2009, continuation of job cuts, pay costs and lay-offs due to prolonged

global recession and crisis.

• In the year 2014, emphasis is shifted to talent management and flexible human

resource policies and practices.

1.3 Nature of HRM

HRM is a management function that helps managers to recruit, select, train and
develop members for an organization. HRM is concerned with people’s dimension in
organizations. The following aspects constitute the core of HRM:

1. HRM Involves the Application of Management Functions and Principles. The

functions and principles are applied for acquiring, developing, maintaining and
providing remuneration to employees in organization.

2. Decision Relating to Employees must be integrated. Decisions on different aspects

of employees must be consistent with other human resource (HR) decisions.

3. Decisions Made Influence the Effectiveness of an Organization. Effectiveness of an

organization will result in betterment of services to customers in the form of high quality

products supplied at reasonable costs.

4. HRM Functions are not confined to Business Establishments Only but applicable to
non-business organizations such as education, health care, recreation and like.

HRM refers to a set of programmes, functions and activities designed and carried out
in corder to maximize both employee as well as organizational effectiveness.

1.4 Objectives of HRM

The primary objective of HRM is to ensure the availability of competent and willing
workforce for an organization. Beyond this, there are other objectives too. Specifically,

Objectives of HRM

HRM objectives are four fold: Societal, Organization, Functional and personal.

• Personal Objectives:

To assist Employees in achieving their personal goals, at least in so far as these goals

enhance the individual’s contribution to the organization. Personal objectives of

employees must be maintained, retained and motivated.

Functional Objectives:

To maintain the contribution of department at an appropriate level organization should

fulfill the needs. Resources are wasted when HRM is either more or less sophisticated
to suit the organizations demands.

• Organizational Objectives:

To recognize the role of HRM in bringing about organizational effectiveness, HRM is

not an end in itself but it is only a mean to assist the organization with its primary
objectives

organization.

• Societal Objectives:

To be ethically & socially responsible for the needs and challenges of society while \
minimizing the negative impact of such demands upon the organization to use their

resources for society’s benefits in ethical ways may lead to restriction.

• Other objectives:

Accomplish the basic organizational goals by creating and utilizing an able and

motivated workforce.

To establish and maintain organizational structure and desirable working

relationships among all the members of the organization.Develop co-ordination among
individual and group within organization to secure the integration of organization.

To create facilities and opportunities for individual or group development so as to

match it with the growth of the organization.To attain an effective utilization of human
resources in the achievement of organizational goals.

To identify and satisfy individual and group needs by providing adequate and equitable
wages, incentives, employee benefits and social security and measures for
challenging work, prestige, recognition, security, status.

To maintain high employees morale and human relations by sustaining and improving
the various conditions and facilities. To strengthen and appreciate the human assets
continuously by providing training and development programs.

To consider and contribute to the minimization of socio-economic evils such as

unemployment, under employment, inequalities in the distribution of income and
wealth and to improve the welfare of the society by providing employment
opportunities to women and disadvantaged sections of the society.

To provide an opportunity for expression and voice management.

To provide fair, acceptable and efficient leadership.

To provide facilities and conditions of work and creation of favorable atmosphere for
maintaining stability of employment.

To create & utilize an able & motivated work force Establish & maintain sound
organizational structure Create facilities attain an effective utilization Identify & satisfy
individual & group needs.

Maintain high employee morale Training & development Opportunity for expression
Provide fair, acceptable and efficient leadership Facilities and conditions.

1.5 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
organization comes under the preview of HRM.The major HRM activities include HR
planning, job analysis, job design, employee hiring, employee and executive
remuneration, employee motivation, employee maintenance, industrial relations and
prospects of HRM.

The scope of Human Resources Management extends to:

All the decisions, strategies, factors, principles, operations, practices, functions,

activities and methods related to the management of people as employees in any type
of organization. All the dimensions related to people in their employment relationships
and all the dynamics that flow from it.

American Society for Training and Development (ASTD) conducted fairly an

exhaustive study in this field and identified nine broad areas of activities of HRM.

These are given below:

❖ Human Resource Planning

❖ Design of the Organization and Job

❖ Selection and Staffing

❖ Training and Development

❖ Organizational Development

❖ Compensation and Benefits

❖ Employee Assistance

❖ Union/Labour Relations

❖ Personnel Research and Information System

a) 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. Moreover, 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.

b) 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.

c) 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.

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

e) 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.

f) 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.

g) Employee Assistance: Each employee is unique in character, personality,

expectation and temperament. By and large each one of them faces problems
everyday. Some are personal some are official. In their case he or she remains
worried. Such worries must be removed to make him or her more productive and
happy.

h) 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.

i) Personnel Research and Information System: Knowledge on behavioral science and

industrial psychology throws better insight into the workers expectations, aspirations
and behavior. Advancement of technology of product and production methods have
created working environment which are much different from the past.

Globalization of economy has increased competition many fold. Science of

ergonomics gives better ideas of doing a work more conveniently by an employee.
Thus, continuous research in HR areas is an unavoidable requirement. It must also
take special care for improving exchange of information through effective
communication systems on a continuous basis especially on moral and motivation.
HRM is a broad concept; personnel management (PM) and Human resource
development (HRD) are the parts of HRM.

1.6 Role ofHRM

The role of HRM is to plan, develop and administer policies and programs designed
to make optimum use of an organizations human resources. It is that part of
management which is concerned with the people at work and with their relationship
within enterprises.

According to R.L Mathis and J. H. Jackson (2010) several roles can be fulfilled by HR
management. The nature and extent of these roles depend on both what upper
management wants HR management to do and what competencies the HR staff have
demonstrated. Three roles are typically identified for HR.

• Administrative

• Operational Actions

• Strategic HR

Classification of HR Roles

Administrative - Personnel practices, Legal compliance forms and paperwork

Operational Actions -Managing employee relationship issues, Employee advocate

Strategic HR- Organizational business strategies, HR strategic or planning,

Evaluation of HR effectiveness

Administrative Role of HR:

The administrative role of HR management has been heavily oriented to administration

and recordkeeping including essential legal paperwork and policy implementation.
Major changes have happened in the administrative role of HR during the recent years.
Two major shifts driving the transformation of the administrative role are: Greater use
of technology and Outsourcing. Technology has been widely used to improve the
administrative efficiency of HR and the responsiveness of HR to employees and
managers. Moreover; HR functions are becoming available electronically or are being
done on the Internet using Web-based technology. Technology is being used in most
HR activities, from employment applications and employee benefits enrolments to e-
leaming using Internet-based resources.

Increasingly, many HR administrative functions are being outsourced to vendors. This

outsourcing of HR administrative activities has grown dramatically in HR areas such

as employee assistance (counseling), retirement planning, benefits administration,
payroll services and outplacement services.

Operational and Employee Advocate Role for HR:

HR managers manage most HR activities in line with the strategies and operations
that have been identified by management and serves as employee “champion” for
employee issues and concerns.HR often has been viewed as the “employee advocate”
in organizations. They act as the voice for employee concerns, and spend
considerable time on HR “crisis management,” dealing with employee problems that
are both work-related and non work-related. Employee advocacy helps to ensure fair
and equitable treatment for employees regardless of personal background or
circumstances. Sometimes the HR’s advocate role may create conflict with operating
managers. However, without the HR advocate role, employers could face even more
lawsuits and regulatory complaints than they do now.

The operational role requires HR professionals to co-operate with various

departmental and operating managers and supervisors in order to identify and
implement needed programs and policies in the organization. Operational activities
are tactical in nature. Compliance with equal employment opportunity and other laws
are ensured, employment applications are processed, current openings are filled
through interviews, supervisors are trained, safety problems are resolved and wage
and benefit questions are answered. For carrying out these activities HR manager
matches HR activities with the strategies of the organization.
Strategic Role for HR: The administrative role traditionally has been the dominant role
for HR. A broader transformation in HR is needed so that significantly less HR time
and fewer HR staffs are used just for clerical work. Differences between the
operational and strategic roles exist in a number of HR areas. The strategic HR role
means that HR professionals are proactive in addressing business realities and
focusing on future business needs, such as strategic planning, compensation
strategies, the performance of HR and measuring its results. However, in some
organizations, HR often does not play a key role in formulating the strategies for the
organization as a whole; instead it merely carries them out through HR activities.

Many executives, managers, and HR professionals are increasingly seeing the need
for HR management to become a greater strategic contributor to the business success
of organizations. HR should be responsible for knowing what the true cost of human
capital is for an employer. For example, it may cost two times key employees’ annual
salaries to replace them if they leave. Turnover can be controlled though HR activities,
and if it is successful in saving the company money with good retention and talent
management strategies, those may be important contributions to the bottom line of
organizational performance.

The role of HR as a strategic business partner is often described as “having a seat at

the table,” and contributing to the strategic directions and success of the organization.
That means HR is involved in devising strategy in addition of implementing strategy.
Part of HR’s contribution is to have financial expertise and to produce financial results,
not just to boost employee morale or administrative efficiencies. Therefore, a
significant concern for chief financial officers (CFOs) is whether HR executives are
equipped to help them to plan and meet financial requirements.

The role of HR shifted from a facilitator to a functional peer with competencies in other
functions and is acknowledged as an equal partner by others. The HR is motivated to
contribute to organizational objectives of profitability and customer satisfaction and is
seen as a vehicle for realization of quality development. The department has a
responsibility for monitoring employee satisfaction, since it is seen as substitute to
customer satisfaction.
According to McKinsey’s 7-S framework model HR plays the role of a catalyst for the
organization. According to this framework, effective organizational change is a
complex relationship between seven S’s.

HRM is a total matching process between the three Hard S (Strategy, Structure and
Systems) and the four Soft S (Style, Staff, Skills and Super-ordinate Goals). Clearly,
all the S’s have to complement each other and have to be aligned towards a single
corporate vision for the organization to be effective. It has to be realized that most of
the S’s are determined directly or indirectly by the way Human Resources are
managed and therefore, HRM must be a part of the total business strategy.

1.9 Role of HR Manager

Human Resources Manager plays a vital role in the modem organization. He plays
various strategic roles at different levels in the organization. The roles of the HR
Manager include roles of conscience, of a counsellor, a mediator, a company
spokesman, a problem solver and a change agent.

• The Conscience Role: The conscience role is that of a humanitarian who reminds
the management of its morals and obligations to its employees. • The Counsellor.
Employees who are dissatisfied with the present job approach the HR manager for
counselling. In addition, employees facing various problems like marital, health,
children education/marriage, mental, physical and career also approach the HR
managers. The HR Manager counsels and consults the employees and offers
suggestions to solve/overcome the problems.

• The Mediator. As a mediator, the HR manager plays the role of a peace-maker. He

settles the disputes between employees and the management. He acts as a liaison
and communication link between both of them.

• The Spokesman: He is a frequent spokesman for or representative of the company.

• The Problem-solver: He acts as a problem solver with respect to the issues that
involve human resources management and overall long range organizational
planning.
• The Change Agent: He acts as a change agent and introduces changes in various
existing programmes. He also performs various other roles like welfare role, clerical
role and fire-fighting role as indicated in figure above.

1. As a Specialist: The HR department has staff relationship with other

departments/managers in the total organization. The personnel department is
responsible for advising management from the Managing Director to the lowest line
supervisor in all areas relating to HR management and industrial relations. HR
department also performs various functions of employment, training and development.
It represents the management in many of the relationships that affect the organization
as a whole. It is also responsible for representing various workers’ problems to the
management.

HR department generally acts in an advisory capacity; it provides information, offers

suggestions and is not responsible for the end results. The HR managers must
exercise control each and every aspect very tactfully in order to win the confidence
and cooperation of all line managers. They have to persuade line managers to work
with staff

specialists and not against them. The authority of the HR manager should derive from
concrete HR policies and programmes and from the advantages and result of
accepted specialised knowledge.

Importance of HRM

The importance of human resource management can be discussed by Yodder,

Heneman and others, from three standpoints, viz., social, professional and individual
enterprise.

1. Social Significance: Proper management of personnel enhances their dignity by

satisfying their social needs. This is done by: (i) maintaining a balance between the
jobs available and the jobseekers, according to the qualifications and needs; (ii)
Providing suitable and most productive employment, which might bring them
psychological satisfaction; (iii) making maximum utilization of the resources in an
effective manner and paying the employee a reasonable compensation in proportion
to the contribution made by him; (iv) eliminating waste or improper use of human
resource, through conservation of their normal energy and health; and (v) by helping
people make their own decisions, that are in their interests.

2. Professional Significance-. By providing healthy working environment it promotes

team work in the employees. This is done by: (i) maintaining the dignity of the
employee as a ‘human-being’; (ii) providing maximum opportunity for personal
development; (Hi) providing healthy relationship between different work groups so that
work is effectively performed; (iv) improving the employees’ working skill and capacity;
(v) correcting the errors of wrong postings and proper reallocation of work.

3. Significance for Individual Enterprise: It can help the organization in accomplishing

its goals by: (i) creating right attitude among the employees through effective
motivation; (ii) utilizing effectively the available goals of the enterprise and fulfilling
their own social and other psychological needs of recognition, love, affection,
belongingness, esteem and self-actualization. Dynamic and growth - oriented
organization do require effective management of people in a fast - changing
environment. Organizations flourish only through the efforts and competencies of their
human resources. Employee capabilities must continuously be acquired, sharpened,
and used.

Any organization will have proper human resource management (i) to improve the
capabilities of an individual; (ii) to develop team spirit of an individual and the
department; and (Hi) to obtain necessaiy co - operation from the employees to
promote organizational effectiveness.

Functions of HRM

Human Resources management has an important role to play in equipping

organizations to meet the challenges of an expanding and increasingly competitive
sector. Increase in staff numbers, contractual diversification and changes in
demographic profile which compel the HR managers to reconfigure the role and
significance of human resources management.

The functions are responsive to current staffing needs, but can be proactive in
reshaping organizational objectives. All the functions of HRM are correlated with the
core objectives of HRM . For example personal objectives are sought to be realized
through functions like remuneration, assessment etc.
HR management can be thought of as seven interlinked functions taking place within
organizations, as depicted in Figure below. Additionally, external forces—legal,
economic, technological, global, environmental, cultural/geographic, political, and
social—significantly affect how HR functions are designed, managed, and changed.

1. Strategic HR Management: As a part of maintaining organizational competitiveness,

strategic planning for HR effectiveness can be increased through the use of HR
metrics and HR technology. Human resource planning (HRP) function determine the
number and type of employees needed to accomplish organizational goals.

HRP includes creating venture teams with a balanced skill-mix, recruiting the right
people, and voluntary team assignment. This function analyzes and determines
personnel needs in order to create effective innovation teams. The basic HRP
strategies are staffing and employee development.

2. Equal Employment Opportunity. Compliance with equal employment opportunity

(EEO) laws and regulations affect all other HR activities.3. Staffing: The aim of staffing
is to provide a sufficient supply of qualified individuals to fill jobs in an organization.
Job analysis, recruitment and selection are the main functions under staffing.

Workers job design and job analysis laid the foundation for staffing by identifying what
diverse people do in their jobs and how they are affected by them. Job analysis is the
process of describing the nature of a job and specifying the human requirements such
as knowledge, skills and experience needed to perform the job. The end result of job
analysis is job description. Job description spells out work duties and activities of
employees.

Through HR planning, managers anticipate the future supply of and demand for
employees and the nature of workforce issues, including the retention of employees.
So HRP precedes the actual selection of people for organization. These factors are
used when recruiting applicants for job openings. The selection process is concerned
with choosing qualified individuals to fill those jobs. In the selection function, the most
qualified applicants are selected for hiring from among the applicants based on the
extent to which their abilities and skills are matching with the job.

4. Talent Management and Development: Beginning with the orientation of new

employees, talent management and development includes different types of training.
Orientation is the first step towards helping a new employee to adjust himself with the
new job and the employer. It is a method to acquaint new employees with particular
aspects of their new job, including pay and benefit programmes, working hours and
company rules and expectations.

Training and Development programs provide useful means of assuring that the
employees are capable of performing their jobs at acceptable levels and also more
than that.

All the organizations provide training for new and inexperienced employee. In addition,
organization often provide both on the job and off the job training programmes for
those employees whose jobs are undergoing change.

Likewise, HR development and succession planning of employees and managers both

are necessary to prepare for future challenges. Career planning has developed as
result of the desire of many employees to grow in their jobs and to advance in their
career. Career planning activities include assessing an individual employee’s potential
for growth and advancement in the organization.

Performance appraisal includes encouraging risk taking, demanding innovation,

generating or adopting new tasks, peer evaluation, frequent evaluations and auditing
innovation processes.

This function monitors employee performance to ensure that it is at acceptable levels

or not. This strategy appraises individual and team performance so that there is a- link
between individual innovativeness and company profitability. Which tasks should be

appraised and who should assess employees’ performance are also taken into
account.

5. Total Rewards: Compensation in the form of pay, incentives and benefits are the
rewards given to the employees for performing organizational work. Compensation
management is the method for determining how much employees should be paid for
performing certain jobs. Compensation affects staffing and in the matter of staffing;
people are generally attracted to organizations offering a higher level of pay in
exchange of the work performed.
To be competitive, employers develop and refine their basic compensation systems
and may use variable pay programs such as incentive rewards, promotion from within
the team, recognition rewards, balancing team and individual rewards etc. This
function uses rewards to motivate personnel to achieve an organization's goals of
productivity, innovation and profitability.

Compensation is also related to employee development in the matter of compensation;

it provides an important incentive for motivating employees to higher levels of job
performance in the organization. Benefits are another form of compensation to
employees other than direct pay for the work performed. Benefits include both legally
required items and those offered at employer’s discretion. Benefits are primarily
related to the area of employee maintenance as they provide for many basic employee
needs.

6. Risk Management and Worker Protection-. HRM addresses various workplace risks
to ensure protection of workers by meeting legal requirements and being more
responsive to concern for workplace health and safety along with disaster and
recovery planning.

7. Employee and Labor Relations: The relationship between managers and their
employees must be handled legally and effectively. Employer and employee rights
must be addressed. It is important to develop, communicate and update HR policies
and procedures so that managers and employees alike know what is expected. In
some organizations, union/management relations must be addressed as well.

The term labour relation refers to the interaction with employees who are represented
by a trade union. Unions are organization of employees who join together to obtain
more voice in decisions affecting wages, benefits, working conditions and other
aspects of employment. With regard to labour relations the major function of HR
personnel includes negotiating with the unions regarding wages, service conditions
and resolving disputes and grievances.

Challenges of HRM in Indian Economy

1. Globalization: - Growing internationalization of business has its impact on HRM in

terms of problems of unfamiliar laws, languages, practices, competitions, attitudes,

management styles, work ethics and more. HR managers have a challenge to deal
with more functions, more heterogeneous functions and more involvement in
employee’s personal life.

2. Corporate Re-organizations: - Reorganization relates to mergers and acquisitions,

joint ventures, take over, internal restructuring of organizations. In these situations, it
is difficult to imagine circumstances that pose a greater challenge for HRM than
reorganizations itself. It is a challenge to manage employees’ anxiety, uncertainties,
insecurities and fears during these dynamic trends.

3. New Organizational forms: - The basic challenge to HRM comes from the changing
character of competitions. The competition is not between individual firms but between
constellations of firm. Major companies are operating through a complex web of
strategic alliances, forgings with local suppliers etc. These relationships give birth to
completely new forms of organizational structure, which highly depend upon a regular
exchange of people and information. The challenge for HRM is to cope with the
implications of these newly networked relations more and more, in place of more
comfortable hierarchical relationships that existed within the organizations for ages in
the past.

4. Changing Demographics of Workforce: - Changes in workforce are largely reflected

by dual career couples, large chunk of young blood between age old superannuating
employees, working mothers, more educated and aware workers etc. These dynamic
workforces have their own implications for HR managers and from HRM point of view
is a true challenge to handle.

5. Changed employee expectations: - With the changes in workforce

demographics,employee expectations and attitudes have also transformed.
Traditional allurements like job security, house, and remunerations are not much
attractive today, rather employees are demanding empowerment and equality with
management. Hence' it is a challenge for HRM to redesign the profile of workers, and
discover new methods of hiring, training, remunerating and motivating employees.

6. New Industrial Relations Approach: - In today’s dynamic world, even unions have
understood that strikes and militancy have lost their relevance and unions are greatly
affected by it. The trade union membership has fallen drastically worldwide and the
future of labor movement is in danger. The challenge before HRM is to adopt a
proactive industrial relations approach which should enable HR specialist to look into
challenges unfolding in the future and to be prepared no convert them into
opportunities.

7. Renewed People Focus: - The need of today’s world and business is the people’s

approach. The structure, strategy, systems approach which worked in post war era is
no more relevant in today’s economic environment which is characterized by over
capacities and intense competition. The challenge of HR manager is to focus on
people and make them justifiable and sustainable.

8. Managing the Managers'. - Managers are unique tribe in any society, they believe
they are class apart. They demand decision-making, bossism and operational
freedom.

However in the post liberalization era, freedom given to managers is grossly misused
to get rid of talented and hard working juniors. The challenge of HRM is how to manage

this tribe? How to make them realize that the freedom given to them is to enable them
make quick decisions in the interest of the organization and not to resort to witch-
hunting.

9. Weaker Society interests: - Another challenge for HRM is to protect the interest of
weaker sections of society. The dramatic increase of women workers, minorities and
other backward communities in the workforce has resulted in the need for
organizations to reexamine their policies, practices and values. In the name of global
competition, productivity and quality the interests of the society around should not be
sacrificed. It is a challenge of today’s HR managers to see that these weaker sections
are neither denied their rightful jobs nor are discriminated against while in sendee.

10. Contribution to the success of organizations: - The biggest challenge to an HR

manager is to make all employees contribute to the success of the organization in an
ethical and socially responsible way. Because society’s well being to a large extent
depends on its organizations.