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Module 3

Objectives of HRM
attract and retain talent

train people for challenging roles

develop skills and competencies promote team spirit develop loyalty and commitment increase productivity and profits improve job satisfaction enhance standard of living generate employment opportunities

Scope of HRM Personnel Management:

This is typically direct manpower management that involves manpower planning, hiring (recruitment and selection), training and development, induction and orientation, transfer, promotion, compensation, layoff and retrenchment, employee productivity. The overall objective here is to ascertain individual growth, development and effectiveness which indirectly contribute to organizational development. It also includes performance appraisal, developing new skills, disbursement of wages, incentives, allowances, traveling policies and procedures and other related courses of actions.

HRM in Employee Welfare:

This particular aspect of HRM deals with working conditions and amenities at workplace. This includes a wide array of responsibilities and services such as safety services, health services, welfare funds, social security and medical services. It also covers appointment of safety officers, making the environment worth working, eliminating workplace hazards, support by top management, job safety, safeguarding machinery, cleanliness, proper ventilation and lighting, sanitation, medical care, sickness benefits, employment injury benefits, personal injury benefits, maternity benefits, unemployment benefits and family benefits. It also relates to supervision, employee counseling, establishing harmonious relationships with employees, education and training. Employee welfare is about determining employees real needs and fulfilling them with active participation of both management and employees. In addition to this, it also takes care of canteen facilities, crches, rest and lunch rooms, housing, transport, medical assistance, education, health and safety, recreation facilities, etc.

HRM in Industrial Relations:

Since it is a highly sensitive area, it needs careful interactions with labor or employee unions, addressing their grievances and settling the disputes effectively in order to maintain peace and harmony in the organization. It is the art and science of understanding the employment (union-management) relations, joint consultation, disciplinary procedures, solving problems with mutual efforts, understanding human behavior and maintaining work relations, collective bargaining and settlement of disputes. The main aim is to safeguarding the interest of employees by securing the highest level of understanding to the extent that does not leave a negative impact on organization. It is about establishing, growing and promoting industrial democracy to safeguard the interests of both employees and management.

Functions of HRM
Operative Functions
Procurement Job Analysis HR planning

Managerial functions:


Development: Training Executive development

Motivation and Compensation: Job design Work scheduling Motivation Job evaluation Performance and potential appraisal Compensation administration

Maintenance: Health Safety Welfare Social security

Integration: Grievances Discipline Teams and teamwork Collective bargaining Participation Empowerment

Emerging Issues: Personnel records Personnel audit Personnel research HR accounting HRIS Job stress Mentoring International HRM

Recruitment Selection Placement

Career planning
Succession planning Human resources development strategies


Induction Internal mobility


Incentives benefits and services

Trade unions
Employers associations Industrial relations

Perspectives of HRM
Five different perspectives of human resource management (HRM) include the normative perspective, the critical perspective, behavioral perspective, systems perspective, and agency or transaction cost perspective.

The Normative Perspective

The normative perspective of human resource management bases itself on the concepts of hard HRM and soft HRM, on which the foundations of human resource management rest. The concept of Hard HRM is the basis for the traditional approach toward human resource management. This concept traces its origins to the Harvard model that links workforce management to organizational strategy. Hard HRM stresses the linkage of functional areas such as manpower planning, job analysis, recruitment, compensation and benefits, performance evaluations, contract negotiations, and labor legislations to corporate strategy. This enforces organization interests over the employees' conflicting ambitions and interests. It views the workforce as passive resources that the organization can use and dispose at will. Soft HRM is synonymous with the Michigan model of human resources and is the bedrock of the modern approach to strategic human resource management. This model considers human capital as assets rather than resources and lays stress on organizational development, conflict management, leadership development, organizational culture, and relationship building as a means of increasing trust and ensuring performance through collaboration. This approach works under the assumption that what is good for the organization is also good for the employee.

The Critical Perspective of Human Resource Management

The critical perspective of human resource management is a reaction against the normative perception. This highlights some inherent contradictions within the normative perspective. This perspective espouses a gap between rhetoric, as organizations claim to follow soft HRM policies when they actually enforce hard HRM. A study by Hope-Hailey et al. (1997) finds that while most organizations claim employees to be their most important assets and make many commitments for their welfare and development, in reality employers enforce a hard HRM-based strategic control, and the interests of the organization always take priority over the individual employee.

The Behavioral Perspective of Human Resource Management

The behavioral perspective of human resource management has its roots in the contingency theory that considers employee behavior as the mediator between strategy and organizational performance. This theory holds that the purpose of human resource intervention is to control employee attitudes and behaviors to suit the various strategies adopted to attain the desired performance. This perspective thus bases itself on the role behavior of employees instead of their skills, knowledge, and abilities. For instance, an organization aiming to innovate will require a workforce that demonstrates a high degree of innovative behavior such as long-term focus, cooperation, concern for quality, creativity, propensity for risk taking, and similar qualities. The role of human resource management in such a context is to inculcate and reinforce such behavioral patterns in the workforce.

The systems perspective describes an organization in terms of input, throughput, and output, with all these systems involved in transactions with a surrounding environment. The organized activities of employees constitute the input, the transformation of energies within the system at throughput, and the resulting product or service the output. A negative feedback loop provides communications on discrepancies. The role of human resource management in the systems perspective is Competence management to ensure that the workforce has the required competencies such as skills and ability to provide the input needed by the organization. Behavior management through performance evaluation, pay systems, and other methods to ensure job satisfaction, so that employees work according to the organizational strategy, ultimately boosting productivity. Setting up mechanisms to buffer the technological core from the environment in closed systems. Facilitating interactions with the environment in open systems.

The Systems Perspective of Human Resource Management

Among the different perspectives of human resource management is the agency or transaction cost perspective, which holds the view that the strong natural inclination of people working in groups is to reduce their performance and rely on the efforts of others in the group. When one person delegates responsibility to another person, conflicts of interests invariably arise. The major role of human resource management in such a context is to promote alternative ways of controlling behavior to reduce the effects of such conflicts and minimize the cost to the organization. The two major approaches include
Monitoring employee behavior and preventing shrink of work by establishing effective control systems and improving productivity. Providing employees with incentives such as rewards, motivation, and job satisfaction to increase their individual performance.

Agency or Transaction Cost Perspective of Human Resource Management

The human resource department needs to adopt the approach that minimizes transaction cost to the organization.

Strategic Human Resource Management

Competitive advantage through people
Competitive advantage allows a firm to gain an edge over its rivals when competing. It comes from a firms unique ability to perform activities more distinctively and more effectively than rivals. HR can be a source of competitive advantage when the talents of people working in the firm are valuable, rare; difficult to imitate and well organised to deliver efficient and effective results

Traditional HR vs. Strategic HR

Point of distinction Focus Role of HR Initiatives Time horizon Control Job design Traditional HR Employee Relations Transactional change follower and respondent Slow, reactive, fragmented Short-term Strategic HR Partnerships with internal and external customers Transformational change leader and initiator Fast, proactive and integrated Short, medium and long (as required) Organic-flexible, whatever is necessary to succeed Broad, flexible, cross-training teams

Bureaucratic-roles, policies, procedures

Tight division of labour; independence, specialisation Capital, products

Key investments Accountability Responsibility for HR

Cost centre
Staff specialists

People, knowledge Investment centre Line managers

Model of SHRM