Pachavellam Education :: bba-5b-07-human-resources-managment-Study Materials

MODULE 1

MODULE I

INTRODUCTION TO HUMAN RESOURCE MANAGEMENT

Human Resource management is the most happening function as of now. This is so because people offer competitive advantage to a firm and managing people is the domain of HRM. An organisation enjoys competitive advantage when it is the only one which can offer a product at a price and at quality while its competitors cannot do so.

Fast changes are taking place in the business environment. An organisation must have the ability to absorb these changes at a fast rate than in the past, not simply to prove its competency alone but to justify its existence in the dynamic business world as well. All organisations, whether large or small must ensure themselves that they have the competent people capable of accepting this challenge.

Human resource management is a relatively modern concept, which involves the arrangement of ideas and practices in managing people. Human resource is the most valuable resource in any organisation because it can function only through people.

Human Resource Management has come to be recognized as an inherent part of management, which is concerned with the human resources of an organisation. Its objective is the maintenance of better human relations in the organisation by the development, application and evaluation of policies, procedures and programs relating to human resources to optimise their contribution towards the realisation of organisational objectives.

In other words, HRM is concerned with getting better results with the collaboration of people. It is an integral but distinctive part of management, concerned with people at work and their relationships within the enterprise. HRM helps in attaining maximum individual development, desirable working relationship between employees and employers, employees and employees, and effective modelling of human resources as contrasted with physical resources. It is the recruitment, selection, development, utilisation, compensation and motivation of human resources by the organisation.

CONCEPT OF HUMAN RESOURCE MANAGEMENT

What exactly is human resource management? Many people find HRM to be an unclear and strange concept. ‘This is not simply because of having

variety of meanings to this term. This confusion is mainly due to the different interpretations found in articles and books about human resource management.

HRM is the philosophy of people management based on the belief that human resources are extremely important for sustained business success. An organization acquires competitive advantage by using its people effectively and utilizing their expertise to meet clearly defined objectives. HRM is aimed at recruiting capable, flexible and committed people. Managing and rewarding their performance and developing key competencies.

Meaning and Definition

Human Resource Management is the process of recruitment, selection of employee, providing proper orientation and induction, providing proper training and the developing skills, assessment of employee (performance of appraisal), providing proper compensation and benefits, motivating, maintaining proper relations with labor and with trade unions,

maintaining employee’s safety, welfare and health by complying with labor laws of concern state or country.

Many great scholars had defined human resource management in different ways and with different words, but the core meaning of the human resource management deals with how to manage people or employees in the organization.

Edwin Flippo defines- HRM as “planning, organizing, directing, controlling of procurement, development, compensation, integration, maintenance and separation of human resources to the end that individual, organizational and social objectives are achieved.”

The National Institute of Personal Management (NIPM) of India has defined human resources – personal management 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 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”.

FEATURES OF HRM

The features of human resource management can be highlighted as follows:

1. It is an inherent part of management: Human resource management is inherent in the process of management. This function is performed by all the managers throughout the organisation rather that by the personnel department only. If a manager is to get the best of his people, he must undertake the basic responsibility of selecting people who will work under him.

2. It is a pervasive function: Human Resource Management is a pervasive function of management. It is performed by all managers at various levels in the organisation. It is not a responsibility that a manager can leave completely to someone else. However, he may secure advice and help in managing people from experts who have special competence in personnel management and industrial relations.

3. It is basic to all functional areas: Human Resource Management permeates all the functional area of management such as production management, financial management, and marketing management. That is every manager from top to bottom, working in any department has to perform the personnel functions.

4. It is people centered: Human Resource Management is people centered and is relevant in all types of organisations. It is concerned with all categories of personnel from top to the bottom of the organisation. The broad classification of personnel in an industrial enterprise may be as follows: (i) Blue-collar workers (i.e. those working on machines and engaged in loading, unloading etc.) and white-collar workers (i.e. clerical employees),

(ii) Managerial and nonmanagerial personnel, (iii) Professionals (such as Chartered Accountant, Company Secretary, Lawyer, etc.) and non-professional personnel.

5. It involves Personnel Activities or Functions: Human Resource Management involves several functions concerned with the management of people at work. It includes manpower planning, employment, placement, training, appraisal and compensation of employees. For the performance of these activities efficiently, a separate department known as Personnel Department is created in most of the organisations.

6. It is a continuous process: Human Resource Management is not a “one shot” function. It must be performed continuously if the organisational objectives are to be achieved smoothly.

7. It is based on Human Relations: Human Resource Management is concerned with the motivation of human resources in the organisation. The human beings can‘t be dealt with like physical factors of production. Every person has different needs, perceptions and expectations.

The managers should give due attention to these factors. They require human relations skills to deal with the people at work. Human relations skills are also required in training performance appraisal, transfer and promotion of subordinates

Evolution of HRM

The evolution of the concept of Human Resource Management can be analysed as follows:

Period before industrial revolution – The society was primarily an agriculture economy with limited production. Number of specialized crafts was limited and was usually carried out within a village or community with apprentices assisting the master craftsmen. Communication channel were limited.

Period of industrial revolution (1750 to 1850) – Industrial revolution marked the conversion of economy from agriculture based upon industry. Modernization and increased means of communication gave way to industrial setup. A department was set up to look into workers wages, welfare and other related issues. This led to emergence of personnel management with the major task as

- Worker’s wages and salaries

- Worker’s record maintenance

- Worker’s housing facilities and health care

An important event in industrial revolution was growth of Labour Union (1790) the works working in the industries or factories were subjected to long working hours and very less wages. With growing unrest, workers across the world started protest and this led to the establishment of Labour unions. To deal with labour issues at one end and management at the other Personnel Management department had to be capable of politics and diplomacy, thus the industrial relation department emerged.

Post Industrial revolution – The term Human resource Management saw a major evolution after 1850. Various studies were released and many experiments were conducted during this period which gave HRM altogether a new meaning and importance.

A brief overview of major theories release during this period is presented below

Frederick W. Taylor gave principles of scientific management (1857 to 1911) led to the evolution of scientific human resource management approach which was involved in - Worker’s training

- Maintaining wage uniformity

- Focus on attaining better productivity.

Hawthorne studies, conducted by Elton Mayo & Fritz Roethlisberger (1927 to 1940). – Observations and findings of Hawthorne experiment shifted the focus of Human resource from

maintaining employee’s safety, welfare and health by complying with labor laws of concern state or country.

FEATURES OF HRM

The features of human resource management can be highlighted as follows:

(ii) Managerial and nonmanagerial personnel, (iii) Professionals (such as Chartered Accountant, Company Secretary, Lawyer, etc.) and non-professional personnel.

6. It is a continuous process: Human Resource Management is not a “one shot” function. It must be performed continuously if the organisational objectives are to be achieved smoothly.

Evolution of HRM

The evolution of the concept of Human Resource Management can be analysed as follows:

- Worker’s wages and salaries

- Worker’s record maintenance

- Worker’s housing facilities and health care

A brief overview of major theories release during this period is presented belowFrederick W. Taylor gave principles of scientific management (1857 to 1911) led to the evolution of scientific human resource management approach which was involved in - Worker’s training

- Maintaining wage uniformity

- Focus on attaining better productivity.

Hawthorne studies, conducted by Elton Mayo & Fritz Roethlisberger (1927 to 1940). – Observations and findings of Hawthorne experiment shifted the focus of Human resource from

increasing worker’s productivity to increasing worker’s

efficiency through greater work satisfaction.

Douglas McGregor Theory X and Theory Y (1960) and Abraham Maslow’s Hierarchy of needs (1954) – These studies and observations led to the transition from the administrative and passive Personnel Management approach to a more dynamic Human Resource Management approach which considered workers as a valuable resource.

As a result of these principles and studies, Human resource management became increasingly line management function, linked to core business operations. Some of the major activities of HR department are listed as-

1. Recruitment and selection of skilled workforce.

2. Motivation and employee benefits

3. Training and development of workforce

4. Performance related salaries and appraisals.

APPROACHES TO HRM

John Storey (1989) distinguished two approaches that describe the concept of Human Resources Management.

Hard HRM

The hard version of HRM traces its roots from the concept of scientific management postulated by Fredrick W Taylor in the early 20th century.

Basically scientific management advocated for the adoption of a set of management techniques that would increase Organizational efficiency and productivity.

The management techniques mainly involved the scientific measurement of work through time and method studies, standardization of work tools, functional foremanship, differential pay-rate systems, cost containment and instructional cards for workers etc.

The humane side of scientific management was that it embraced the concept of the worker as a “rational economic man whose individualistic nature required motivation to gain the best out of him.

NB: The Hard HRM version resembles in many ways the characteristics of scientific management mentioned above.

The fundamental point to note is that Hard HRM like scientific management seeks to achieve organizational efficiency through the organization’s human resources.

This is achieved through utilitarian instrumentalism, which entails that organizations must use their human resources to achieve its desired goals.

Thus Hard HRM is quantitative in nature as it focuses on the strategic needs of the organization in terms of the amount of human resources it requires and which must be treated with rationality like any other factor of production.

Hard HRM is purely market driven and it adopts a business-oriented philosophy as it aims to manage people in a way that adds value and one which brings competitive advantage.

The hard version of HRM is more common in a capitalist set up where people are regarded as human capital, which can bring profit after investing in it.

Also the worker is regarded as a commodity, which can be exchanged.

Soft HRM

The soft version of HRM traces its roots to the human relations school of thought led by Elton Mayo in the Hawthorne studies from 1927-1932 at the Western Electric Company in Chicago.

Human Relations emphasized the human dimension of workers through the demonstration of the importance of group pressures, social relations, and attitudes towards supervision as determinants of productivity.

The organization is a social system as well as a techno - economic system with emphasis on the importance of both the formal and the informal group.

Similarly soft HRM is premised on the need to treat employees as ‘whole men’, valued assets, and the most important source of competitive advantage as opposed to treating them as objects.

It emphasizes more on effective communication, training and development, motivation, culture, values and involvement as sources of employee commitment, which is crucial for gaining competitive advantage.

The thrust of soft HRM is thus based on mutuality of purpose, which renders it unitarist in nature.

NB: Soft HRM can be said to embrace developmental humanism as opposed to utilitarian instrumentalism in hard HRM

H R Management Vs. Personnel Management

HRM	Personnel Management
HRM is the latest development in the evaluation of management of man	Personnel management precedes HRM
It gives more importance to the abilities of employees rather than evaluating them as per rules.	Performance is evaluated within the framework of rules.
It works on the basis of integrated initiative	It works on the basis of piecemeal initiative
Process of decision making is fast	Process of decision making is slow
It supports performance related remuneration	It supports fixed remuneration
It uses latest techniques of training and development	It uses outdated techniques of training and Development
It practices division of work along with team work	It practices only division of work
It favours all round development of employees	It favours contractual employment based on written agreement

Scope of Human Resource Management

1. Personnel Aspect

Human Resource Planning – It is the process by which the organization identifies the number of jobs vacant.

Job Analysis and Job Design – Job analysis is the systematic process for gathering, documenting, and analyzing data about the work required for a job.

Job analysis is the procedure for identifying those duties or behavior that defines a job.

Recruitment and Selection – Recruitment is the process of preparing advertisements on the basis of information collected from job analysis and publishing it in newspaper. Selection is the process of choosing the best candidate among the candidates applied for the job.

Orientation and Induction – Making the selected candidate informed about the organization’s background, culture, values, and work ethics.

Training and Development – Training is provided to both new and existing employees to improve their performance.

Performance Appraisal – Performance check is done of every employee by Human Resource Management. Promotions, transfers, incentives, and salary increments are decided on the basis of employee performance appraisal.

Compensation Planning and Remuneration – It is the job of Human Resource Management to plan compensation and remunerate.

Motivation – Human Resource Management tries to keep employees motivated so that employees put their maximum efforts in work.

1. Welfare Aspect – Human Resource Management have to follow certain health and safety regulations for the benefit of employees. It deals with working conditions, and amenities like - canteens, crèches, rest and lunch rooms, housing, transport, medical assistance, education, health and safety, recreation facilities, etc.

2. Industrial Relation Aspect – HRM works to maintain co- ordinal relation with the union members to avoid strikes or lockouts to ensure smooth functioning of the organisation. It also covers - joint consultation, collective bargaining, grievance and disciplinary procedures, and dispute settlement.

Importance of Human Resource Management

Human Resource Management is related with effective utilization of human resources. The importance of HRM can be discussed as:

1. Importance concerned with individual organization

Human Resource Management can help an organization to achieve to its objective more efficiently and effectively in the followingways:

(a) Procurement of required talents through recruitment, selection, placement, inducting, training, compensation and promotion policies.

(b) Secures co-operation of all employee of the organization for achieving goals.

(a) Proper utilization of human resources for the success of the enterprise.

(b) Ensure a future team of efficient ancompetent workers required for the organization.

1. Professional Importance

Professional competency among employees can be achieved through the following ways.

(a) Human resource management provides maximum opportunities to employees for their personnel development.

(b) Providing healthy relationship among employees

(d) Providing training facilities for the individual development of employees.

2. Social Importance

HRM is important in social perspective also. It includes the following aspects:

(a) Human resource management enhances the dignity of labour.

(b) Provides suitable job to suitable person and it will help to satisfy the psychological and social satisfaction of employees.

(d) Helps to maintain a balance between jobs and job seekers in terms of numbers, qualification, aptitude etc.

(a) Takes health and safety measures which ensures physical and mental health of the employees.

1. National Importance

Effective management of human resources will speed up the economic growth of nation. This in turn leads to better standard of living and more job opportunities.

Human Resource Management: Objectives

• To help the organization reach its goals.

• To ensure effective utilization and maximum development of

human resources.

• To ensure respect for human beings.Toidentify and satisfy the needs of individuals.

• To ensure reconciliation of individual goals with those of the

organization.

• To achieve and maintain high morale among employees.

• To provide the organization with well-trained and well- motivated employees.

• To increase to the fullest the employee’s job satisfaction and

self-actualization.

• To develop and maintain a quality of work life.

• To be ethically and socially responsive to the needs of society.

• To develop overall personality of each employee in its multidimensional aspect.

• To enhance employee’s capabilities to perform the present job.

• To equip the employees with precision and clarity in

transactions of business.

• To inculcate the sense of team spirit, team work and inter-team collaboration.

Human Resource Activities

In order to achieve the above objectives, Human Resource Management undertakes the following activities:

1. Human resource or manpower planning.

2. Recruitment, selection and placement of personnel.

3. Training and development of employees.

4. Appraisal of performance of employees.

5. Taking corrective steps such as transfer from one job to another.

6. Remuneration of employees.

7. Social security and welfare of employees.

8. Setting general and specific management policy for organizational relationship.

9. Collective bargaining, contract negotiation and grievance handling.

10. Staffing the organization.

11. Aiding in the self-development of employees at all levels.

12. Developing and maintaining motivation for workers by providing incentives.

13. Reviewing and auditing manpower management in the organization

14. Potential Appraisal Feedback Counseling.

15. Role Analysis for job occupants.

16. Job Rotation.

17. Quality Circle, Organization development and Quality of Working Life

Functions

Human Resource Management Functions: Managerial,

Operative and Advisory Function

Some of the major functions of human resource management are as follows:

1. Managerial Functions

2. Operative Functions

3. Advisory Functions.

Human Resource or Personnel Department is established in most of the organizations, under the charge of an executive known as Human Resource/Personnel Manager. This department plays an important role in the efficient management of human resources.

The personnel department gives assistance and provides service to all other departments on personnel matters. Though personnel or human resource manager is a staff officer in relation to other departments of the enterprise, he has a line authority to get orders executed within his department.

(i)Managerial,

(ii) Operative and

(iii) Advisory functions.

1. Managerial Functions:

The Human Resource Manager is a part of the organisational management. So he must perform the basic managerial functions of planning, organising, directing and controlling in relation to his department.

There functions are briefly discussed below:

1. Planning:

To get things done through the subordinates, a manager must plan ahead. Planning is necessary to determine the goals of the organisation and lay down policies and procedures to reach the goals. For a human resource manager, planning means the determination of personnel programs that will contribute to the goals of the enterprise, i.e., anticipating vacancies, planning job requirements, job descriptions and determination of the sources of recruitment.

The process of personnel planning involves three essential steps.

Firstly, a supply and demand forecast for each job category is made. This step requires knowledge to both labour market conditions and the strategic posture and goals of the organisation.

Secondly, net shortage and excess of personnel by job category are projected for a specific time horizon.

Finally, plans are developed to eliminate the forecast shortages and excess of particular categories of human resources.

1.Organizing:

Once the human resource manager has established objectives and developed plans and programs to reach them, he must design and develop organisation structure to carry out the various operations.

The organization structure basically includes the following:

(i) Grouping of personnel activity logically into functions or positions;

(ii) Assignment of different functions to different individuals;

(iii) Delegation of authority according to the tasks assigned and responsibilities involved;

(iv) Co-ordination of activities of different individuals.

2. Directing:

The plans are to be pure into effect by people. But how smoothly the plans are implemented depends on the motivation of people. The direction function of the personnel manager involves encouraging people to work willingly and effectively for the goals of the enterprise.

In other words, the direction function is meant to guide and motivate the people to accomplish the personnel programs. The personnel manager can motivate the employees in an organisation through career planning, salary administration, ensuring employee morale, developing cordial relationships and provision of safety requirements and welfare of employees.

The motivational function poses a great challenge for any manager. The personnel manager must have the ability to identify the needs of employees and the means and methods of satisfy those needs.

Motivation is a continuous process as new needs and expectations emerge among employees when old ones are satisfied.

1. Controlling:

Controlling is concerned with the regulation of activities in accordance with the plans, which in turn have been formulated on the basis of the objectives of the organisation. Thus, controlling completes the cycle and leads back to planning. It involves the observation and comparison of results with the standards and correction of deviations that may occur.

Controlling helps the personnel manager to evaluate the control the performance of the personnel department in terms of various operative functions. It involves performance appraisal, critical examination of personnel records and statistics and personnel audit.

2. Operative Functions:

The operative functions are those tasks or duties which are specifically entrusted to the human resource or personnel department. These are concerned with employment, development, compensation, integration and maintenance of personnel of the organisation.

The operative functions of human resource or personnel department are discussed below:

1. Employment:

The first operative function of the human resource of personnel department is the employment of proper kind and number of persons necessary to achieve the objectives of the organisation. This involves recruitment, selection, placement, etc. of the personnel.

Before these processes are performed, it is better to determine the manpower requirements both in terms of number and quality of the personnel. Recruitment and selection cover the sources of supply of labour and the devices designed to select the right type of people for various jobs. Induction and placement of personnel for their better performance also come under the employment or procurement function.

2. Development:

Training and development of personnel is a follow up of the employment function. It is a duty of management to train each employee property to develop technical skills for the job for which he has been employed and also to develop him for the higher jobs in the organisation. Proper development of personnel is necessary to increase their skills in doing their jobs and in satisfying their growth need.

For this purpose, the personnel departments will device appropriate training programs. There are several on- the-job and off-the-job methods available for training purposes. A good training program should include a mixture of both types of methods. It is important to point out that personnel department arranges for training not only of new employees but also of old employees to update their knowledge in the use of latest techniques.

3. Compensation:

This function is concerned with the determination of adequate and equitable remuneration of the employees in the organisation of their contribution to the organisational goals. The personnel can be compensated both in terms of monetary as well as non- monetary rewards.

Factors which must be borne in mind while fixing the remuneration of personnel are their basic needs, requirements of jobs, legal provisions regarding minimum wages, capacity of the organisation to pay, wage level afforded by competitors etc. For fixing the wage levels, the personnel department can make use of certain techniques like job evaluation and performance appraisal.

4. Maintenance (Working Conditions and Welfare):

Merely appointment and training of people is not sufficient; they must be provided with good working, conditions so that they may like their work and workplace and maintain their efficiency.

Working conditions certainly influence the motivation and morale of the employees.

These include measures taken for health, safety, and comfort of the workforce. The personnel department also provides for various welfare services which relate to the physical and social wellbeing of the employees. These may include provision of cafeteria, rest rooms, counseling, group insurance, education for children of employees, recreational facilities, etc.

5. Motivation:

Employees work in the organisation for the satisfaction of their needs. In many of the cases, it is found that they do not contribute towards the organisational goals as much as they can. This happens because employees are not adequately motivated. The human resource manager helps the various departmental managers to design a system of financial and non-financial rewards to motivate the employees.

6. Personnel Records:

The human resource or personnel department maintains the records of the employees working in the enterprise. It keeps full records of their training, achievements, transfer, promotion, etc. It also preserves many other records relating to the behaviour of personnel like absenteeism and labour turnover and the personnel programs and policies of the organisation.

7. Industrial Relations:

These days, the responsibility of maintaining good industrial relations is mainly discharged by the human resource manager. The human resource manager can help in collective bargaining, joint consultation and settlement of disputes, if the need arises. This is because of the fact that he is in possession of full information relating to personnel and has the working knowledge of various labour enactments.

The human resource manager can do a great deal in maintaining industrial peace in the organisation as he is deeply associated with various committees on discipline, labour welfare, safety, grievance, etc. He helps in laying down the grievance procedure to redress the grievances of the employees. He also gives authentic information to the trade union leaders and conveys their views on various labour problems to the top management.

8. Separation:

Since the first function of human resource management is to procure the employees, it is logical that the last should be the separation and return of that person to society. Most people do not die on the job. The organisation is responsible for meeting certain requirements of due process in separation, as well as assuring that the returned person is in as good shape as possible.

The personnel manager has to ensure the release of retirement benefits to the retiring personnel in time.

3. Advisory Functions:

Human resource manager has specialized education and training in managing human resources. He is an expert in his area and so can give advice on matters relating to human resources of the organization.

He offers his advice to:

1. Advised to Top Management:

Personnel manager advises the top management in formulation and evaluation of personnel programs, policies and procedures. He also gives advice for achieving and maintaining good human relations and high employee morale.

2. Advised to Departmental Heads:

Personnel manager offers advice to the heads of various departments on matters such as manpower planning, job analysis and design, recruitment and selection, placement, training, performance appraisal, etc.

Personnel Management vs. Human Resource Management

Both the terms refer to the one and the same function of the management and that is managing the people at work. However, Human Resource Management is mainly focused on best utilizing the man power by understanding their strength and weaknesses and engaging them in different occupations so that their productivity can be increased. Therefore, training and development and employee engagements are part of it. Personnel Management, on the other hand, is mainly concerned with

maintaining good employee- employer relationship and activities connected with it. Therefore, Personnel Management mainly works around Industrial/ Employee/ Labour Relations and activities connected with grievance handling, negotiations, enforcement of labour statute, looking after welfare of employees and so on.

Personnel Management is thus basically an administrative record- keeping function, at the operational level. Personnel Management attempts to maintain fair terms and conditions of employment, while at the same time, efficiently managing personnel activities for individual departments etc. It is assumed that the outcomes from providing justice and achieving efficiency in the management of personnel activities will result ultimately in achieving organizational success.

Human resource management is the new version of personnel management. There is no any watertight difference between human resource management and personnel management. However, there are some differences in the following matters.

1. Personnel management is a traditional approach of managing people in the organization. Human resource management is a modern approach of managing people and their strengths in the organization.

2. Personnel management focuses on personnel administration, employee welfare and labor relation. Human resource management focuses on acquisition, development, motivation and maintenance of human resources in the organization.

3. Personnel management assumes people as a input for achieving desired output. Human resource management assumes people as an important and valuable resource for achieving desired output.

4. Under personnel management, personnel function is undertaken for employee's satisfaction. Under human resource management, administrative function is undertaken for goal achievement.

5. Under personnel management, job design is done on the basis of division of labor. Under human resource management, job design function is done on the basis of group work/team work.

6. Under personnel management, employees are provided with less training and development opportunities. Under human resource management, employees are provided with more training and development opportunities.

7. In personnel management, decisions are made by the top management as per the rules andregulation of the organization. In human resource management, decisions are made collectively after considering employee's participation, authority, decentralization, competitive environment etc.

8. Personnel management focuses on increased production and satisfied employees. Human resource management focuses on effectiveness, culture, productivity and employee's participation.

9. Personnel management is concerned with personnel manager. Human resource management is concerned with all level of managers from top to bottom.

10. Personnel management is a routine function. Human resource management is a strategic function.

New Role of Human Resource Management

Human Resource Management in the “New Millenium” has undergone a great revolution by questioning the accepted practices and re-inventing the organisations as well as structures.

Many traditional practices have been thrown out. As an example, it can be seen that hierarchies are vanishing and there is greater emphasis on flat organisations. It means a great deal of specialisation and skills. It also means upgrading the norms and standards of work as well as performance. The newrole of human resource management is much more strategic than before.

Some of the new directions of the role of HRM can be summed up as follows:

1. A Facilitator of Change: To carry people through upheaval requires the true management of human resources.

2. An Integrated Approach to Management: Rather than being an isolated function, human resource is regarded as a core activity, one which shapes a company‘s values. In particular, this can have an impact on customer service.

3. A Mediator: Establishing and balancing the new and emerging aspirations and requirements of the company and the individual.

HRM and competitive advantage

Competitive advantage in HR refers to the quality of the employees who can not be copied, unlike company's systems and processes. It comes down to the fact that companies with better employees have the competitive advantage.

HR is important as it helps in creating strong competitive advantage through their personnel management policies – productivity and employee happiness is

an advantage that often results in superior customer service, which helps drive sales.

Achieving competitive success through people requires a basic change in how managers think about their employees and how they view the working relationship.For gaining competitive advantage through people, Professor Pfeffer of Harvard University suggested few HRM guidelines and these are listed below:

Employment Security

Employment security is a critical element of a high-performance work arrangement. The security of employment signals a longstanding commitment by the organization to its workforces. Feeling of stable employment may generate loyalty, commitment, or willingness to expend extra efforts for the organization’s benefits.

Employment security enhances employee involvement because employees are more willing to contribute to the work process when they need not fear losing their own or co-workers’ jobs.

Selective Recruiting

Organizations serious about making a profit through people will expend the efforts needed to ensure that they recruit the right people in the first place. Organizations need to have a large applicant pool from which to select the right person. Organizations need to be clear about what are the most critical skills and attributes needed in their application pool. Care must be taken while selecting employees.

If organizations select a less qualified employee, he or she will be a burden for the organization for a long time.

High and Lucrative Wages

An organization can attract and retain qualified candidates if it pays a high and lucrative pay package. Higher wages tend to attract more outstanding applicants, permitting the organization to be more selective in finding people who will be committed to

the organization. Higher wages send a message that the organization values its people.

Incentive Pay

The pay system should be based on the performance or productivity of employees. Employees will contribute more if they earn more. The contingent incentive can take many forms, such as gain sharing, profit sharing, stock ownership, pay for skills, or various forms of individual or team incentives.

Employee Ownership

Organizations should make an employee a mini-employer. This can be done by a stock ownership plan. This may increase their sense of ownership. Employee ownership reduces conflict between labor and capital. Employee ownership puts stock in the hands of people. These employees are more inclined to take a long term view of the organization, its investment policies and strategies, and less likely to support hostile takeovers and acquisitions. It has a positive effect on the firm’s performance if managed properly.

Employee Empowerment and Participation

Empowerment indicates many things to many experts. It refers to mutual influence, creative distribution of power, and shared responsibility. It is a democratic and long-lasting process. Empowering enables people to use their talents and capabilities, fosters accomplishment, invests in learning, finds the spirit in an organization and builds effective relationships, informs, leads, coaches, serves, creates, and liberates. Participation increases both satisfaction and employee productivity. Managers should encourage the decentralization of decision making.

Information Sharing

If people are to be a source of competitive advantage, they must have the information necessary to do what is required to be successful. Information sharing is an essential element of high- performance work systems. The sharing of information on issues like budget, strategy, and financial performance conveys the people of an organization that they are trusted.

Training and Development of Skills

Training is an essential component of high-performance works systems because these systems rely on front line employee’s skill and initiative to identify and resolve problems, to initiate change in work methods, and to take responsibility for quality

Treat People with Respect and Dignity

Dignity is a term used in moral, ethical, legal, and political discussions to signify that human being has an innate right to be valued and receive ethical treatment. At the heart of human right, it is the belief that everybody should be treated equally and with dignity – no matter what their circumstances. This means that nobody should be

tortured or treated as an inhuman or degrading way. It also means that nobody has the right to ‘own’ another person or to force them to work under threat of punishment. And it means that everybody should have access to public services and the right to be treated fairly by those services. This applies to all public services, including the criminal justice system.

Wage Compression

Pay differential among the levels of management should be lower.

Wage compression between senior managers and other employees will reduce status differences and develop a sense of common fate. A huge pay gap may damage the cooperative spirit between managers and workers. Wage compression is the situation that occurs when there is only a small difference in pay between employees regardless of their skills or experience.

Promotion from Within

It is of vital importance to encourage employee promotion from within the organization. This practice may boost employee morale. It encourages training and skill development because of the availability of promotion opportunities within the firm bind workers to employers and vice versa.

നിങ്ങൾക്ക് ഉപകാരപ്പെട്ടെങ്കിൽ നിങ്ങളുടെ കൂട്ടുകാർക്ക് കൂടി ഷെയർ ചെയ്യുക