An Overview of Human Resource Management

Concept of Human Resource Management

Human resource management is the process of managing human abilities and competencies for achieving organisational goals. It is the act of getting and maintaining the best talents at the job to attain organisational goals at possibly low cost and maximum efficiency and effectiveness. A human being working in the organisation is considered a unique resource as it contains knowledge, skills and enormous potential to create organisational value. Thus, HRM conducts a series of activities like human resource planning, selection, motivation, developing and maintaining in the organisation.

According to DeCenzo and Robbins, "Human Resource Management is a process consisting of the acquisition, development, motivation and maintenance of human resources."

HRM ensures the right person is at the right place at the right time and their devotion and continuation of the organisation. It is both an art as well as science for managing the workforce in an organisation.

Characteristics of Human Resource Management

1. Human-centric: HRM treats employees as organisational assets.
2. Management function: It performs all the general management functions, i.e., planning, organising, leading and controlling.
3. Flexible: HRM is directly influenced by several changes in organizational environment, and its functions are to be updated and adjusted according to environmental needs.
4. Universal function: HRM has an unlimited scope or area of operation. All the managers from each level should be responsible for performing activities within the basic norms of HRM.
5. Non-terminating function: HRM activities are committed to long-term purposes as long as the existence of the organisation. It receives feedback from past performance for future course of action.
6. Collectivism approach: HRM promotes a feeling of team effort to achieve organisational goals. Each member of the organisation accepts the coexistence of others and maintains good industrial relations.
7. System approach: HRM is a system as it consists of input, processing and output and a feedback mechanism within the internal and external environment.
8. Strategic approach: The main purpose of human resource management is to ensure the organisational goals through the optimum use of human resources.
9. Complex to operate: Managing human resources is challenging, complex, energising, important and strategic. HRM should work with human psychology.

Objectives of HRM/Importance of HRM

1. To achieve goals: 

Goals cannot be achieved without the effective deployment of people. Work requires people to get things done. HRM encourages employees to be committed for organizational goal instead of personal goals by ensuring the attainment of personal goals with organisational goals.

• Organisational goals: profit maximisation, organisational growth, better customer service, survival in the market, market leadership, production efficiency, etc.
• Personal goals: good remuneration, compensation, personal growth, and advancement.
• Functional goals: proper resource allocation, planning, decision making, resource allocation, acquisition, development, utilisation, and maintenance.
• Society goals: social responsibility for the welfare of consumers and society, creation of employment opportunities.

2. To improve productivity:  

HRM focuses on higher degree productivity by efficient and effective utilisation of human resources through employee performance. Evaluation of performance and performance based incentive ensures higher organisational productivity.

3. To achieve cost efficiency: 

HRM believes that productivity can be improved through cost-effective utilisation of human resources. The right man at the right job with proper guidance, supervision and motivation can minimise the cost of operation.

4. To maintain organisational structure: 

HRM is responsible for designing and redesigning the jobs. It prepares job requirements and skills requirements. Authority for different job responsibilities is allocated to each job. Fixation of responsibility and allocation of authority help to maintain organisational structure.

 

5. To maintain harmonious relations: 

HRM maintains a harmonious relationship between employees and management by promoting a participatory management culture, effective compensation and reward management system, promoting an open communication system, etc.

6. To manage change: 

HRM is flexible, and its functions are to be updated and adjusted according to environmental needs. It promotes the readiness of employees to accept change. Without change, modern organisations cannot be competitive.

7. To promote quality work life: 

Human resource management improves the working environment in an organisation. It aims to motivate employees psychologically, which ultimately increases organisational efficiency.

8. To maintain employee discipline and morale: 

HRM maintains a working environment for self-respect, dignity and value. It coordinates and facilitates the working environment, praising and recognizing employee's effort.

 

People join the organization but they quit the manager. Being a manager is critically important and hard. While leaders have vision, inspire, are strategic and eager for change, managers implement policy. A human resource manager has an important role in an organisation because of the importance of human resource management.

Development of Human Resource Management Concept (Evolution of HRM)

How to best manage workers is an age-old problem. The modern concern with managing workers comes from the Industrial Revolution. The evolution of HRM = evolution of IDEAS, not just practices. Human resource management at current situation is the continuous development of various theories and practices. Different psychologists, scholars, researchers, management experts, and engineers have contributed a lot for development of the HRM concept.

The development of human resource management can be described in the following phases:

1. Early Scientific Management (Industrial Revolution):

 

• 1820-1840
• Workers in the industries were considered as paid dogs.
• Output was the prime concern of employers. 
• Hiring and firing were common. 
• The craftsmen, carpenters and apprentices started organising in the form of guilds and trade unions. 
• The guild raised its voice against the violation of workers' health and welfare.
• work relation and the relationship between employee and management had changed dramatically with industrial revolution.

 2. The Personnel Management Era:

• 1856-1904
• administration of record keeping, ensuring compliance with state policies, and basic recruitment, selection, training and development functions.
• Organisations started thinking of workers as employees, i.e. personnel.
• started planning for personnel's welfare, health and hygiene care, physical protection and financial protection.

3. Scientific Management Era (Taylorism):

• Fredrick Winslow Taylor first time in 1911 proposed scientific management with the publication of his book, "Principles of Scientific Management."
• focused in productivity of employees and the organisation.
• The organisational productivity can be increased with scientific selection of employees, the use of scientific methods for training and development, proper division of work, and harmonising the relationship between management and workers.
• Taylorism was followed by the application of psychological principles to managing workers.
• It's about not just getting technical conditions right but also getting human conditions right by focusing on skills and ability, engagement, group dynamics, and job satisfaction.
• It breaks down jobs into small, standardised repetitive tasks determined by managers, and workers are just hands.

 4. Human Relations Movement Era :

• after 1920 AD
• primarily focused on human relations, recognising the real spirit of employees.
• Human relation movement was started by researchers with studying work-place behavior of groups and industrial and organisational psychology.
• gives emphasis to human behaviour and the psychological aspects of human beings.
• sense of social responsibility, well-accepted norms and values, mutual respect and judgment of employees for their contribution were initiated.
• Hugo Munsterberg, Elton Mayo, Abraham Maslow, Douglas McGregor and Mary Parker Follett contributed in development of the human relations movement.

5. Human Resource Management Era:

• started with the late 20th century with the evolution of motivation theories.
• HR revolution era for a new positive approach to HR and talent management.
• A comprehensive set of recruitment, selection, socialisation, motivation, development, retention, etc., of employees.

6. Strategic Human Resource Management Era:

• emphasizes in integration of individual goals and corporate goals of the organisation.
• long-range policies and action plans are prepared for career growth, security and professional-work life balance of each employee.
• directly links to organisational profitability with compensation management.

In conclusion, early supervision emphasised strict monitoring and unquestioned authority of supervision and was Foreman's empire drive system. As people management strategies change over time, ideas matter. The current strategies are outdated, and managers always have a choice.

The Rising Interest in Human Resource Management due to:

•  Growing competition.
•  Globalization.
•  Increasing diversity in the workforce.
•  Increasing complexity.
•  Rapid changes in technology.
•  Contingent workforce (Temporary workforce).
•  Urgency of knowledge management.
•  Increasing the virtual workplace.
•  Raising the issue of employee involvement.
•  Organisational effectiveness.

Major Functions/ Components of HRM

​Human Resource Management is the process of managing human energy and competencies for achieving organisational goals through acquisition, development, utilisation, and maintenance. The functions/components of HRM are as follows:

​1) Acquisition function

​HRM is involved in searching and selecting the right man at right job. Different activities like human resource planning, job analysis, recruitment, selection and socialisation are conducted.

​2) Development function

​HRM performs its activities to enhance the competencies of employees to handle current and future needs.

​The development function consists of the following activities:

​

i) Analysing training and development needs
​ii) Employee training
​iii)Management development (for higher job responsibilities)

​3) Utilisation or motivation function

​Only motivated employees perform their best at work.

​The motivation function consists of

​

i) Motivation
​ii) Performance appraisal
​iii) Compensation management
​Motivational tools can be monetary incentives, benefits, promotion, career advancement, job security, etc.

​4) Maintenance function

​It is the effort to encourage employees to continue job for many years.

​The activities of maintenance functions are:

​i) Employee discipline
​ii) Labor relation
​iii) Employee welfare programs.

Human Resource Management System

The HRM system is formed with an integrated relationship of Input-processing-output and a feedback mechanism. ​It is an open system as it is highly influenced by external environmental factors. Components of the HRM system are briefly discussed below:

​a) Input components

​Inputs are the basic resources which are expected to be converted into output. It consists of human and non-human resources. Human resources are used to convert plans into actions by using non-human resources. 

The input components for the human resource management system are:

​

1. Information technology
2. ​HR plans and policies
3. ​HR inventories: Details of human skills, qualifications, experience, expertise and competencies available in the employees currently working in the organisation.
4. HR competencies are special abilities to accomplish the job.​Academic qualification, experience, ability to judge the situation, decision-making ability, ability to work under pressure, forecasting capacity, etc.

​b) Processing component

​It is a transformation of input into outputs 

by means of 

acquisition, development, utilization and maintenance.

​c) Output components

​It is the end result or achievement of the human resource management system. The output components are:

1. ​Quality of work life: It is the state of working conditions within an organisation. It is composed of physical well-being and human relations in an organisation.
2. ​Productivity: It is the relationship between output and input. Greater output with respect to input indicates better productivity.
3. ​Readiness to change
4. ​Job satisfaction and job commitment
5. ​Goal congruence: It is an integration of individual employee goals and organisational goals.

​d) Feedback system

The mechanism for getting information regarding the quality of output in the human resource management system.HRM ​provides feedback so that management can improve them at the right time.

​e) Environment

• ​set of factors influencing the human resource management system.
• ​composed of internal and external factors.
• ​Components of the internal environment are the marketing system, finance system, production system, and Research and Development system, which are specific to the organisation.
• ​Components of the external environment are political-legal, socio-cultural, economic, technological, competitive, etc. factor that are beyond the control of management.

​Human Resource outcomes

​HRM management system uses different input components to achieve outputs as quality of work life, productivity and readiness to change, which are described below:

​1) Quality of work life

• ​State of working conditions within the organisation.
• ​composed of physical well-being and human relations in the organisation.
• ​It is a new concept where management thinks integration of individual goals and organisational goals.
• ​American Society for Training and Development (ASTD) defines "Quality of work life is a process of work organisation which enables its members at all levels to participate actively and efficiently in shaping the organisation's environment, methods and outcomes."

​For a good quality of work life, the following five things are most essential:

​a) Autonomy

• ​refers to the degree of freedom in decision-making.
• ​exercised through employee participation in decision making, an open and transparent operation system, lower supervision and a directive approach with greater flexibility.

b) Recognition

• ​refers to the value given to the job done by employees.
• ​The scientific performance appraisal system and reward management system provide better recognition to best performing employees in front of other employees.

c) Belongingness:

• ​employee's feeling of attachment to the organisation.
• ​result of recognition and job satisfaction.
• ​Higher level of belongingness = greater job commitment and organisational commitment.

​d) Opportunity for personal growth:

• ​source of intrinsic motivation.
• ​An organisation can provide opportunity of personal growth by providing chalfornging job, opportunity of accomplishment, training and development, promotion, etc.

e) Rewards system:

• ​can be in the form of incentives, salary and benefits, promotion, status, etc.
• ​are a source of motivation for greater efforts.

​2) Productivity

• ​relationship between output and input.
• ​Greater output with respect to input = better productivity. i.e. utmost output with minimum input.
• ​HRM fulfils these aims through its major functions, i.e. acquisition, development, utilisation, and maintenance.

​3) Readiness to change

• ​ready state of adapting to the change or adjusting to the changing environment.
• ​Resisting the change is human nature, but to cope with change, human resource management must motivate through these techniques:

​a) Better communication
​b) Training and education
​c) participation and involvement
​d) Assurance of support
​e) Negotiation

​

Human Resource Management Environment 

• ​unified, comprehensive and integrated set of factors, elements or forces which have positive or negative effects on human resource functioning.
• ​HR environment is composed of several factors, consisting of internal as well as external factors.

​A. Components of the internal environment of human resources management

​1. HRM scope

• ​a) organisational policies
• ​b) organisational structure
• ​c) organisational strategy
• ​d) organisational resources
• ​e) organisational culture

​

2. Organisational activities

• ​a) Financing activities (capital formation and expenditure)
• ​b) Marketing activities (creating market, product and organisational value)
• ​c) Research and development activities (innovation and development of product and process to optimise quality, simplify production process)

​B. Components of the external environment of human resource management

1. ​Specific environment
   • ​a) Stakeholders
   • ​b) Shareholders
   • ​c) Employees
   • ​d) Employees union
   • ​e) Pressure groups
   • ​f) Competitors
   • ​g) Suppliers
   • ​h) Customers
   • ​i) strategic allies
   • ​j) Regulator
   • ​k) Government and court
2. ​General Environment
   • ​a) Political-legal forces
   • ​b) Socio-cultural forces
   • ​c) Economic forces
   • ​d) labor market
   • ​e) Technological environment

​Ethics in HRM

• ​Ethics are the fundamental principles of decent human conduct.
• ​Ethical issues in HRM are the problems or dilemmas of whether to choose or not to apply any HR practice or principles.
• ​Basic emerging issues in HRM are discussed below:

1. ​Recruitment issues
   • ​whether to recruit the employees from the internal source or from the labour market.
2. ​Compensation issues
   • ​whether to raise the base salaries and to pay out more incentives to the top management.
   • ​In Nepal, compensation issues are: to maintain only the minimum salary or to provide more incentives, what could be the salary differences between top executives and middle-level managers, and what should be the total salary expenses out of the total profit of the organisation.
3. ​Diversity issues
   • ​whether and to what extent diversity should be maintained in the organisation.
4. ​Privacy issues
   • ​whether and to what extent the personal life should be cared for in the organisation.
5. ​Restructuring issues
   • ​Downsizing and layoffs, job redesign, reallocation of responsibilities, and payments for additional responsibilities.
6. ​Performance appraisal issues
   • ​whether performance appraisal should be transparent or not.
   • ​Providing feedback to employees.
7. ​Career planning issues
   • ​whether career plan is possible through an organisation with the fullest of fair practices.

​HR Challenges / Emerging Challenges in HRM

1. ​Globalization
2. ​Technological changes
3. ​Workforce diversity
4. ​Complexities
5. ​Detaching the behaviour of employees (search for better opportunities of their own)
6. ​Temporary workforce
7. ​Change management (Refuse to change)
8. ​Ethical and social responsibility: The ethical concern of HRM is to know how an organisation should treat human resources and how to groom them for organisational productivity.

​Strategic Human Resource Management (SHRM)

• ​Strategic Human Resource Management is thinking proactively regarding the effective and efficient management of the workforce in the organisation.
• ​It connects, more specifically, integrates human resource management activities with strategic goals and objectives of the organisation to ensure improvement in business performance and strengthen the organisational culture.
• ​Strategic management has 4 components: mission, vision, strategies and objectives.
• ​SHRM aims to link HR function with the organisation’s corporate, business level and the operating strategies.
• ​It ensures HR functions as a strategic partner in the course of strategy formulation and implementation.

​Role of HR Manager in Strategy Formulation

• ​HR departments today are becoming strategic partners in the organisation.
• ​CEO/BODs are strategists who formulate holistic strategies and may not have detailed knowledge of human resources like HR managers. Thus, HR managers play a partnering role while formulating strategy with the CEO/BOD.
• ​Following specific steps makes HR a strategic partner in the organisation:

1. ​Align HR with Business strategy: HR must support the organisation’s overall goals by linking HR strategies with business strategies.
2. ​Focus on Competency Development: Develop organisational and employee competencies through planning, training and development.
3. ​Provide strategic information: Collect and analyse valuable data to support strategic decision-making.
4. ​Enhance e-HR capabilities: Go beyond traditional HR by adopting digital systems and tools for efficiency.
5. ​Develop specialised HR skills.
6. ​Job rotation and cross-functional exposure.
7. ​Involve HR in decision-making.
8. ​Support continuous learning.

​Role of HRM Functions in Strategy Formulations

1. ​Role of HRM functions in strategy planning:
   • ​a) Corporate-level strategy formulation (HRM outcomes, Behaviour outcomes, Performance outcomes)
   • ​b) Business unit strategy formulation
   • ​c) Functional level strategy formulation (Cost leadership, differentiation and focus strategy)
2. ​Role of HRM functions in strategy implementation
3. ​Role of HRM functions in strategic choice and control.

​International Dimensions of HRM

• ​International Human Resource Management (IHRM) can be defined as the management concern related to human resource problems of multinational firms in foreign subsidiaries or, more broadly, with the unfolding HRM issues that are associated with the various stages of the internationalisation process.
• ​The major dimensions of IHRM are:

1. ​Planning: There are usually three approaches to HR planning in multinationals: ethnocentric, polycentric and geocentric.
   • ​Ethnocentric approach: The organisation plans to fill all the key management positions with parent company nationals. Only the operating level staff are fulfilled by foreign ssubsidiaries’home country nationals.
   • ​Polycentric: Home office headquarters are planned to be fulfilled by parent-country nationals, and foreign subsidiaries are planned tobe fulfilledl by host country nationals.
   • ​Geocentric: Qualified and best-fit employees are planned from anywhere, whatever may be the nationality.
2. ​Recruitment and Selection: It ensuresthe right man on the right job at the right time and right place. IHRM focuses on whether the candidate can adapt to the cultural change and can perform best in cross cultural context or not, along with the best technical competencies for the job.
3. ​Training: Four-level trainings are suggested for the overseas employees as follows:
   • ​Level I:  Focus on the impact of cultural differences, and on raising trainees’ awareness of such differences and their impact on business outcomes.
   • ​Level II: participant’s attitude to understand how attitudes are formed and how they influence behaviour inthe international market.
   • ​Level III:  providing factual knowledge about the target country.
   • ​Level IV:  skill building in areas like language, adjustment and adaptation skills.
4. ​Compensation: The most common approach is the Balance Sheet Approach, i.e. each foreign employee should enjoy the same standard of living he/she would have enjoyed at home.
5. ​Performance Appraisal: Five-point procedures are suggested by experts for improving expatriates’ performance appraisal:
   • ​a. Specify the difficulty involved in assignments at the workplace of an expatriate.
   • ​b. Give more weight in the evaluation of a manager’s appraisal working in a foreign country than the manager’s appraisal.
   • ​c. In case the homeland manager is appraising the expatriate employee, the manager should collect all the background advice from a former expatriate from the same country.
   • ​d. Modify, if required, the performance criteria used for a particular job to fit the overseas position and characteristics of that particular locale.
   • ​e. Use both quantitative and qualitative criteria to evaluate the performance ofan overseas employee.

​Globalisation and HR Policy

• ​Globalisation is the process of interaction and integration of people, products, organisations, and society globally. It facilitates free flow of factors of production, i.e. people, technology, material, information and capital.
• ​Employee movement is high, which creates more challenges to HR managers, organizations and behavioural researchers.
• ​Organisations should develop strategies to cope with human resource-related challenges.
• ​There must be wider perspectives in HR policies, formal rules and guidelines to recruit and select the best talents globally, train and develop human skills, and reward management to make the organisation lucrative for human talents.
• ​Follow the international dimensions of HRM as HR policy in globalisation.
• ​Remember, it is not globalisation as a process that ought to be rejected, but rather, it is poor governance of globalisation that needs to be contested.

​Roles and Functions of Human Resource Managers

1. ​General responsibilities
   • ​a) Attendance tracking
   • ​b) Keeping a record of overtime work.
   • ​c) Making payroll
   • ​d) Approval of leave and other recommendations.
2. ​Strategic responsibilities
   • ​a) Human resource need identification
   • ​b) Recruitment and selection
   • ​c) Compensation and benefits
   • ​d) Training and development
   • ​e) Maintaining good employee relations
   • ​f) Maintaining workplace safety and risk management
   • ​g) Succession planning

​Human Resource Management in Nepal

• ​After the liberalisation and privatisation policy in 1990 A.D., the importance of HRM in Nepal has risen with more precisely defined HR strategies.
• ​The establishment of private business organisations and joint venture companies brought a new dimensionto the scope of human resource management in Nepal.
• ​HRM in the current days in Nepal can be discussed as follows:

1. ​Government and semi-government organizations:
   • ​Public Service Commission recruits and selects the employees. It has comparatively higher faith of the public and the newly entering labour force inthe labourr market.
   • ​Employees get training from the very first day of their selection. They have the provision of refreshment as well as career advancement training. Employees participate in the training session, but the training transfer is very low, i.e. skills learnt fromtrainings are not used in the daily routine.
   • ​Performance appraisal is used to be kept confidential.
   • ​For public servants, compensation is paid on a membership basis as declared by the Nepal government.
   • ​Nepali labour unions are politicised and work for their mother party. They are not being rational for organisational benefits.
2. ​Corporate houses:
   • ​Large multinational companies prefer experience, potential, loyalty, independence, diversity, job knowledge, market image, confidence level, and sound health as selection criteria.
   • ​Almost all privately owned organisations do not want to spend a single training and development, thinking that the trained employees quit their jobs for otherorganiother organisationshigh salaries and benefits.
   • ​Personal judgment and subjective assessment have been key criteria in many public and private sector organisations for performance appraisals.
   • ​They pay compensation haphazardly based on their so-called organisational policy.
3. ​Family-owned / small business:
   • ​Family owning organizations offer human resource managers to their kin so that they can get the jobs that the owner wishes to have.
   • ​Recommendation of friends and family members is dominant for recruitment and selection.
   • ​Family owned business do not invest in training and are self-centred. If new people come, they can easily replace the old workers.

​In short, Nepali organisations are still not realising the constructive role of the human resource department. Selecting family members, recommended candidates, candidates from the political pool, or pressure,s etc., are common practices. Training and development in Nepali organisations is just a formality. Performance appraisal is not free from bias and is rarely discussed with concerned employees. Labour unions influence compensation management.

Case Incident Analysis

Employee care means business care.

Pappaz Bakery was established in 2012 AD at Tokha Road, Samakhusi, Kathmandu, with the leadership of Mr Suraj Thami. He was previously engaged with UMNIN in the course of the logical end of peace workers. One day, the remaining three shareholders who had technical skills in the bakery business requested Mr Thami to initiate the bakery business and take leadership of the business. He agreed to be one of the shareholders with such wise men. With the joint capital of Rs. 21 lakhs, seven people, including four shareholders. The location of the establishment is connected with the main road extension, with rapid urbanisation.

Pappaz Bakery is now an established name in bakery products within five years under the leadership of Mr Thami. It was only offering regular bakery products like bread, doughnuts, muffins, birthday cake, and sliced cake. Under the participative leadership of Mr Thami, well-motivated employees, Pappaz continuously increased its business horizon. Currently, it offers many varieties of bakery products and, interestingly, also extended its business to a restaurant, offering fast food. It also provides home delivery service within 2 Kilometers of distance. For this, Pappaz now has 22 employees. Now the firm has reached the investment of Rs. 70 lakhs. All the capital is retained from the earnings of the firm.

The guiding principle for the successful business of Mr Thami is the satisfaction of employees. His employees are well educated. Pappaz provides more than the minimum salary provisioned by the Nepal Government. Pappaz pays around Rs. 4 lakhs as salary expenses every month. He believes that employees should enjoy while working. He always tries to understand human sentiments and hence provides the best working environment. He has developed team work environment, transparency and a flat structure. Mr Thami has not clearly divided the responsibility, as everyone can perform any task without delay or personal priority. Currently, Pappaz makes Rs. 20,000 net profit every day.

Mr Thami is committed to quality products and service from its outlet. He encourages everyone to follow the menu of the ingredients of any product so that customers feel different taste on its products. Customers prefer Pappaz's product unconditionally, which has increased the confidence level of Mr Thami that it can further extend its business. He always encourages research on new products and tastes. Pappaz currently offers products to customers regardless of class. Ram, one of the employees, has started a similar business in Gongabu within 2.5 km, and another bakery has been started at Greenland, which is within a distance of 1 km, but Mr Thami has a high level of confidence for the further growth of the business.

Reacting to the queries about the support from government and society, Mr Thami expresses a bitter experience from the tax office, but is satisfied with the cooperation of society.

Questions:

a. What is the issue of the case? What do you think is the inspiration of establishment of Pappaz?

b. Conduct SWOT analysis of the Pappaz Bakery

c. Trace the human relations practice in Pappaz Bakery.

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