Human Resource Management 9789350431382, 9789350245446

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HaMfI" .SOURCE MfI"flClEMENT

D. Shivarudrappa M.Com., M.Phil. Prof. of Commerce V. V. Puram College BANGALORE

K. Ramachandra M.Com., M.B.A., LL.B., DPM&IR, Ph.D. Senior-Scale Lecturer in Commerce Govt. College for Boys KOLAR - 563 101

K. S. Gopalakrishna M.Com. HOD of Commerce BES Evening College, Jayanagar BANGALORE

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CONTENTS'

PART - A : HUMAN RESOURCE MANAGEMENT Chapter 1

Nature and Scope of Human Resource Managmerit

1 - 27

Chapter 2

Human Resource Panning

28 - 58

Chapter 3

Induction and Training

59 - 75

Chapter 4

Performance Appraisal and Compensation

76 - 93

Chapter 5

Promotions and Transfers

Chapter 6

Work Envrionment

102 - 139

Chapter 7

Human Resource Development

140 - 162

PART - B : Skill Development and Record Management

163 - 188

94 - 101

"This page is Intentionally Left Blank"

PART-A

Resource Human Reource Management

Chapter -1 ., Nature and Scope of Human Resource Management LEARNING OBJECTIVES

• • • • • • • •

After reading this chapter you should be able to: Understand the meaning, definition and scope ofHRM Analyse the importance of HRM Differentiate between HRM and personnel management List the objectives and functions of HRM Identify the different steps involved in HRM process Understand the HRM as systems and techniques Classify the role of, duties and responsibilities of HR Manager Draw an organisation chart for HR department

Nature and Scope of Human Resource Management

3

1.1 Introduction The success or failure of a company in today's competitive environment depends to a great on extent the quality of human resources possessed at a particular point of time. There are companies which are called super performers such as Infosys, Wipro, Bio-con, Dr.Reddy's Lab, Ranbaxy, Glaxo, SmithKline Beecham and host of others while there are certain other companies which are called poor performers, to name a few Mysore Lamps, NGEF erstwhile GKW and the like. The super performance or under performance largely depends on the quality of human asset in the organisations. The total skills, knowledge, abilities available in an organisation at a particular point of time decides organisational effectiveness in terms of performance, productivity, profitability, market leadership harmonious industrial relations, high employee morale, low labour turnover, absenteeism, attrition and the like. Today's organisations are learning organisations where knowledge is created, disseminated, shared and utilised for the overall benefit of the organisations and individuals. The knowledge management in the organisation is the buzzword in the industry circle and management parlance. The companies effectiveness purely depends on its people. If the people's knowledge skill and abilities are high, the success of that organisation is a foregone conclusion otherwise, downfall of the company is guaranteed sooner or later. The stepping stone of any organisation in the current competitive, and volatile environment is people, people, people. Without quality HR, the organisations survival will be in jeo-pardy hence, the significance of the HR. Infosys,,.ABB and IBM values HR and indicate it as llltellectual capital asset on the asset side of the balance sheet. Among all the resources human capital ic:; vital, essential and indispensable to convert all other resources, HR is significant, lest the organisations success cannot be achieved. The empirical research studies have outlined the paramount and evergreen significance of Human Resource Management (HRM). Gone are the days when people were treated as liabilities in the organisation. Today the rules of the game have changed for the better and accordingly people are considered as invaluable assets, such is the momentum and significance acquired by HR. There is a mutuality of interest between the employer and employees in that, their exists mutual responsibility, reward sharing, appreciation, growth and the like.

4

Human Resource Management

At present employees are talented, responsible risk takers challenge seekers, aiming to grow alongwith the organisation. In view of economic reforms, world trade, inflow of foreign capital, technology, professionalism, HR, our organisations and people should be geared up to meet the untold challenges. Hence fine tuning, redefining HR in this context is very significance. India's growth and development is greatly influenced by the quality of low cost, English speaking adaptable, talented human resources. Of all the tasks of Management, managing the human component is the central and most important task because all else depends on how well it is done. This truism enunciated by Rensis Likert almost four decade ago, is equally valid today and underscores the vital role ofHRM in the corporate sector. HRM is a well-founded, planned, executed and evaluated approach to employee acquisition, development, utilisation and separation. It draws on a number of related disciplines, especially the behavioural sciences like Psychology, Sociology, Law, Economics, Education and Industrial Engineering, to name a few. The role of HRM in a business organisation has undergone a significant change, from that of mainly record keeping to employment, to providing for employee's welfare to a comprehensive approach to human resource allocation, utilisation and knowledge management. An organisation is formed for the fulfillment of certain objectives like earning a desired rate of profit on investment, exploitation of certain natural resources, development of a given geographical area, and supplying to the public some essential goods or services. Machines, materials, money and all other nonhuman resources are the tools and aids that man uses to achieve his tasks. Thus, a proper selection of men, their tactful handling and proper management is the essence of good overall management of an organisation. However, this is the most difficult of all the management tasks in an organisation. Some people also say that 'management' means 'managing people tactfully.' One often comes into contact with the personnel department of one's office, for example, for selection, placement, training, discipline, grievance handling wage administration, dismissal, etc. However, there are certain aspects of the work of a personnel department which may not be very obvious.

Nature and Scope of Human Resource Management

5

1.2 Meaning and Definition Simply put, Human Resource Management (HRM) is a management function that helps managers recruit, select, train aJ?d develop members for an organisation. Obviously, HRM is concerned with the people's dimension in organisations. We quote three definitions on HRM. But before quoting the definitions, it is useful to point out the essenti~ls which must find their place in any definition. The core points are: 1. Organisations are not mere bricks, mortar, machineries or inventories. They are people. It is the people who staff and manage organisations. 2. HRM involves the application of management functions and principles. The functions and principles are applied to acquisitioning, developing, maintaining, and remunerating employees in organisations. 3. Decisions relating to employees must be integrated. Decisions on different aspects of employees must be consistent with other human resource (HR) decisions. 4. Decisions made must influence the effectiveness of an organisation. Effectiveness of an organisation must result in betterment of services to customers in the form of high-quality products supplied at reasonable costs. 5. HRM functions are not confined to business establishments only. They are applicable to nonbusiness organisations, too, such as education, healthcare, recreation, and the like. The following three definitions collectively cover all the five core points: 1. ... a series of integrated decisions that form the employment relationship; their quality contributes to the ability of the organisations and the employees to achieve their objective. 2. . .. is concerned with the people dimension in management. Since every organisation is made up of people, acquiring their services, developing their skills, motivating them to higher levels of performance and ensuring that they continue to maintain their commitment to the organisation are essential to achieving organisational objectives. This is true,

6

Human Resource Management

regardless of the type of organisation-government, business, education, health, recreation, or social action. 3. . .. management is the planning, organising, directing and controlling of the procurement, development, compensation, integration, maintenance and separation of human resources to the end that individual, organisational, and social objectives are accomplished. Thus, HRM refers to a set of programmes, functions and activities designed and carried out in order to maximize both employee as well as organisational effectiveness.

1.3 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 organisation until he or she leaves - come under the purview ofHRM. Specifically, the activities included are - HR planning, job analysis and design, recruitment and selection, orientation and placement, training and development, performance appraisal . and job evaluation, employee and executive remuneration, motivation and communication, welfare, safety and health, industrial relations (IR) and the like. As the subsequent pages in this book unfold, all these functions are explained in a greater detail (see Fig.!.!).

1.4 The Semantics As in any other discipline, there is the problem of semantics in HRM, too. First, we have two terms, namely, personnel management (PM) and HRM. Between these two terms there is a basic difference, and it is useful to understand as to what it is. HRM differs from PM both in scope and orientation. HRM views people as an important source or asset to be used for the benefit of organisations, employees and the society. It is emerging as a distinct philosophy of management aiming at policies that promote mutuality - mutual goals, mutual respect, mutual rewards and mutual responsibilities. The belief is that policies of mutuality will elicit commitment which, in turn, will yield both better economic performance and greater human resource development (HRD). Though a distinct philosophy, HRM cannot be treated in isolation. It is being integrated into the overall strategic management of businesses. Further, HRM represents the latest term in the evolution ofthe subject. The year 1990 was

Nature and Scope of Human Resource Management

./

! \

7

~

Fig. 1.1 Scope ofHRM (Source: Aswathappa.K., Personnel HRM, Tata McGraw Hill, 2003, New Delhi)::

a turning point in this evolution. The American Society for Personnel Administration (ASPA), the largest professional association in this field of management, changed its name to the Society for Human Resource Management (SHRM). Since then, the expression is gradually replacing the hackneyed term 'personnel management.' TABLE 1.1 Differences between HRM and PM Dimension

Personnel Management

1. Employment Careful delineation of contract written contracts Importance of devising 2. Rules clear rules

Human Resource Management Aim to go 'beyond contract.' 'Can do, outlook, impatience with rule'

Human Resource Management

8 Procedures 3. Guide to management action

Business need

4. Behaviour referent

Values/mission

Norms/customs and practices

5. Managerial Monitoring task vis-a-vis labour

Nurturing

6. Key relations Labour management

Customer

7. Initiatives

Piecemeal

8. Speed of decision

Slow

Integrated ,Fast

9. Management Transactional role 10. CommuniIndirect cation Negotiation 11. Prized management skills Separate, marginal task 12. Selection 13. Pay

Job evaluation (fixed grades)

14. Conditions

Separately negotiated

15. Labour Collective-bargaining management contracts 16. Job categories and grades 17. Job design 18. Conflict handling

Transformational leadership Direct Facilitation

Integrated, key task Performance related Harmonisation Individual contracts

Many

Few

Division of labour

Team work Manage climate and culture

Reach temporary truce

19. Training and Controlled access to development courses

Learning companies

20. Focus of Personnel procedures attention for interventions

Wide-ranging cultural, structural and personnel strategies

21. Respect for employees

Labour is treated as a tool which is expendable and replaceable

People are treated as assets to be used for the benefit of an organisation, its employees and the society as a whole

22. Shared interests

Interests of the organisation are uppermost

Mutuality of interests

23. Evolution

Precedes HRM

Latest in the evolution of the subject

(Source: Aswathappa.K., Personnel HRM, Tata McGraw Hill, 2003, New Delhi)

Nature and Scope of Human Resource Management

9

PM has a limited scope and an inverted orientation. It viewed labour as a tool, the behaviour of which could be manipulated for the benefit of the organisation and replaced when it was wornout. The personnel department itself was not treated with respect. It was filled with not-very-productive employees whose services could be used with minimal damage to the organisation's ongoing operations. Personnel function was treated as a routine activity meant to hire new employees and to maintain personnel records. It was never considered a part of the strategic management of businesses. Historically,' PM preceded HRM. Table 1.1 draws the line of separation between HRM and PM quite clearly. Another term widely used these days is HRD. For many people, HRD and HRM convey the same meaning. This is not true. Essentially, HRD is a function more concerned with the training and development of employees. HRD, therefore, is a part ofHRM and forms one wing of the latter department. Industrial Relations Management (IRM) is yet another term which adds to the problem of semantics. 'Industrial relations,' as the term implies, is merely concerned with employee grievances and their settlement, unionization, and the like. Obviously, IRM is one wing of HRM.

1.5 Features of HRM The following are the basic facts and characteristics of HRM: It is concerned with employees: Personnel Management is concerned with employees both as individuals and also as a group. Personnel Management is a function or activity aiding and directing workmen in maximizing their personal contribution and satisfaction in employment, bringing them an equitable, just and humane treatment, and adequate security from employment. It covers all levels ofpersonnel: It refers not only to labour or, what you may call 'blue collared' employees, like craftsmen, foremen, operatives and labourers, but also the 'white collared' employees, like professional and technical workers, managers, officials, clerical workers, sales workers, etc. The concern for the employees is to help them: The employees are helped to develop their potentialities and capacities to the full so that they can derive the greatest satisfaction from their work.

Human Resource Management

10

It is inherent in all organisations: It is as useful and effective in government departments and non-profit organisations as in a business organisation. Moreover, it covers all types of functional management such as production management, financial management, marketing management etc. It is of a continuous nature: Personnel management requires constant alertness and awareness of human relations and their importance in everyday operations. It attempts at getting the willing cooperation of the people for the attainment of the desired goals: This is necessary because work cannot be effectively performed in isolation without the promotion and development of an esprit de corps.

1.6 Objectives of HRM The objectives of HRM are given below: (1) To achieve an effective utilisation of human resources for the achievement of organisation goals. (2) To establish and maintain an adequate organisational structure and a desirable working relationship among all the members of an organisation by dividing the organisational tasks into functions, positions, jobs and by defining the responsibility, accountability, authority for each job and its relation with other jobs/personnel in the organisation. (3) To secure the integration of the individuals and groups with the organisation by reconciling individual/group goals with those of an organisation in such a manner that the employees feel a sense of involvement, commitment and loyalty towards it. The absense of this integration will allow development of frictions, personal jealousies and rivalries, prejudices, personnel conflicts, cliques, factions, favouritism and nepotism. These will produce inefficiency and result in failure of the organisation. (4) To generate maximum development of individuals/groups within an organisation by providing opportunities for advancement to employees through training and job education or by offering transfers or by providing retraining facilities. (5) To recognize and satisfy individual needs and group goals by offering an adequate and equitable remuneration,

Nature and Scope of Human Resource Management

11

economic and social security in the form of monetary compensation, and protection against such hazards oflife as illness, old age, disability, death, unemployment etc. With adequate compensation and security, employees work willingly and cooperate to achieve an organisation's goals. (6) To maintain high morale and better human relations inside an organisation by sustaining and improving the conditions so that employees may stick to their job for a longer period. Considering these objectives, you will perhaps agree that the objectives are in the best interests of all those to whom management is responsible, i.e., owners of enterprise, the community, the consumers of its goods and services, and members of the organization itself, including groups who may belong to unions. For enabling the Personnel Manager to fulfil these objectives the top management has to create some conditions as the prerequisites. These are described below: (1) Existence of capable people in the organisation picked up on the basis of their merits and not on other considerations. If people are selected on other considerations they will be misfits, creating all sorts of problems for the organisation and other employees. (2) Plans for effective utilisation of efforts and potentialities of individuals and groups for appreciation of work well done and for future advancement and training. If people are left on their own, nothing will be achieved. They have to be provided with necessary opportunities and means, and given encouragement. (3) Considering employees as co-workers rather than as subordinates. If this is not done employees will not consider it their responsibility or duty to fulfil the objectives of the organisation. (4) A proper division of tasks of an organisation in accordance with a sound plan into functions and positions, each indicating a clear-cut authority, responsibility and duties as also relationship of one position with another. In the absence of such a division, chaotic conditions will prevail and no work will be done properly or even done at all. (5) The presence of clearly defined and comprehensive objectives and proper communication to all concerned. If

12

Human Resource Management

objectives are not clear and if people, who are expected to work for achieving these, do not know about these, they cannot be expected to achieve them. (6) The formulation of objectives in consultation with senior persons in the orgunisation and common understanding among managers at all levels of the objectives. If the senior staff or personnel have not participated in the formulation of objectives they may not feel any real responsibility for achieving these. If managers at any level do not understand the objectives, they will not know why they are doing a given work, what is expected of them and as a result may not even do it properly.

1.7 Importance of HRM HRM has unique significance in every organisation because it makes possible the effective use of human resources along with material resources. Effective HRM has significant value in an organisation in terms of the following: 1. It helps in attracting and retaining competent and capable personnels in the organisation. The planning function of HRM ensures recruitment/acquisition of different types of personnel in the short, medium and long run. 2. It helps to identify the best people for available jobs through recruitment and selection procedure. It also ensures that they: are placed in suitable positions. 3. Through performance appraisal and training it enables individuals to develop skill, knowledge, abilities and attitudes from those they currently possess. 4. It also motivates personnel to excel in their work. 5. It provides maximum opportunity for personnel development. 6. It is helpful in achieving organisational goals, efficiency, and effrectiveness. 7. It helps to maintain a balance between job seekers in the labour market and available jobs. 8. It helps in providing suitable and most productive employment. 9. It aids to bring about harmonious relations among different work groups.

Nature and Scope of Human Resource Management

13

10. It helps to improve employees working skill and capacity. 11. It helps to reduce income disparities through standardisation of wages in the organisation. 12. It aids knowledge creation, dissemination, sharing and utilisation in the organisation called knowledge management.

1.8 Functions and Operations of HRM HR fUIictions are generally divided into two categories, i.e., Managerial and Operational. In fact, these are two levels at which each function is to be performed. Each function is part of a management plan and has to be given practical shape at the operational level. This will be clear from the following chart, which shows various functions classified under the broad functions of management, viz., Planning, Organising, Staffing, Motivating, Controlling. It also gives objectives in relation to each, what may be called managerial function. Under each objective are given operations performed for achieving the objective concerned.

Functions of Personnel ManagementlHRM (A) Planning Manpower Requirement Function: Anticipating Vacancies Objective: To anticipate and provide for future openings Operations: 1. Anticipating deaths, dismissals, retirements, and resignations 2. Anticipating future promotions 3. Anticipating future transfers 4. Estimating future vacancies from the above causes 5. Estimating additional future positions Function: Recruitment Objective: To seek and attract qualified applicants to fill vacancies Operations: 1. Preparing job analysis 2. Preparing man specifications 3. Analysing the sources of potential employees 4. Attracting potential employees

14

Human Resource Management

(B) Organising The Manpower Resources Function: Organisational Planning Objective: To determine the organisational structure and manpower needed ~o effectively meet the company objectives. Operations: 1. Analysing organisational structure 2. Forecasting manpower requirements 3. Recommending arganisational changes 4. Analysing key position requirements Function: Selection Objective: To analyse applicants' qualifications for determining their suitability Operations: 1. Preparing questionnaires 2. Weeding out undesirables through analysis or questionnaires 3. Interviewing the applicants 4. Testing the applicants psychologically, where necessary 5. Investigating their references 6. Arranging medical examination, if necessary 7. Evalauting the applicants and making the final selection Function: Classification of Employees Objective: To assign officially each employee to an appropriate position clearly defined regarding its responsibilities Operations: 1. Preparing the job descriptions 2. Assigning of proper title to each position 3. Reviewing periodically the correctness of job descriptions (C) Staffing Function: Induction Objective: To ensure that new recruits are provided with appropriate training and information to enable them to perform their duties effectively. Operations: 1. Orienting new employees into their jobs 2. Ascertaining training requirements of such employees to make them more competent for their jobs 3. Providing facilities for their future education and development

Nature and Scope of Human Resource Management

15

Transfer and Promotion To provide for increasing the utilisation of the employee's capabilities Operations: 1. Continuously analysing job descriptions 2. Evaluating employee qualification 3. Determining training requirements 4. Promotion according to employee's development Manpower Development Function: Objective: To provide for the individual employee's development Operations: 1. Developing performance standards 2. Appraising performance 3. Planning individual development programmes Training Function: Objective: To arrange programmes as required for developing existing personnel Operations: 1. Planning and preparing training programmes 2. Providing training staff and faculty resources 3. Conducting the training programmes 4. Evaluating the training results (D) Motivating Rate Determination Function: Objective: To set rupee values on job positions that are fair and equitable when compared with the other positions in the company as well as prevails outside. Operations: 1. Analysing jobs and giving job descriptions 2. Evaluating such jobs 3. Developing wage scales Function: Recreation Objective: To provide facilities for employee's enjoyment of the job and make the company more attractive and satisfying as a work place. Operations: 1. Conducting social activities 2. Conducting athletic activities· 3. Providing recreational facilities for employees Communications Function: Objective: To provide the needed exchange of information throughout the organisation. Function: Objective:

~

....

16

Human Resource Management,

Operations: 1. Developing channels and media for information presentation to employees 2. Introducing and administering suggestion scheme 3. Conducting opinion surveys 4. Developing grievance procedures Function: Collective Bargaining Objective: To build up rapport with officially recognised and legally established employee organisations in the best interests of both the company and its employees Operations: 1. Negotiating agreements 2. Interpreting and administering such agreements Function: Employee Discipline Objective: To develop effective work regulations and harmonious working relationships Operations: 1. Establishing rules for conduct 2. Administering disciplinary measures, where necessary Performance Evaluation Function: Objective: To appraise objectively each employee's performance in relation to the duties and responsibilities assigned Operations: 1. Developing performance evaluation 2. Conducting performance evaluation interviews 3. Analysing performance evaluation results Function: Employee Counselling Objective: To help employees solve their personal problems Operations: 1. Selecting and training counsellors 2. Arranging counselling interviews 3. Assessing extent of help actually rendered Function: Safety Objective: To develop facilities and procedures for prevention of on-the-job accidents Operations: 1. Establishing safety rules 2. Investigating accidents 3. Conducting safety inspections 4. Preventing or eliminating hazards

Nature and Scope of Human Resource Management

17

Medical Services To prevent diseases and physical ailments as well as care for diseases, ailments, and injuries sustained by employees on the job. Operations: 1. Developing and administering prevention programmes 2. Examining employees and job applicants 3. Providing medical treatment 4. Educating in health matters Function: Protection and Security Objective: To provide precautionary measures for safeguarding the company and its property from theft, fire, etc. Operations: 1. Developing and administering security regulations 2. Organising fire fighting services 3. Providing guard or watchman service Function: Personnel Research Objective: To develop improved employee attitudes and conditions of work Operations: 1. Analysing personnel problems 2. Recommending improved practices The chart above gives one way of classification of functions. Different experts ofHRM and Institutions like the Indi'3.n Institute of Personnel Management, have classified these functions differently. Some of the operations mentioned in the schedule are selfexplanatory. A few of tl>