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Human Resource Management Unit 1

Sikkim Manipal University Page No. 1

Unit 1 Introduction to Human Resource Management

Structure:

1.1 Introduction to Human Resource Management

Objectives

1.2 Concept of Human Resource Management

1.3 Scope of Human Resource Management

1.4 History of Human Resource Management

1.5 Function of Human Resource Management

1.6 Role of HR Executives

1.7 Summary

1.8 Glossary

1.9 Terminal Questions

1.10 Answers

1.11 Case Study

1.1 Introduction to Human Resource Management

Every organisation is essentially a blend of material and Human Resource

(HR). Material refers to money and machines pre-arranged by organisations

for production or trade. Human Resource, on the other hand, refers to the

knowledge, education, skills, training and ability of the members of the

organisation. Human resources are the most valuable and unique assets ofan organisation.

The successful management of an organisation's human resources is an

exciting, dynamic and challenging task, especially at a time when the world

has become a global village and economies are in a state of change. The

scarcity of talented resources and the growing expectations of the modern

day worker have further increased the complexity of the human resource

function. Even though specific human resource functions/activities are the

responsibility of the human resource department, the actual management of

human resources is the responsibility of all the managers in an organisation.

In this unit, we shall look into the concept of Human Resource Management

(HRM), its functions and roles in detail.

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Objectives:

After studying this unit, you should be able to: describe the concept of HRM

define the scope of HRM

describe the history of HRM

explain the functions of human resource

recognise the role of HR executives

1.2 Concept of Human Resource Management

Todays organisations constantly mould itself to meet the business

challenges despite economic, political and social patterns in which it exists.

The efforts made by organizations to sustain business metrics like revenue,

profits and growth, market share is possible only through the people in the

organization who work towards making this happen within the enterprise.

One of the most useful definitions of Human Resources Management

(HRM) is provided by Fisher, Schoendfelt and Shaw in their book Human

Resources Management, HRM involves all management decisions and

practices that directly affect or influence the people or Human resources

who work for the organization.

The concept of human resources entails:

Total knowledge

Skills

Creative abilities

Talents

Aptitudes of an organisations workforce

Values

Attitudes

Belief of the individuals involved

A human resource manager has to build an effective workforce, handle the

expectations of the employees and ensure that they perform at their best.He or she also has to take into account the firms responsibilities to the

society that it operates in.

It is therefore necessary for all managers to understand and give due

importance to the different human resource policies and activities in the

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organisation. Human resource management outlines the importance of HRM

and its different functions in an organisation. It examines the various HRprocesses that are concerned with attracting, managing, motivating and

developing employees for the benefit of the organisation.

Objectives of HRM

The objectives of HRM can be classified into the following:

To act as a link between the top management and the employees.

To arrange and maintain adequate manpower inventory, which in turn,

ensures the smooth working of the organisation.

To offer training as a way of developing skills, enhancing productivity

and most importantly, increasing individual and organisational

performance to achieve the desired results.

To devise employee benefit schemes for improving employee motivation

and group morale, and enhancing employer-employee cooperation.

To ensure and enhance the quality of work life, which refers to the

employees perception of their physical and psychological well-being at

work.

To help keep up ethical values and behaviour amongst employees both

within and outside the organisation.

Self Assessment Questions

Fill in the blanks:

1. A HR Manager has to build an effective ____________, handle the

expectations of the employees and ensure that they perform at their

best.

2. One of the major objectives of HRM is to act as a link between the

____________ and __________.

3. HRM examines the various HR processes that are concerned with

attracting, managing, ______ and ______ employees for the benefit of

the organisation.

1.3 Scope of Human Resource Management

In the previous section we discussed the concept and objectives of HRM.

Let us now discuss the scope of HRM in an organisation.

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The scope of HRM is wide and far-reaching. An understanding of HRM is

important to anyone who is employed in an organisation. HR issues becomeimportant wherever there is a group of workers. Staffing is performed by all

the managers as a managerial function, either directly or indirectly through

HR department. All managers are, in this way, HR managers, since they get

involved in HR activities such as selecting, training, inducting, compensating

and motivating the employees along with industrial relations activities.

We may classify the scope of HRM under the following heads:

HRM in personnel management This is typically direct manpower

management that involves manpower planning, hiring (recruitment and

selection), training and development, induction and orientation, transfer,

promotion, compensation, layoff and retrenchment, and employee

productivity. The overall objective is to ascertain individual growth,

development and effectiveness which indirectly contribute to

organisational development.

It also includes performance appraisal, developing new skills,

disbursement of wages, incentives, allowances, travelling policies and

procedures, and other related courses of actions.

HRM in employee welfare This particular aspect of HRM deals with

working conditions and amenities at the workplace. This includes a wide

array of responsibilities and services such as safety services, healthservices, welfare funds, social security and medical services. It also

covers appointment of safety officers, making the environment

conducive for working, eliminating workplace hazards, support by top

management, job safety, safeguarding machinery, cleanliness, proper

ventilation and lighting, sanitation, medical care, sickness benefits,

employment injury benefits, personal injury benefits, maternity benefits,

unemployment benefits and family benefits.

It also relates to supervision, employee counselling, establishing

harmonious relationships with employees, education and training.

Employee welfare is about determining employees real needs andfulfilling them with active participation of both the management and the

employees. In addition to this, it also takes care of canteen facilities,

crches, rest and lunch rooms, housing, transport, medical assistance,

education, health and safety, recreation facilities, etc.

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HRM in industr ia l relat ions Since employment relationship is a highly

sensitive area, it needs careful interactions with labour or employeeunions, address their grievances and effectively settle the disputes in

order to maintain peace and harmony in the organisation. Industrial

relations is the art and science of understanding the employment (union-

management) relations, joint consultations, disciplinary procedures,

solving problems with mutual efforts, understanding human behaviour

and maintaining work relations, collective bargaining and settlement of

disputes.

The main aim is to safeguard the interest of employees by securing the

highest level of understanding to the extent that does not leave a

negative impact on the organisation. It is about establishing, growingand promoting industrial democracy to safeguard the interests of both

employees and management.


Match the following:

4. Personnel management (a) working conditions and workplace

amenities

5. Employee welfare (b) promotes industrial democracy

6. Industrial relations (c) Direct manpower management

1.4 History of Human Resource Management

In the previous unit we discussed the scope of HRM and its classification

under different headings. Let us now discuss the history of HRM.

There is a vast difference between modern HRM and the personnel

management that was prevalent decades ago. By the end of the twentieth

century, the managerial philosophy that had defined the personnel function

had undergone radical changes. Over the past several years, scientific

management approach and the human relations approach appeared and

then disappeared too. However, the human resource approach has gained

prominence in recent times.

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Scientific management approach

Fredrick Taylor, who is widely considered to be the father of scientificmanagement, focused on motions that were required for each job, the tools

used and the time needed to accomplish each task. Fair performance

standards were then determined for each job, on the basis of such scientific

data rather than on the superiors subjective judgment. Those workers

whose output exceeded the standards were given additional incentive pay.

The base of scientific management was solely motivated by money and led

to many problems.

Human relations approach

The Hawthorne studies conducted during the 1930 and 1940s, forced

organisations to shift their attention from scientific management approach tohuman relations approach.

Hawthorne studies suggested that employee productivity was not only

influenced by the way the job was designed and the economic rewards, but

also by certain social and psychological factors. Feelings, emotions and

sentiments of employees were greatly influenced by work conditions such

as group relationships and management support.

It was recognised that treating employees with respect would improve

employee satisfaction and help in achieving higher productivity.

Human resources approachHuman resources approach treats people as resources, rather than factors

of production, or as human beings who act on the basis of emotions alone.

Some of the principles of human resource approach are:

Employees are assets to an organisation.

Policies, programmes and practices must cater to the needs of

employees and should help them in their work and in their personal

development.

The job and tasks are the primary motivators for employees. Individual

employee needs must be catered to maintain motivation.

It is necessary to create and maintain a supportive work environment, to

encourage the employees to develop and harness their knowledge and

skills for the benefit of the organisation.

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HR policies and practices should be in alignment with the goal of

balancing individual and organisations needs.When employees are considered as assets and treated individually, the

level of motivation improves. This leads to more committed and better

employee performance. Overall increase in the performance of employees

leads to an increased organisational performance. When the organisation

reaps benefits out of the increased performance, it is bound to share some

of it to the employees in the form of employee rewards.

Employee rewards may be monetary such as hike in salary or increments or

it may be non-monetary such as change in designation, status, fringe

benefits, etc. When employees realise that they are rewarded and respected

for their efforts they are further motivated. Thus, the human resource

approach helps the employees to achieve through a mutual process where

the organisation and the employees help each other to achieve their goals

as shown in figure 1.1.

Employee

Motivation

Employee

Performance

Employee

Rewards

Organisational

Performance

Fig. 1.1: Human Resource Approach

[Source: ICFAI Center for Management Research]


Fill in the blanks:

7. _________ is considered to be the father of scientific management.8. __________ suggested that employee productivity was not only

influenced by the way the job was designed and the economic rewards

but also by certain social and psychological factors.

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9. __________ approach states that HR policies and practices should be

in alignment with the goal of balancing individual and organisationsneeds.

Activity 1:

Browse the Internet and prepare a report on the implications of

Hawthorne Studies.

(Hint: Refer to:

1. http://www.enotes.com/hawthorne-experiments-

reference/hawthorne-experiments

2. http://www.nwlink.com/~donclark/hrd/history/hawthorne.html)

3. http://www.accel-team.com/motivation/hawthorne_02.html

1.5 Function of Human Resource Management

In the previous section we discussed the history of HRM and analysed the

various approaches towards HRM. Let us now describe the functions of

HRM.

Human resource management involves blending the traditional

administrative functions along with the changing concepts of employee

welfare in the organisation. Organisations now regard employees as a

precious resource and spend more efforts to retain them. The retention ofemployees is dependent on how they are perceived and treated in the

organisation based on their performance, abilities and skills.

Human resource managers are involved right from identifying potential

candidates for jobs to their separation from the organisation. They

encourage communication amongst the employees and also promote better

employeremployee relationship.

Organisational performance depends directly on how efficiently and

effectively the HR department functions. It is the quality of the human

resources available to the organisation that primarily determines the quality

of the products and services produced by the organisation. The HR

personnel are the key link between the top management and the

employees. Today, HRM operates in tune with other essential organisational

requirements and co-exists with the topmost management cadre. It thrives

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on the strength of the relationship between the management and the

workers of the company.Figure 1.2 depicts the major functions that an HR manager has to carry out

in any organisation. The extent of activities carried out by the HR is

dependent on the size and scope of the organisation, the nature of

operations and the attitude of management towards the employees.

10

MISSION OF AN ORGANISATION

VISION & OBJECTIVES

HRM OBJECTIVES

STRATEGIES AND POLICIES OF HRM

MANAGERIAL FUNCTIONS OF HRM

OPERATIVE FUNCTIONS OF HRM

P

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GEMPLOYMENT HUMAN

RESOURCES

DEVELOPMENT

EMPLOYEE

RELATIONS

CONPENSATION

MANAGEMENT

HUMAN

RESOURCES

DEVELOPMENT

RECRUITMENT

SELECTION

PLACEMENT

PERFORMANCE APPRAISAL

TRAINING

MANAGEMENT DEVELOPMENT

PERFORMANCE APPRAISAL

JOB

EVALUATION

WAGE AND

SALARY

FRINGE

BENEFTS

ORGANISATION CHANGE AND

ORGANISATION DEVELOPMENT

MOTIVATION

MORALE

JOB

SATISFACTION

COMMUNICATION

GRIEVANCE AND

DISCIPLINARY PROCEDURE

INDUCTION

Fig. 1.2: Flow Chart of Functions of HRM

[Source: Rao, Subba (2011). Essentials of HRM and Industrial Relations,

3rd

Ed. Himalaya Publishing Pvt Ltd.]

HRM functions can be broadly classified into the following two categories:

1. Managerial functions

2. Operative functions

Managerial functions of HR departmentThe managerial functions of HR department include the following:

Planning Future course of action; it also includes identifying human

resource requirements and forecasting personnel needs.

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Organis ing Division of labour; assignment of responsibility is part of

the organisations functions. Staff ing It is the process of obtaining and maintaining capable and

competent personnel in various positions at all levels, i.e., manpower

planning, recruitment, selection, placement and induction.

Directing It is the process of directing all the available resources

towards the common organisational goals.

Contro l l ing It is the measurement and rectification of activities to

ensure that the events conform to plans.

Operative functions of HR department

Operative functions of HR department are those core functions that only the

HR department is assigned to perform. These include functions such as

employment of new personnel, developing their skill sets, compensating

them for their efforts and maintaining employee relations. Figure 1.3 depicts

the operative functions of HRM.

Fig. 1.3: Operative Functions of HRM

Let us now discuss the operative functions of HRM.

Employment

Employment is the first operative function of HRM. This

involves procuring and employing individuals with suitable knowledge,

skills, experience and aptitude necessary to perform various jobs. It

includes functions such as job analysis, human resource planning,

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recruitment, selection, placement and induction. Figure 1.4 shows the

different functions of employment.

Fig. 1.4: Functions of Employment

The various functions of employment are:

a) Job analysis To ensure the satisfactory performance of an

employee, his skills, abilities and motives to perform a job must

match the requirements of the job.Job analysis is the process by

which the tasks which comprise the job are determined and the skills

and abilities required to perform it successfully are identified.b) HR planning HR planning involves forecasting the human

resource requirements of an organisation and the future supply of

human resources, and making suitable adjustments between the two

in correlation with the organisational plans.

c) Recruitment Recruitment is the process of seeking and attracting

prospective candidates against a vacancy in the organisation.

d) Selection The purpose of employment selection is to choose the

right candidate for a job.

e) Placement After a selected candidate conveys his or her

acceptance of the offer of employment made by an organisation, his

or her placement has to be decided based on the needs of the

organisation.

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f) Induction Introducing a new employee to the organisation, the

organisations business, its culture, values and beliefs, and practicesand procedures is termed as induction.

HR developm ent HR development concentrates on developing the

workforce so that both the employees and the organisation in turn can

achieve their goals. It focuses on strengthening the skills, knowledge

and aptitudes of the employees. This includes functions starting with

evaluating the performance of the employees, providing necessary

training and development programmes to fill the gaps between current

performances to the optimum performance of employees.

HR development involves functions such as:

a) Performance appraisal This is the process of evaluating the

performance of an employee on the job and developing a plan for

the employees improvement. This includes an assessment of the

strengths and weaknesses of the employee, and drawing up a

development plan in consultation with him or her to prepare him or

her for future tasks and responsibilities in the organisation.

b) Training Training is the systematic development of knowledge,

skills and attitudes required to perform a given task or job

successfully, in an individual.

c) Management development It is the concept of developing the

employees of an organisation to meet future changes and

challenges.

d) Career planning and development Career planning and

development refers to identifying ones career goals and formulating

plans forachieving them through various means such as education

and work experience.

Compensat ion Compensation includes all the rewards that an

employee receives during the course of his or her jobfor his or her

contributions to the organisation. Compensation encompasses base

salary, incentives, bonus and benefits, and is based on job evaluation.a) Job evaluation Job evaluationis a systematic determination of the

value of each job in relation to other jobs in the organisation, in the

industry and in the market.

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b) Wage and salary administrationWage and salary administration is

the process of formulating and operating a suitable wage and salaryprogramme.

c) Incentives Incentives are the rewards that an employee earns in

addition to regular wages or salary based on the performance of the

individual, the team or the organisation.

d) Fringe benefits Fringe benefits are monetary and non-monetary

benefits given to employees during their employment, and

sometimes, also in the post-employment period. These include

housing facilities, canteen facilities, conveyance facilities,

educational facilities for employees and their children, medical and

welfare facilities, company stores, etc.

Employ ee relat ions Employee relations deals with the employees, in

the organisational context, as a social group that contributes to the

organisation. It includes:

a) Increasing employee productivity.

b) Keeping the employees satisfied and motivated.

c) Developing team building, team management, leadership skills in

employees.

d) Designing and implementing a fast and suitable grievance

management system.

e) Ensuring discipline among the employees by prompt action to

correct deviations.

f) Supporting employees by counselling and developing them into

complete individuals and responsible citizens.

g) Enhancing the quality of both work and personal life of the

employees.


10. __________ is the future course of action that includes identifying

human resource requirements and forecasting personnel needs.

11. ___________ are the rewards that an employee earns in addition toregular wages or salary based on the performance of the individual,

team or the organisation.

12. ____________ are monetary and non-monetary benefits given to

employees during their employment.

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1.6 Role of HR Executives

In the previous section, we discussed the various functions involved inHRM. Let us now discuss the role of HR executives.

Managing people is one of the biggest challenges for a manager. Few of the

reasons are:

Individuals differ from each other in terms of their values, attitudes,

beliefs and culture. This leads to a very complex situation.

The stimulating and motivational factors might not be the same for all

employees.

It is important to understand the individual needs of the employees and

cater to those needs. This involves taking up different roles by the HR. Thespecialist role of HR manager includes:

Services provider

Administrative expert

Facilitator

Consultant

Auditor

Change agent

Employee advocate

Let us now look into each of these roles in detail. Service provider Management needs to gather information such as

market statistics, pay rates and labour laws, and legislations from the

market as well as from their competitors before making decisions on

various employee related issues.

Administrat ive expert The administrative role involves record

keeping and legal compliance. The HR is responsible for maintaining all

records of the employees relating to their employment and also ensuring

the organisation complies to the statutory health and safety, employee

welfare measures.

Facilitator

They act as a facilitator when training and development

actions are planned and conducted,and when performance appraisals

are done.

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Consultant While supervising the employees, managers face many

problems. Their problems may be due to lack of motivation, lack oftraining,job misfit and grievances relating to pay.They should know how

to smoothly resolve such problems.

Audi tor HR specialists are responsible for ensuring that all members

of the management perform their respective roles efficiently and also

ensures that there is effective use of the human resources of the

organization.

Change agent It is the HR that helps organisations to implement

changes and help employees adapt to changes. The HR is the first

department that recognises the changes in the external environment and

makes necessary changes within the organisation to help theorganisation adjust to the changes without any hitches. When the

market is not favourable, the HR may be busy with downsizing and

when there are new prospects in future, the HR tries to ensure that the

employees are well trained to take full advantage of it.

Employ ee advocate HR employees are the link between the top

management and the employees. The concerns of the employees are

first reported to the HR personnel. They report these issues to the top

management and try to resolve the issues.

Thus, we have seen that the HR in any organisation has multiple roles toplay. No HR can perform just one role. They may have to perform all the

mentioned roles at different stages in their career as HR personnel.


13. The administrative role of the HR involves record keeping and

____________.

14. As an ___________ HR employees link the top management and

employees.

15. As an _______ HR specialists are responsible for ensuring that all

members of the management perform their respective roles concernedwith the effective use of HR.

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1.7 Summary

Let us recapitulate the important concepts discussed in this unit:

Human resource management is one of the most complex and

challenging field of management study. It mainly deals with people

dimension in management.

Over the past several years various approaches to human resource

management have been adopted by companies. Scientific management

approach gave rise to the human relations approach. The human

resource approach has gained prominence in recent times valuing

employees as the prime asset in any organisation.

The primary objective of HRM is to take care of the work life of

employees even while ensuring their best possible cooperation for

achieving the organisational goals and objectives.

The scope of HRM can be divided into HRM in personnel management,

HR in employee welfare, HR in industrial relations.

Basically, HRM includes the four functions of acquiring, developing,

motivating and managing the human resources. HRM functions are

broadly classified into two categoriesmanagerial and operative

functions.

Managerial functions include planning, organising, directing and

controlling.

The operative functions of HRM are related to specific activities of HRM

such as employment, development, compensation and employee

relation.

The specialist role of the HR professional takes a number of roles, which

is that of an auditor, service provider, administrative expert, facilitator,

consultant, the change agent and employee advocate.

1.8 Glossary

Manpower inventory: A record of all the employees that lists all

relevant employment related information such as age, sex, educationalqualification, job history, type of employment, years of work experience.

It helps in knowing the number of employees in a department and the

job that they carry out.

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Employ ee Retention:Employee retention refers to the various policies

and practices which let the employees stick to an organization for alonger period of time.

Hawthorne studies: In the 1920s Harvard Business School professor,

Elton Mayo, and his Fritz J. Roethlisberger led a landmark study of

worker behavior at Western Electric, Chicago. The study began by

examining the physical and environmental influences of the workplace

(e.g. brightness of lights, humidity) and later, moved into the

psychological aspects (e.g. breaks, group pressure, working hours,

managerial leadership). The major finding of the study was that almost

regardless of the experimental manipulation employed, the production of

the workers seemed to improve. The Hawthorne experiments brought tolight ideas concerning motivational influences, job satisfaction;

resistance to change, group norms, worker participation, and effective

leadership.


1. What is human resources management? Discuss the scope of HRM.

2. Explain the functions of HRM.

3. Discuss the main features of human relation approach. How does it

differ from scientific management?

4. Briefly describe the different roles of HR professional in business.

1.10 Answers


1. Workforce

2. Top management and the employees

3. motivating, developing

4. (c) direct manpower management

5. (a) Working conditions and workplace amenities

6. (b) promotes industrial harmony

7. Fredrick Taylor

8. Hawthorne studies

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9. Human Resource

10. Planning11. Incentives

12. Fringe benefits

13. Legal compliance

14. Employeee Advocate

15. Auditor

Terminal Questions

1. Human resource refers to total knowledge, skills, creative abilities,

talents and individual aptitudes of an organisations workforce, as wellas values, attitudes and beliefs of the individuals involved. A human

resource manager has to build an effective workforce, handle the

expectations of the employees and ensure that they perform at their

best.For more details, refer section 1.2

2. HRM includes the four functions of acquiring, developing, motivating and

managing the human resources. HRM functions are broadly classified

into two categories-managerial and operative functions.For more details,

refer section 1.5

3. The Hawthorne studies conducted during the 1930 and 1940s, forced

organisations to shift their attention from scientific management

approach to human relations approach. Hawthorne studies suggested

that employee productivity was not only by the way the job was

designed and the economic rewards, but also by certain social and

psychological factors. For more details, refer section 1.4

4. HR professional takes a number of forms: the auditors role, the

executives role, the facilitators role, the consultants role, and the

service providers role. HRM objectives should align with the

organisational objectives, and should balance them with the individual

and social goals. For more details, refer section 1.6

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1.11 Case Study

HR, The trendsetter?No longer is HR just a recruitment function; it is part of the company's

overall strategy to achieve its business goals. With increased competition in

every industry, the challenge for companies is to remain competitive, and

are they doing just that? Industry experts give a bird's-eye view of a few HR

trends in the months to come.

Dayanand Allapur, Head HR, Tesco HSC, feels that in the months to come,

there would be an increased focus on strengthening the employee brand

and creating a workplace of choice' through various init iatives such as

smarter employee policies, increased workplace interaction through new

age social media tools and using technology to optimise systems and

processes. "This would be augmented with greater focus on talent planning

and development, thereby providing better career options to employees.

The trend would also lean more towards the "human side" of companies

such as how "green" are we and also focus on diversity and giving back to

the community," says Allapur.

What is in store?

Ashish Srivastava, Director - HR, Canara HSBC Oriental Bank of

Commerce Life Insurance:

Work-life balance

Organisations will look at ensuring higher flexibility withenhanced focus on overall productivity rather than mere number of hours.

Employees would be encouraged to constantly up-skill themselves and

learn to work "smarter" and carve time for value-added initiatives with

colleagues and family.

Staffing and Compensation Staffing will remain lean with higher

demands on individual productivity - beyond specified KRAs, albeit all within

the parameter of core organisational values. The concept of "Total

Rewards" will be earnestly applied as organisations will make compensation

more creative and competitive. Expect deliberate focus on variable pay

plans and a higher ROI on compensation. "Recognition" would be a focalpoint to ensure sustained engagement whilst simultaneously encouraging

increased performance differentiation. What the high-performing

organisations will choose to do is to give a staff an overall sense of "a great

total-deal" and not just a good fixed base in compensation.

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Talent Management What will matter is the "Employment Brand" and

existent talent, just as much as product loyalty will differentiate the topplayers in the industry. For instance, propel increase in the breadth of

experience resulting in versatile workforce within the organisation through

means of short-term and cross functional projects and assignments.

Deepak Kaistha, Director, Planman Consulting

Work-life Balance Work-life balance is just not a simple term but the way

one should maintain/divide their work hours effectively. What will matter in

the months to come is how you work smart and complete a defined task at a

given time frame. Employees who are able to manage the same will be

termed smart' workers.

Staffing and Compensation Hiring plans for the next quarter is on its

spree and looks optimistic. As per a study, employers in various industry

sectors and all four regions of India report positive hiring plans for the next

three months. Job seekers in the wholesale and retail trade sector (+51 per

cent) and service sector (+48 per cent) can look forward to the most

vigorous hiring in the next three months. Globally, the third quarter hiring

expectations are positive, India being the strongest country, apart from

Brazil, Taiwan, Turkey and Singapore.

Talent Management Given ample evidence that companies with highly

engaged employees outperform companies with neutrally or negativelyengaged employees, over the next few years we'll see more companies

adopt - not just talk about - best practices such as closer scrutiny of

manager quality, continuous feedback, talent mining and mobility, workforce

segmentation, employee recognition programmes and differentiated pay.

Rajesh Padmanabhan, Head-HR, Capgemini India

Work-life balance is an important ingredient of driving company culture

and employer of choice value proposition. India Inc. will see more

expectations around this and will need to ready organisations keeping this

important aspect in mind.

Staffing and Compensation as a recruitment channel is set to increase,

going forward. More structured compensation options in the form of time-off,

remote working, project allowance and performance accelerators would

slowly start coming into play.

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Talent Management Structured capability building models and building

future leaders will be the way forward.Whatever the route, HR is all set to pull up its sleeves and become the new

trend-setter.

Discussion Questions

1. What are the trends in staffing ?

2. What are the ways of ensuring talent management ?

(Source: http://www.itsmyascent.com/web/itsmyascent/hr-zone/-/

asset_publisher/4htH/content/hr-the-trendsetter

(Retrieved on 27th February, 2012)

References:

Bearwell, I, & Holden, L. (1995). Human Resource Management: A

Contemporary Perspective. New Delhi: Macmillan India Limited.

Dessler, G, & Verkkey, B. (2011). Human Resource Management. New

Delhi: Pearson Prentice Hall.

Durai, P. (2010). Human Resource Management. New Delhi: Pearson

Publication.

E-Reference:

http://www.managementstudyguide.com/scope-of-human-resource-

management.htm (Retrieved on 20 December 2011 )

http://www.slideshare.net/hemanthcrpatna/procedures-for-handling-

disciplinary-matters-in-ktms (Retrieved on 20 December 2011 )
http://www.itsmyascent.com/web/itsmyascent/hr-zone/-/%0basset_publisher/4htH/content/hr-the-trendsetterhttp://www.itsmyascent.com/web/itsmyascent/hr-zone/-/%0basset_publisher/4htH/content/hr-the-trendsetterhttp://www.itsmyascent.com/web/itsmyascent/hr-zone/-/%0basset_publisher/4htH/content/hr-the-trendsetterhttp://www.slideshare.net/hemanthcrpatna/procedures-for-handling-disciplinary-matters-in-ktmshttp://www.slideshare.net/hemanthcrpatna/procedures-for-handling-disciplinary-matters-in-ktmshttp://www.slideshare.net/hemanthcrpatna/procedures-for-handling-disciplinary-matters-in-ktmshttp://www.slideshare.net/hemanthcrpatna/procedures-for-handling-disciplinary-matters-in-ktmshttp://www.slideshare.net/hemanthcrpatna/procedures-for-handling-disciplinary-matters-in-ktmshttp://www.itsmyascent.com/web/itsmyascent/hr-zone/-/%0basset_publisher/4htH/content/hr-the-trendsetterhttp://www.itsmyascent.com/web/itsmyascent/hr-zone/-/%0basset_publisher/4htH/content/hr-the-trendsetter

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Unit 2 HRM in India

Structure:

2.1 Introduction

Objectives

2.2 HRM in India

2.3 Changing Role of Human Resource in India

2.4 Globalisation and Its Impact on HR

2.5 Summary

2.7 Glossary


2.9 Answers

2.10 Case Study

2.1 Introduction

In the previous unit we studied about the concepts and scope of HRM. We

also learnt the evolution of the concept of HRM. We have learnt that

workforce has evolved from being considered as a commodity to being the

most valuable resource in any organisation.

Although Human Resources is comparatively a recent management term

we can trace the relevance of it to the vedas. In The Bhagavad Gita, Lord

Krishna not only makes Arjuna spiritually enlightened, but also teaches himthe art of self-management, anger management, stress management,

conflict management, transformational leadership, motivation, goal setting

and many other aspects which are now essential parts of any HRM

curriculum.

After Indian independence, the government resorted to protectionism in

order to nurture the countrys fledgling industries. There were very limited

job opportunities and having a government job was regarded with high

esteem. There was a high degree of loyalty, and therefore, people used to

work and retire from the same job. This situation drastically changed after

the government liberalized the economy in 1991 and allowed foreign

competition. Domestic organizations were forced to raise the bar by

improving their products and services to compete with global organizations.

More and more of private multinational organisations started setting up

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companies in India bringing along with them global HR practices. Also apart

from being a global hub of outsourcing, Indian companies are expanding allover the world through mergers and acquisitions.

The critical HR issues today in India are performance management,

employee motivation and retention, career and succession planning. In this

unit we shall look into the changing role of HR in India and how globalisation

has impacted the changes in HR practises.

Objectives:

After studying this unit, you should be able to:

analyse the concepts of HRM in India

describe the changing role of HR in India

explain the impact of globalisation and its impact on Indian business

2.2 HRM in India

The viewpoint of HRM in India has shifted in the last two decades. The

economic liberalisation of 1991 has created a massive change in the HRM

perspective in India. It not only led to the creation of a very competitive

market situation but also in turn forced Indian organisations to think and

implement innovative measures to attract and retaining employees.

The Indian workforce is now being globally acknowledged as a dedicated,

intelligent and a well-informed workforce. This is the result of the strong

foundation provided by the Indian education system at the primary,

secondary, technical and at professional levels. It is an undisputed fact that

the Indian Institutes of Technology, the National Institutes of Technology

and the famed India Institutes of Management are among the world-class

institutions to name a few. Quality education and research are encouraged

on these campuses and across the country, which mould and contribute to

the practices in Indian organisations.

There are arguments that HRM practices in India are a simple extension of

the HR practices from the established western organisations and thedeveloped countries. They argue that much of the changes in the

employment perspectives in India have changed only after the economic

liberalisation. However, there is an equally strong cultural impact on the

hiring practices, compensation standards, benefits and statutory benefits,

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performance linked rewards and pay-out, which though in-step with

international HRM practices have a flavour of their own. We will discuss afew distinct differentiators that impact HRM practices in Indian

organisations:

The Indian culture is one that is deeply rooted in its societal and

collectivistic values whereby there is a natural urge to collaborate at the

workplace, work in teams and groups with ease.

Work culture-wise, the natural ability to work hard and long hours,

perseverance and the need to earn money impact the way the work is

organised in Indian organisations. It is not uncommon for the Indian to

compromise personal time with family/friends and instead attend to work

and satisfy a customer. There is an overwhelming sense of service thatmanifests itself at the workplace.

Indians are quick at accepting diverse views and ideas as a result of its

diverse religious and regional culture. Tolerance for diversity is high

among Indians and therefore not much HR efforts are needed to

practice tolerance towards others points of view.

The tolerance for ambiguity and uncertainty however is low in the Indian

workforce, which requires a lot more detailing of jobs and roles and

responsibilities. There is need therefore to establish definite boundaries

of authority and responsibility.

Availability of a large educated group of individuals of different calibre ofknowledge and skill allows the country to undertake different nature of

work beginning with lower skilled activities such as BPOs (Business

Process Outsourcing) and moving up the value curve to far more

advanced activities like KPOs (Knowledge Process Outsourcing).

Due to the availability of large employable individuals, compensation

and benefits costs continue to provide a competitive advantage for India.

There is a naturally expressed need to belong. This again is typical of

the Indian population and has brought about a significant amount of

customisation of the workplace and its norms to allow for cultural events

and activities through the year. There is a lot more scope for socialisingthat exists in the Indian organisations.

Current trend is that the overpopulated urban part of the country is

quickly moving to tire 2 and tire 3 cities, and towns where the cost of

living and wage levels are not as competitive, further expanding the

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Indian resource base for hiring and building talent, contributing to the

overall gain of the country.HRM in India however, is not structurally well-researched and hence there is

a lack of theoretical information to track and document its progress, unlike

the emerged countries, such as the USA and the UK, where the research

networks are mature and well established. Research is yet at its infancy in

India and there is a lot of dependence on the developed countries in

emulating best practices in the way people are hired and managed. Today

the organisations of Indian origin have their unique HR strategies that work

best for them. Work more and earn more is a common and accepted

philosophy at Indian workplaces. Work is respected, revered and almost

worshipped in Indian organisations. Benefits are basic yet equitable andadequate. There is a high focus on cash in hand as opposed to benefits and

perks.


State whether the following statements are true or false.

1. HRM in India is structurally well-researched.

2. The tolerance for ambiguity and uncertainty is high in the Indian

workforce.

3. Tolerance for diversity is high among Indians and therefore not much

HR efforts are needed to practice tolerance towards others points of

view.4. Indian employees require cultural events and activities in the

organisation.

5. There is a natural urge for Indian employees to collaborate at the

workplace, work in teams and groups with ease.

Activity 1:

Prepare a report on how the Indian culture has influenced the HR

practices in India.

Refer: 1.http://rphrm.curtin.edu.au/2007/issue2/india.html

2.http://www.f3.htwberlin.de/Professoren/Arora/discussion_paper/

Foreign_Multinationals_in_India-Dayanand_Arora.pdf
http://rphrm.curtin.edu.au/2007/issue2/india.htmlhttp://www.f3.htwberlin.de/Professoren/Arora/discussion_paper/%0b%20%20%20%20Foreign_Multinationals_in_India-Dayanand_Arora.pdfhttp://www.f3.htwberlin.de/Professoren/Arora/discussion_paper/%0b%20%20%20%20Foreign_Multinationals_in_India-Dayanand_Arora.pdfhttp://www.f3.htwberlin.de/Professoren/Arora/discussion_paper/%0b%20%20%20%20Foreign_Multinationals_in_India-Dayanand_Arora.pdfhttp://www.f3.htwberlin.de/Professoren/Arora/discussion_paper/%0b%20%20%20%20Foreign_Multinationals_in_India-Dayanand_Arora.pdfhttp://rphrm.curtin.edu.au/2007/issue2/india.html

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2.3 Changing Role of Human Resource in India

In the previous section, we discussed HRM in India. Let us now discussabout the changing role of HR in India.

The role of HR has undergone several changes in India. From being

considered as compliance checking body, human resource managers are

now being considered as strategic partners to the organisation. They are

involved in all the crucial business decisions made by the company. Their

role is not limited to designing the organisational structure to meet the

changing market demands, attracting high performing talent, evaluating

performance, retaining top talent and also ensuring that employees are

motivated and engaged.

The roles that HR in India has to take up have increased. They are the

change agents, counselors, motivators, trainers and also the spokeman of

the employees.

HRM challenges

One of the challenges HR managers face is the issue of upgrading the skill

set of employees through training and development. Indian companies are

recognising their responsibilities to enhance the employees opportunity to

develop skills and abilities for full performance within the position and for

career advancement.

The fast pace in which the global business environment is changing has

kept HR managers in India also on toes. Every little change in the business

environment bring along with it subsequent changes in the workforce. This

has become a challenge for the HR personnel to handle several complex

issues such as attracting the right talent who meets international work

standards, designing work teams, creating faster communication patterns,

creating innovative employee recognition strategies and devising measures

to ensure that the top quality talent is retained.

Managing changes in technology is also one of the challenges that an HR of

any organisation in India faces. Technology is changing rapidly, and everyday we are witnessing innovative technological advancements. All

organisations want to be technologically oriented. They want their

employees to aware of the changes and quickly adapt to them. This require

the HR personnel to attract the right talent with the required knowledge and

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are also responsible for upgrading the skills and knowledge and motivating

them to learn, absorb and come out of their comfort zones is a greatchallenge faced by many organizations.

Developing Accountability: With the advent of Six Sigma methodologies,

organizations have lowered their tolerance levels for mistakes, errors and

delays. It is a challenge which HRM in India is facing like its global

counterparts. It is not easy to train people to shoulder responsibility.

Managing workforce stress and employment relations: HR is the face of an

organization. It hires and fires employees and if the HR of an organization is

not emphatic towards its workforce it does not help in employment relations.

This factor is fast becoming a challenge for HRM especially in sectors like

hospitality, IT and allied support services, media and entertainment.

Managing inter-functional conflict: Earlier it was the friction between different

levels of an organization and now the new emerging challenge for the HR is

to manage inter-functional conflict within an organization. With

organizational restructuring becoming common in the past few years,

disputes and friction between different functions has been on the rise.

Managing workplace diversity: With globalization and Indias economy

changing gears to accelerate growth, organizations hire as well depend on a

people from different countries, cultures and ethnicity. To manage the

diverse workforce who have fairly diverse physiological and thepsychological influences, is also a huge challenge for the HR in the

emerging Indian economy.

Progressive HR policies

Today, most of Indian companies are committed to provide equal

employment opportunities for all. The employers are increasingly realising

the value of trained human resource, especially women, in India. Some

organisations are changing their HR policies to retain their valuable

employees. MNCs are providing flexible options such as working from a

different city, sabbatical from corporate life and extended maternity leave so

that female employees, at various life stages, benefit from these policies.

Entrepreneurship by employees

Indian organizations are encouraging 'entrepreneurs' or employees who

have ideas that could potentially become an asset. HRM has taken a

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leading role in encouraging Corporate Social Responsibility (CSR) activities

at all levels. Companies, such as Wipro, inculcate CSR values amongst itsworkforce right at the beginning during the induction process. Corporate

presentations and keeping employees updated through regular newsletters

are the instruments used by HR to keep employees energised about the

organisations socially responsible initiatives.

Over the last decade, India's vast manpower has played an instrumental

role in its economic success story. Indeed, the success of Indian companies

is not based on superior access to raw materials or technology or patents,

but fundamentally upon human skills. The synergy between the strategic

planning and innovative HRM practices will be pivotal as Indian Inc.

embarks itself on a global journey.


6. The challenges HR managers face is the issue of upgrading the skill

set of employees through ________ in the face of high attrition.

7. Most of Indian companies are committed to provide ___________

opportunities for all.

8. Human Resource Management has taken a leading role in encouraging

________ activities at all levels.

9. Organisations are changing their HR policies to retain their _________.

2.4 Globalisation and Its Impact on HR

In the previous section, we discussed the changing role of HR in India. Let

us now discuss about globalisation and its impact on HR.

The tendency of firms is to extend their sales and/or manufacturing to new

markets abroad, and for business everywhere. The one element that is

unique about every nation or company is its workforce.

A workforce that is knowledgeable and skilled at doing complex things

keeps a company competitive and attracts foreign investment. Well-trained

workers attract global corporations, which invest and provide employment

opportunities to the workers, which in turn generate additional training and

experience.

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Technology

The most important use of technology in HRM is in an organisations HumanResource Information system.

Trends in the nature of work

Technological and globalisation trends are in turn producing changes in the

nature of jobs and work. Following are a few trends in the nature of work:

Information technology and personal computers have allowed

companies to relocate operations to locations with lower wages.

Increased use of part time and temporary workers.

A service society

An enormous shift from manufacturing jobs to service jobs.

For service jobs new types of knowledge workers and new HRM method

to manage them.

Knowledge work and human capital

The distinguishing characteristics of companies today and tomorrow is

the growing emphasis on human capitalthe knowledge, education,

training skills and expertise of a firm's workers.

This growing emphasis on education and human capital reflects several

social and economic factors.

Now companies are relying more on employees creativity and skills.

Other trends affecting HRM

Equal employment opportunity laws that bar discrimination on the basis

of race, age, disability, religion, sex or national origin, have been

passed.

Virtually all managers are thus now legally bound to uncover and correct

instances of discrimination.

Mandated health benefits, occupational safety and health requirements.

Union-management relations.

HR managers have to deal with all these legal constraints.

Workforce diversityDiversity in the field of HRM can be defined as the situation that arises when

employees differ from each other in terms of age, gender, ethnicity,

education, etc.

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Managing diversity means establishing a heterogeneous workforce to

perform to its potential in an equitable work environment where no memberor group of members has an advantage or a disadvantage.

Young, skilful and knowledgeable employees are occupying positions of

importance.

Organisations now cannot discriminate on the basis of age. They must listen

to their experienced employees, to draw from their expertise and initiate

programmes that meet these needs.

At the same time companies have to understand and appreciate the

changing values of the young workers who join the company with lots of

expectations.

To attract and retain young brains, organisations have to institute

appropriate HR policies, supported by attractive compensation offers.

Figure 2.1 depicts workforce diversity.

19

Workforce

Diversity

Global

Markets

Mergers &

Alliance

Changing

Labour

Market

Teamwork

Strategies

Shift from

Manufacturing

to Services

Fig. 2.1: Workforce Diversity

There are five reasons, as shown in figure 2.1, why diversity has become a

dominant activity in managing an organisations human resources:

1. The shift from a manufacturing to a service economy.

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2. Globalisation of markets.

3. New business strategies that require more team work.4. Mergers and alliances that require different corporate cultures to work

together.

5. The changing labour market.


10. The most important use of technology in HRM is an organisations

__________.

11. Technological and ___________ trends are in turn producing changes

in the nature of jobs and work.

12. ___________ means establishing a heterogeneous workforce to

perform to its potential in an equitable work environment where no

member or group of members has an advantage or a disadvantage.

13. An enormous shift from manufacturing jobs to _____ is observed in

workforce diversity.

2.6 Summary

Let us recapitulate the important concepts discussed in this unit:

The viewpoint to Human Resource Management in India has shifted in

last two decades. Economic liberalisation in 1991 created a hyper-

competitive environment.

As international firms entered the Indian market bringing with them

innovative and severe competitiveness, Indian companies were forced

to adopt and implement innovative changes in their HR practices.

Increasing demand for skilled performers affected the companies to shift

focus on attracting and retaining high-performing employees in a

competitive marketplace.

Activity 2:

Identify three practices in Indian companies that you know of that are

specific to the Indian culture. Think of festivals and how they are

celebrated in companies.

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One of the challenges HR managers face is the issue of upgrading the

skill set of employees through training and development, Most of the Indian companies are committed to provide equal

employment opportunities for all.

A workforce that is knowledgeable and skilled at performing complex

jobs keeps a company competitive and attracts foreign investment.

Well-trained workers attract global corporations, which invest and

provide employment opportunities, which in turn, generate additional

training and experience.

2.7 Glossary

Corporate social responsibilityIt is a set of actions of a company that

changes business operations to improve, maintain, or mitigate a

companys impact on society and the environment.

GlobalisationThe integration of the worlds economies brought about

by the rapid improvements in communication and transportation.

Globalisation involves the spread of economic, social and cultural ideas

across the world, and growing uniformity between different places that

result from this spread.

Knowledge Process Outsourcing Knowledge process outsourcing(KPO) is a form of outsourcing, in which knowledge-related and

information-related work is carried out by workers in a different company

or by a subsidiary of the same organization, which may be in the same

country or in an offshore location to save cost.

Workforce diversity Differences among recruits and employees in

characteristics, such as gender, race, age, religion, cultural background,

physical ability, and sexual orientation.


1. Discuss the concept of HRM in India.

2. Discuss the impact of changing roles of human resource in India.

3. Discuss globalisation and its impact on HR.

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2.9 Answers


1. False

2. False

3. True

4. True

5. True

6. Training and development

7. Equal employment

8. Corporate Social Responsibility

9. Valuable employees10. Human Resource Information system

11. globalisation

12. Managing diversity

13. Service jobs

Terminal Questions

1. The Indian corporate is emerging as a base for committed, intelligent

and a knowledgeable workforce. As international firms entered the

Indian market bringing with them innovative and severe

competitiveness, Indian companies were forced to adopt and

implement innovative changes in their HR practices. For more details,

refer section 2.2)

2. The role of HR has transformed from that of an administrative and

legal compliance body to that of a strategic partner. Refer section 2.3

for more details.

3. A workforce that is knowledgeable and skilled at doing complex things

keep a company competitive and attracts foreign investment. Well-

trained workers attract global corporations, which invest and provide

employment opportunities, which in turn, generate additional trainingand experience.For more details, refer section 2.4

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2.10 Case Study

Indian Tech Tries to Retain Top WorkersByJessica MehroinIrani

At a time when most IT companies are reducing employee numbers to cut

costs, tech majors such as Wipro, TCS and Infosys are re-channelising their

manpower. Sabbaticals are more common and people on the bench are

being asked to undergo longer and more rigorous training programmes.

Wipro has asked some of its non-billable and skilled employees to move to

subsidiary Wipro Infotech on the same pay package as earlier; but they will

continue to be on the payrolls of Wipro Technologies.

"These are not under performers, but talented people we don't want to lose.The move to Infotech is currently for a year, and this will give them a chance

to be productive" said Pratik Kumar, Wipro Executive Vice President of

human resources. This will also help the company in sustaining high

utilisation rates.

The other option given to employees, who have been on the bench for over

six months, is a special programme which allows them to come to work for

10 days a month, at half their salary. "This allows them to take up

certification programmes, work on innovation projects and help in creating

question banks for domain specific internal tests" said Kumar. "Once we see

an opening for them on a project, we will transfer them immediately."

TCS has also put its benched employees on high-end training programmes

in areas such as enterprise resource planning, business intelligence and

analytics. "We are building a larger skill set as we would like to be ready

when the demand picks up," said a TCS spokesperson. The IT Company

has also invited its employees to write research papers on technology that

can be used by the company.

Reducing employee numbers for saving costs is a short-term solution, said

Nandita Gurjar, head of global HR at Infosys. "When demand picks up, we'll

be hiring skill pools at a higher cost; there will also be the cost of extratraining. We weed out non-performers, but retain talent even if they are not

being utilised currently."

While Infosys has said that 50 employees, at any given point of time, can

take a year off and work for an NGO at half their salaries, its peer Wipro has
mailto:[email protected]&Subject=Feedback%20on%20'Indian%20tech%20tries%20to%20retain%20top%20workers'mailto:[email protected]&Subject=Feedback%20on%20'Indian%20tech%20tries%20to%20retain%20top%20workers'

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introduced project rejuvenate where employees, across all levels, can take a

year-long sabbatical and pursue their hobbies.This is not restricted to those on the bench, but also for those working on

projects. Even though these people are asked to take a pay cut, it does not

matter.

"As long as you get to keep your job and do fun things to de-stress, a pay

cut doesn't matter," said a Wipro employee.

Discussion Questions:

1. What all strategies are taken by Indian IT companies to retain their

talented employees?

(Source: Business Week, Monday, March 30, 2009)

References:

1. Fisher, S, and Shaw. (2010).Human Resources Management. New

Delhi:Cengage publication.

2. K Aswathappa. (2010). Human Resource Management. New Delhi: Tata

McGraw Hill.

3. Wayne, C.F. (1998). Managing Human Resource. Irwin/McGraw Hills.

4. Durai, P.(2010). Human Resource Management, New Delhi: Pearson

Publication.

E-Reference:

1. http://www.chillibreeze.com/articles_various/HR-practices-in-Indian-

Corporate-510.asp - (Retrieved on 20th March, 2012)

2. http://www.managementparadise.com/forums/articles/6374-changing-

role-hr-todays-world-sees-lending-hand-every-other-dept.html (Retrieved

on 20th March, 2012)

3. http://www.shrm.org/Research/Articles/Articles/Documents/

09-0754%20India%20Talent%20Mindset%20Research%20Article-

FNL.pdf (Retrieved on 20th March, 2012)
http://www.managementparadise.com/forums/articles/6374-changing-role-hr-todays-world-sees-lending-hand-every-other-dept.htmlhttp://www.managementparadise.com/forums/articles/6374-changing-role-hr-todays-world-sees-lending-hand-every-other-dept.htmlhttp://www.shrm.org/Research/Articles/Articles/Documents/09-0754%20India%20Talent%20Mindset%20Research%20Article-FNL.pdfhttp://www.shrm.org/Research/Articles/Articles/Documents/09-0754%20India%20Talent%20Mindset%20Research%20Article-FNL.pdfhttp://www.shrm.org/Research/Articles/Articles/Documents/09-0754%20India%20Talent%20Mindset%20Research%20Article-FNL.pdfhttp://www.shrm.org/Research/Articles/Articles/Documents/09-0754%20India%20Talent%20Mindset%20Research%20Article-FNL.pdfhttp://www.shrm.org/Research/Articles/Articles/Documents/09-0754%20India%20Talent%20Mindset%20Research%20Article-FNL.pdfhttp://www.shrm.org/Research/Articles/Articles/Documents/09-0754%20India%20Talent%20Mindset%20Research%20Article-FNL.pdfhttp://www.managementparadise.com/forums/articles/6374-changing-role-hr-todays-world-sees-lending-hand-every-other-dept.htmlhttp://www.managementparadise.com/forums/articles/6374-changing-role-hr-todays-world-sees-lending-hand-every-other-dept.html

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Unit 3 Human Resource Planning

Structure:

3.1 Introduction

Objectives

3.2 Process of Human Resource Planning

3.3 Need for Human Resource Planning

3.4 HR Forecasting Techniques

3.5 Successful Human Resource Planning

3.6 Summary

3.7 Glossary


3.9 Answers

3.10 Case Study

3.1 Introduction

In the previous unit we studied about HRM in India. We also studied the

changing role of HR in India and learnt about globalisation and its impact on

Indian businesses. We have learnt that one of the most crucial challenges

that an HR personnel faces these days is preparing the perfect HR plan.

Human Resource Planning (HRP) can be defined as the method of

ensuring the right number of qualified people, in the right job at the right timeto bring the results in an efficient and effective manner.

In simple words, HRP is understood as the process of forecasting an

organisations future demand for, and supply of, the right type of people in

the right number. It is only after this that the HR department can initiate the

recruitment and selection process. HRP is a sub system in the total

organisational planning. Organisational planning includes managerial

activities that set the company objectives for the future and determines the

appropriate means for achieving those objectives.

The process of HRP starts with understanding the organisational objectives,and translating them into a schedule of employee requirements over a

period of time. The next step is to devise plans to secure the right resource

to meet these requirements.

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In this unit, we will discuss the process involved in human resource planning

and the need for HRP. We will also study the HR forecasting technique andthe factors to be considered for a successful HRP.

Objectives:

After studying this unit, you should be able to:

explain the process of human resource planning

state the need for HRP

list the HR forecasting techniques

list the factors responsible for the success of HR planning.

3.2 Process of Human Resource Planning

Let us now describe the process of Human Resource Planning.

The process of Human Resource Planning is one of the most critical, difficult

and continuing managerial functions which, according to the Tata Electric

and Locomotive Company (now known as Tata Motors), "embraces

organisation development, management development, career planning and

succession planning."

'Manpower planning consists of projecting future manpower requirements

and developing manpower plans for the implementation of the projections.'

Objectives of the human resource planning are: to maintain the required quantity and quality of human resource required

for an even and well-organised functioning of the organisation.

to forecast the turnover/attrition rates.

to plan to meet organisational human resource needs at the time of

expansion or diversification.

HRP may be rightly regarded as a multi-step process, including various

issues such as:

deciding goals or objectives.

estimating future organisational structure and manpower requirements.

auditing human resources both internally and externally.

planning job requirements and job descriptions/person specifications.

building a plan.

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HRP, therefore is used for determining long term needs, rather than for

momentary replacement needs. It has to take into account the careerplanning for individual employees and succession planning in the

organisation.

Let us now go in to the detailed steps that are involved in the HR planning.

Steps in human resource planning

The basic steps of HRP include the following:

1. Considering the effect of organisational strategy and objectives on

different units of the organisation in terms of the human resource

requirement.

2. Forecasting the manpower requirements of the organisation by involving

the line managers to decide and finalise the human resource needs of

their respective department. Forecasting may be carried out using

mathematical projection tools or judgements.

3. Forecasting the quality and quantity of human resource required by each

department/division.

4. Creating an inventoryof present manpower resources.

5. Matching the current human resources position incumbents in the

organisation with the numbers required in the future.

6. Developing an action plan to meet the future requirements in terms of

addition or separation, in a planned and phased manner. It involves

planning the necessary programmes of recruitment, selection, training,

development, utilisation, transfer, promotion, motivation and

compensation to ensure that future manpower requirements are properly

met.

Figure 3.1 depicts the various steps involved in the process of HRP.

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Organisational Plans and Objectives

Identify future human resource requirements

Compare with current HR inventory

Determine the nos. level and

criticality of vacanciesDetermine the redundant

nos.

Analyse the cost and time

involved in managing the

demand

Analyse the cost and time

involved in managing the

demand

Choose the resources &

method of recruitmentRedeploy Retrench

Fig. 3.1: Process of Human Resource Planning

(Source: ICFAI Centre for Management Research)

HRP is not only done by organisations and corporate bodies. It is a

prevalent practice at different levels of the organisation such as:

At the countrys national level, it is generally performed by the

government and covers items like population projections, programme for

economic development, basic and advanced educational infrastructure

and opportunities, occupational distribution across urban and rural

areas, industrial and geographical mobility of employable people.

At the state level, it may be performed by the state government and

would include manpower planning for the needs of the agricultural,

industrial and service sector.

At the specific industry level, it would include manpower needs forecast

for specific industries, such as engineering, heavy industries, consumer

goods industries and public utility industries.

At the level of the individual organisation/unit, it would relate to the

planning of manpower needs for each department and for various types

of personnel.


1. HRP has to take into account the __________ for individual employees

and ___________ in the organisation.

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2. Human resource planning helps to __________ the turnover/attrition

rates.3. Manpower planning consists of ___________future manpower and

developing manpower plans for the __________ of the projections.

Match the following:

4. It is generally done by the government a) At the industry level

and covers items like population

projections, programme of economic

development, educational facilities,

occupational distribution,

and growth, industrial and

geographical mobility of personnel.

5. It may be done by the government- b) At the state level

central or state-and may cover

manpower needs of agricultural,

industrial and service sector.

6. It may cover manpower forecast for c) At individual unit level

specific industries, such as engineering,

heavy industries, consumer goods

industries, public utility industries.

7. It may relate to its manpower d) At the national level

needs for various departments

and for various types of personnel.

3.3 Need for Human Resource Planning

In the previous section, we learnt the process of HRP. Let us now study the

need for HRP.

HRP is a mandatory part of every organisations annual planning process.

Every organisation that plans for its business goals for the year also plans

for how it will go about achieving them and therein the planning for the

human resource: To carry on its work, each organisation needs competent staff with the

necessary qualifications, skills, knowledge, work experience and

aptitude for work.

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Since employees exit the organisation both naturally (as a result of

superannuation) and unnaturally (as a result of resignation), there is anon-going need for hiring replacement staff to augment employee exit.

Otherwise, work would be impacted.

In order to meet the need for more employees due to organisational

growth and expansion. This in turn calls for larger quantities of the same

goods and services as well as new goods. This growth could be rapid or

gradual depending on the nature of the business, its competitors, its

position in the market and the general economy.

Often organisations might need to replace the nature of the present

workforce as a result of its changing needs, therefore the need to hire

new set of employees. To meet the challenge of the changed needs oftechnology/product/service innovation the existing employees need to

be trained or new skill sets induced into the organisation.

Manpower planning is also needed in order to identify an organisations

need to reduce its workforce. In situations where the organisation is

faced with severe revenue and growth limitations it might need to plan

well to manage how it will reduce its workforce. Options such as

redeployment and outplacement can be planned for and executed

properly.

Self Assessment Questions8. Human Resource Planning is essential because of frequent _________

which is unavoidable and even beneficial.

9. Manpower Planning is required in order to meet the needs of

_________ programmes that become necessary because of increase

in the demand for goods and services.

10. Manpower planning is also needed in order to identify areas in which

there is a __________ of personnel.

3.4 HR Forecasting Technique

In the previous section, we studied the need for human resource planning.

Let us now study the HR forecasting technique.

The success of HR plans depends on the accuracy of the HR forecasts that

are needed to implement the organisational strategies. These forecasting

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involve estimating the future requirements of the organisation in terms of the

nature and the number of people. An organisation may use one or more ofthe forecasting techniques available to assess the future HR requirements.

In fact, the accuracy of HR forecasting largely depends on the ability of the

forecasting techniques in rightly projecting the future.

Following are few of the HR forecasting techniques:

a) Index/Trend Analysis

b) Expert Forecasts/Delphi technique

c) Nominal Group Technique

d) HR Budgets:

Staffing/Manning Tables

e) Envelope and Scenario Forecastingf) Regression Analysis, etc.

g) Productivity Ration

h) Personal Ratio

i) Time Series

a) Index/Trend analysis

Trend analysis forecasts the requirement for additional manpower by

projecting trends of the past and present to the future. It makes use of

operational indices for this.

Historical relationship between the operational index and the Demand

for Labour.

Operational indices used are:

Sales

Number of units produced

Number of clients serviced

Production/Direct Labour Hours

Trend analysis can be used for forecasting overall Organisation, Aub-units,

or Indirect (Staff) and Direct (Line) Manpower requirements.

The Index/Trend analysis involves the following steps:

1. Select the appro priate business/operational index Select a readilyavailable business index, sales level that is known to have direct

influence on the organisational demand for labour.

2. Track the index over time Once the index has been selected, it is

necessary to go back in time for at least four or five most recent years.

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3. Track the workfo rce size over time Record the historical figures of

the total number of employees.4. Calculate the average (or mo st recent) rat io of the bu siness ind ex

to the workforce size (Employee Requirement Ratio) In this step,

the ratio of number of employees required for each thousand rupees of

sales is obtained by dividing each years number of employees by the

level of sales.

5. Calculate the forecasted HR d emand Multiply the annual forecasting

for the business index times the average employee requirement ratio for

each future year to arrive at forecasted annual demand for labour.

b) Expert forecasting or Delphi technique:

This method is essentially a group process to achieve a consensus forecast.This method calls for selection of a panel of experts either from within or

outside the organisation. A series of questions is prepared from the

responses received from a prior set of questions in sequencing manner.

The procedure of Delphi technique involves the following steps:

1. To start with, it requires selection of a coordinator and a panel of experts

from both within and outside the organisation.

2. The coordinator then circulates questions in writing to each such expert.

3. The experts then write their observations.

4. The coordinator then edits those observations and summarises, without

however disclosing the majority opinion in his summary.

5. On the basis of his summary, the coordinator develops a new set of

questionnaire and circulates those among the experts.

6. Experts then answer such set of questions.

7. The coordinator repeats the process till such time he is able to

synthesise from the opinion of the experts.

Figure 3.2 depicts the procedure involved in Delphi technique.

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Leader identifies judgment issues and develops questionnaire

Prospective participants are identified and asked to cooperate

Leaders send questionnaire to willing participants, who record

their judgments and recommendations and return the

questionnaire

Leaders compile summaries and reproduces participants

responses

Leader sends the compiled list of judgment to all participants

Participants comment on each others ideas and propose a f

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