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Understanding human resource management: Concept, basic

functions and clarification

Article in Dynamics of Public Administration · January 2021

DOI: 10.5958/0976-0733.2021.00007.9

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 Dynamics of Public Administration
Vol. 38, Issue 1, January-June, 2021 pp. 94-104 [Link]
A product of Diva Enterprises Pvt. Ltd.

DOI: 10.5958/0976-0733.2021.00007.9

Understanding Human Resource Management: Concept, Basic

Functions and Clarification
Ahsan Abdullah
Assistant Professor, Department of Public Administration, Jahangirnagar University,
Savar, Dhaka-1342, Bangladesh
Email id: aasajib99@[Link]

Received: February 23, 2021; Accepted: May 28, 2021

ABSTRACT
Both public and private organizations heavily rely on human resources to be functional. However,
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proper management of this resource is needed that means right persons should be in the right positions
to achieve organizational goals. This study focuses on major human resource management functions
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to understand human resource management clearly. For better understanding a story example has
been given to know how a person unconsciously performs human resource management functions in
his daily activities. But large organizations have is to perform these functions more consciously,
extensively and obviously systematically since their area of activities is very much wider. Actually
knowledge comes from practical life. The knowledge of human resource management has also come
from practical life which is a focus of this study.

Keywords: Human resource management, Recruitment, Selection, Training, Compensation management,

Performance management, Motivation

INTRODUCTION
An organization mainly relies on three resources namely men, material and money. Among these
resources men or people are the most important resource because it is only living resource which
can make use of other non-living resources. This resource is heterogeneous compared to other
resources and human beings differ in personality, perception, emotions, values, attitudes, motives
etc. However, people can be resource when they are capable of achieving desired ends with the
support of other resources. So, the achievement of goals of an organization is heavily dependent
on the proper management or acquisition, development and control of this vital resource (Khanka,
2007). George Elton Mayo, who is known for his research works especially for the Hawthorne
Studies, is considered as the father of Human Resource Management. Human resources gained
a permanent recognition within organizations as a result of the human relations movement which
was initiated by George Elton Mayo during the late 1920s (HRMP, 2020a). The aim of this paper
is to let the people understand about human resource management and its basic functions easily

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 Understanding Human Resource Management: Concept, Basic Functions and Clarification

and clearly. This paper also focuses on the area of study or scope of human resource management.
A story example has been given to know how each and everyone unconsciously performs human
resource management functions in his / her daily activities. Human resource management involves
certain important functions like recruitment, selection, training, compensation management,
performance management, motivation etc. The study and understanding of human resource
management and its functions will facilitate the conscious or unconscious performance of these
functions by the human beings in their daily activities. There are many entrepreneurs who have
succeeded in their business without knowing formally anything about human resource
management. They performed more or less similar functions that are being performed by human
resource management experts. However, the idea and knowledge that came from many
entrepreneurs and businessmen have been compiled and systematized by different scholars and
have been given a theoretical frame. This theoretical knowledge of human resource management
is followed by most of the public and private organizations in modern age.
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METHODOLOGY OF THE STUDY

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The present study is a qualitative research that has been conducted by the secondary sources of
data. Secondary data are the data that have been already collected and analyzed by someone
and readily available for use (Kothari, 2004). Such data are cheaper and more easily obtainable
than the primary data (Abdullah, 2020). For this study, secondary data and information have
been collected mainly from books, journals, articles, reports, newspapers, and internet sources.
For the purpose of this study some theoretical literature has been reviewed.

Human Resource Management (HRM): Concept and a Story Example for the
Clarification of its Functions
Human resource management means managing people or human resources who work for the
organization by planning, organizing, directing and controlling to achieve organizational goals. It
is also a process of making the efficient and effective use of human resources to achieve previously
set goals (Khanka, 2007). Many scholars say about human resources before defining human
resource management. They imply that human can be resource when they are capable of achieving
desired goals with the support of other resources like money, materials and information. Human
resource management is the process of getting, preparing, stimulating and keeping those people
in the organization who have the capability to achieve desired ends (Bohlander and Snell, 2007;
HRMP, 2020b). Basically, human resource management involves all management functions that
directly affect the people who work for the organization (Fisher et al., 2006).
A story example has been given here for better understanding about human resource management.
Mr. X was an owner of a riverside resort. In the resort, there was a luxury building, a swimming

Dynamics of Public Administration 95

 Ahsan Abdullah

pool, a flower garden and a small open space. He also had two cars. Before starting to live in the
resort he kept in mind that how many people he would need in which positions to maintain the
resort, what will be their regular duties and what type of knowledge and skills they must have.
For doing this he did not need to be a human resource management expert. In fact anyone who
has this type of resort can do that.
Mr. X needed a caretaker for taking care of the whole resort. He needed a chef for cooking, a
maid for serving foods and some other activities and a cleaner for cleaning the house. He also
needed four security guards to secure the entrance and other parts of the resort, a gardener for
taking care of his garden, a worker for the maintenance of swimming pool and two drivers for
driving two cars. He identified positions of twelve people for his resort. He also identified the
duties and responsibilities for those positions and also identified required skills for performing
those duties. It can be said that he did job analysis. This process of examining the tasks, duties
and responsibilities of the job is called job analysis. The duties and responsibilities of the required
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positions are called job description and required skills and knowledge for performing the duties
of those positions are called job specification. After that, he searched sources from where he
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can get these people. An advertisement (formal source) was given by him containing the required
number of positions mentioning duties and required skills and knowledge for those positions. He
also searched people from his known persons (informal source). This process of searching
required number of people is called recruitment.
Many people wanted to hold these positions. So, they applied for those positions. Then Mr. X
fixed some criteria to evaluate the skills and knowledge of the applicants for different positions.
He gave practical examination for the position of driver and took viva for other positions. After
taking examinations he chose the right persons for the right positions. This process of choosing
the right persons for the right positions is called selection. After selection they were appointed.
After passing few months of appointment of those people Mr. X realized that some of them
lacked required skills and knowledge to perform their duties and responsibilities properly. They
were also facing difficulties to perform according to the desires of Mr. X. He analyzed the gap
between previously set level of performance by him and actual performance of the workers.
This process of evaluating the performance of the workers is called performance appraisal.
In these circumstances, Mr. X himself taught and guided them to perform their duties according
to his desire. He sent three of them to another person to acquire skills and knowledge so that
they can perform their duties properly. This process of giving them skills and knowledge by
teaching or guidance by Mr. X (informal method) or by sending them to expert persons (formal
method) to let them acquire skills and knowledge is training. When they were trained by Mr. X
in his resort it is called on the job training and when they were sent to expert person to acquire
skills and knowledge it is called off the job training.

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 Understanding Human Resource Management: Concept, Basic Functions and Clarification

At the time of appointment, Mr. X let them know about how much money they will be paid every
month for performing their duties. This type of payment is called salary. Mr. X also appointed
two other persons for a specific time period to perform some other tasks and they were paid
money on hour basis. This type of payment is called wage. Mr. X gave his workers extra money
as bonus on every festival. The workers also enjoyed annual and sick leaves. They were offered
pleasant working environment. Getting extra money as bonus, enjoying different types of leave
and getting pleasant working environment are called fringe benefits. These payments (salary,
wage and bonus), leaves and good working condition are termed as compensation and fringe
benefits or compensation management.
Everything was going fine. But after passing one year and few months from the appointment
period of the people Mr. X realized that few of his workers were indifferent in their job. He tried
to understand and talked to them about their indifference. He understood that these workers
thought they were inequitably paid. They got the news that workers of another resort at similar
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positions were getting more salary than them. This was the cause of their dissatisfaction. Other
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two workers requested Mr. X to increase their salary because it was difficult for them to maintain
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their families with the present amount of salary. Then Mr. X decided that the salary of his
workers will be increased five percent annually. He also decided that the workers will be given
extra money every month for bearing the expense of schooling of their children. These decisions
of Mr. X stimulated the workers to perform their duties more effectively. This process of satisfying
and prompting or stimulating the workers towards the task completion effectively is called
motivation. However, Mr. X kept in mind that if the workers will get more salary and benefits
from persons working in other organizations they may leave their present job. So, he carefully
tried to identify those workers who may leave. He also kept in mind that which worker should
not be in his resort. In addition, he kept in mind that the efficient, loyal and trustworthy workers
should not be lost. They should be kept in the resort by any means. At the same time he searched
the sources from where he can fill the gap if anyone leaves or if anyone is fired from his job.
Here, Mr. X did demand forecasting and supply forecasting as a part of manpower planning.
The process of his estimating the future quantity and quality of people required is demand
forecasting and estimating availability of human resource to fill up the gap is supply forecasting.
It is clear from the above story example that Mr. X performed human resource management
functions consciously or unconsciously according to his needs. Generally every person does so.
For doing all those functions they essentially need not be human resource management expert.
But it must be mentioned that this example is only for the understanding of human resource
management at primary level. In large organizations it is very difficult to perform human resource
management functions effectively without having enough knowledge or without being expert on
it. The above story example clarifies the basic functions of human resource management at

Dynamics of Public Administration 97

 Ahsan Abdullah

primary level. However, rest of the part of this paper illustrates the human resource management
functions theoretically and broadly.

Basic Functions of Human Resource Management

Many scholars and experts have identified many functions of human resource management. In
the story example of this paper also some basic functions of human resource management have
been identified. In this paper six basic functions of human resource management have been
elucidated which are recruitment, selection, training, compensation management, performance
measurement and motivation.

Recruitment
Recruitment is the process of attracting qualified candidates to apply for a job. There are several
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steps in the process of filling a vacancy. Recruitment is the first step among them. Recruitment
is the process by which organizations discover the sources of manpower to meet the requirement
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of the vacant posts and to attract potential individuals to fill vacancies (Khanka, 2007).
[Link]

Recruitment is a process. The first step in the process of recruitment is planning. It includes job
description, job specification, experience and all other related matters such as grade and level of
pay, special conditions etc. for the vacant post. After deciding how many people with what
qualifications are required, the second step starts which is strategy development. In this step the
organization considers the issues like whether to prepare the candidates themselves or hire
people from outside, what type of recruitment method is to be followed, which sources of
recruitment are to be used etc. The third step of recruitment is screening through which applications
are screened and shortlisted for interview or written test. The final step is evaluation and control.
In this step recruitment costs, recruitment method and recruitment sources are evaluated. Control
measures are taken if necessary (Khanka, 2007).
There are two factors of recruitment that influence the recruitment function of an organization.
These are internal and external factors. Internal factors include present size and future growth
and expansion of the organization, recruiting policy, image of the organization etc. (Khanka,
2007). Cost of recruitment is another considerable factor. External factors include unemployment
rate, labour market, labour laws, political and legal considerations etc. (Aswathappa, 2008).

Selection
Selection is the process of choosing the right persons for the right jobs. It can also be said that
selection is the process of hiring the best candidate from the all candidates. Selection differs
from recruitment. Selection process starts where recruitment process ends. Recruitment involves

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 Understanding Human Resource Management: Concept, Basic Functions and Clarification

searching whereas selection involves comparing those already searched (Khanka, 2007). Both
recruitment and selection process are mutually related and they contribute for the success of any
organization ([Link], 2020). However, faulty and biased selection can have extensive
negative impacts on the functioning and work conduct of the organizations. Using scientific
methods of selection can be a solution as they may enable to bring about better fit between the
employee and the job though foolproof match between them is not always possible (Khanka,
2007).
There is no single universally accepted selection process for the organizations. The process
varies from organization to organization. Every organization follows the selection process which
is suitable for it. However, following steps are followed by majority of the organizations to hire
best candidates:
1. Application screening
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2. Selection tests
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3. Interview
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4. Selection decision
5. Physical examination
6. Final selection (Aswathappa, 2008; Khanka, 2007).
During the course of selection all the academic qualifications and experience of the candidates
are verified by the Human Resource team to ensure that they meet the desires or needs of the
organization and are also suitable for the posts of the job ([Link], 2020). Finally selected
candidates are given job offer like appointment letter to join in the particular sections.

Training
Training is the organized process through which employees are imparted those basic skills which
are required by them for the efficient performance of their duties. It is basically job oriented as
it enables the employees to fill the gap between the skills they are having and those that are
required for the job (Khanka, 2007).

A Systems Approach to Training

The objective of training is to contribute to the organization’s goal. Training programmes should
be developed systematically keeping the organization’s goal in mind. The systems approach
helps an organization to develop a training programme methodically which is consistent with the
organization’s demand. The systems approach involves four phases:

Dynamics of Public Administration 99

 Ahsan Abdullah

1. Needs assessment

2. Program design

3. Implementation

4. Evaluation (Bohlander and Snell, 2007).

There are different training methods to implement training programmes. Various training methods
can be categorized into two major groups as under:

1. On-the-job training
2. Off-the-job training (Fisher et al., 2006).
On-the-job training is conducted at the work site or in the internal environment in the context of
the actual job. Off-the-job training is conducted outside of the organization and in a place which
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is specifically designed for training (Fisher et al., 2006).

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To select the suitable training method, the organization should consider the number of trainees,
[Link]

cost of training methods, availability of the skilled trainers and training places, availability of
technologies, preference of trainees etc. Generally organizations use live classroom instruction.
Many organizations use an e-learning approach. In terms of logistics, cost and time e-learning
approach is most effective (Fisher et al., 2006).

Training programmes should be evaluated. There are various ways to determine the effectiveness
of training programmes. There are the four basic criteria to evaluate training. These are:

1. Reactions

2. Learning

3. Behavior and

4. Result (Bohlander and Snell, 2007).

By the reactions of the participants the effectiveness of the training can be understood. Satisfaction
or dissatisfaction of the participants indicates the level of effectiveness of the training. By
comparing the knowledge and skills level of two types of employees (who attended in the training
programmes and who did not) it can be understood that how much the trainees learned. The
managers can follow several methods like observation, post-training performance appraisal etc.
to understand or ascertain whether training has influenced job behaviors and to what extent. As
the organizations want to see the results of training so they measure training result in terms of its
return on investment (Bohlander and Snell, 2007).

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 Understanding Human Resource Management: Concept, Basic Functions and Clarification

Compensation Management
Compensation management is a very important part of talent management and employee retention.
It is concerned with designing and implementing total salary and benefits structure for the
employees. It uses monetary and non-monetary rewards to attract and retain qualified people,
reduce turnover and boost employee engagement (Iedunote, 2020; [Link], 2020).
Compensation is referred to as money and other benefits received by an employee in return for
his or her labour or in exchange for performing an organizational task (Iedunote, 2020). In fact,
compensation brings the employee and the employer together in an organization (Management
Study Guide, 2020).

Components of the compensation system

There are direct and indirect compensation. Indirect compensation is also called fringe benefits.
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Direct compensation includes:

1. Basic Pay - Salary, Wage.
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2. Merit Pay- Annual increment of salary on the basis of performance

3. Incentive Pay- Bonus, Commission etc.
4. Deferred Pay - Pensions, Stock purchase, annuity etc. (Fisher et al., 2006).
Indirect compensation (fringe benefits) includes:
1. Protection Programmes - Medical facilities, life and health insurance etc.
2. Pay for Time Not Worked - Recreation leave, sick leave etc.
3. Services and Prerequisites - Car and car allowance, recreational facilities, free meals etc.
(Fisher et al., 2006).
Compensation system of the organization is the key factor for creating an employer brand.
Employer branding is the most important factor for attracting talent people. It is well known that
having talented people for the organization is a major asset or strength for achieving organizational
goals ([Link], 2020). So, organizations must take compensation management
function of human resource management seriously if they are to achieve a competitive advantage
in the market for talent (Management Study Guide, 2020).

Performance Management and Performance Appraisal

Performance management is a set of activities and evaluations that align employees’ work behavior
with the organization’s goals. It is an on-going process that ensures the organization is being
effective and efficient in the process of meeting its goals (Kimmons, 2017; Fisher et al., 2006).

Dynamics of Public Administration 101

 Ahsan Abdullah

Basically, it focuses on various elements inside the organization structure such as the overall
performance of the organization, the performance of a specific department, phases of producing
a product or service and employee performance (Kimmons, 2017).
Performance appraisal is a part of the performance management process in which performance
of an individual is assessed during a specific period of time based on predetermined standards
(Fisher et al., 2006; Surbhi, 2018). There are many ways of appraising employee performance.
Performance appraisal is used as an operational tool to improve the efficiency of employees by
evaluating their performance and potential (Surbhi, 2018). There are formal or structured and
informal or unstructured methods of employee assessment. By formal method performance is
assessed annually or bi-annually (Fisher et al., 2006). Performance appraisal methods used by
most of the organizations for effective performance appraisals are Management by Objectives
(MBO), 360-Degree Appraisal, Assessment Centered Method, Behaviorally Anchored Rating
Scale Method, Critical Incident Method etc. (EDUCBA, 2020). Providing feedback is very
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essential after appraising performance since it enables the employees to know the level of their
performance in comparison with the organizational standards determined beforehand. This can
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improve employee performance and corrective measures can be taken accordingly (Fisher et
[Link]

al., 2006).

Motivation
Motivation is the key to organizational effectiveness. It is the process of stimulating people to
actions towards the achievement of goals (Reliving Bad Days, 2020). The word ‘motivation’ has
been derived from the word ’motive’ that implies needs, desires or drives within the individuals.
It prompts people to behave in certain ways.
There are two types of motivation-extrinsic and intrinsic. Extrinsic motivations are those that
generally arise from outside of the individual and often involve rewards such as money, social
recognition, praise etc. On the other hand, intrinsic motivation arises from within the individual
without any conspicuous rewards provided from outside (Verywellmind, 2020; Healthline, 2020).
Motivation is related to performance. The performance of a person depends on his/her ability
backed by motivation. Performance = f (ability × motivation). The ability or motivation alone
cannot work well (Aswathappa, 2008). Where there is motivation backed ability, there is the
good performance. To become successful an organization must offer something to its employees
that accelerate the ability of the employees to accomplish the given tasks efficiently.

Motivational Tools
Motivational tools refer to the instruments that prompt individuals to action. There are two types
of motivational tools. These are monetary and non-monetary tools or incentives. Monetary tools

102 Vol. 38, Issue 1, January-June, 2021

 Understanding Human Resource Management: Concept, Basic Functions and Clarification

include salary, bonus etc. Non-monetary tools include work itself, promotion, recognition,
supervision, co-workers, job enrichment etc. (Khanka, 2007). Monetary and non-monetary tools
are highly related to job satisfaction. Monetary and non-monetary tools are also called job facets.
Satisfaction level of the employees in the organizations is depending on the job facets (Robbins
and Judge, 2009). Generally, satisfied employees perform well. So, job satisfaction is highly
related to job performance.

CONCLUSION
The objective of human resource management is to ensure the availability of the right persons
for the right jobs at right time to achieve organizational goals effectively. Every organization has
is to be careful in recruiting, training, retaining and controlling the human resources to achieve
desired ends. Though human resource management functions are being performed in everyone’s
day to day life activities yet the acquisition of thorough knowledge of human resource management
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is very essential. In the past many scholars and managers in different organizations introduced
many innovative ideas and tried a lot to manage human resources and to keep them in the track
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so that the organizational goals could be achieved effectively. Their efforts have not gone into
[Link]

vain. Their ideas and knowledge are proving to be very useful in managing human resources in
different organizations in the world in this modern era. Once upon a time workers in the organization
were considered as machines. However, this concept has changed with the passage of time.
The contribution of some scholars in the field of managing human resources is unforgettable,
especially the contribution of George Elton Mayo. Further meaningful researches in the area of
human resource management continues to take place as the organizational structure, job description
and job specification of different positions in different organizations are changing to comply with
the needs of the people of modern world.

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How to cite this article: Abdullah A, 2021. Understanding Human Resource Management: Concept,
Basic Functions and Clarification. Dynamics of Public Administration, Vol. 38, No. 1, pp. 94-104.

104 Vol. 38, Issue 1, January-June, 2021

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