Human resource management (HRM) and its significance

Human resource management (HRM) is the practice of recruiting, hiring, deploying and managing
an organization's employees. HRM is often referred to simply as human resources (HR).

Importance of HRM
 The purpose of HRM practices is to manage the people within a workplace to achieve the
organization's mission and reinforce the corporate culture.
 Managers can help recruit new employees who have the skills to further the company's goals.
 HR professionals also aid in the training and professional development of employees to meet the
organization's objectives.
 A company is only as good as its employees, making HRM a crucial part of maintaining or
improving the health of the business.
 HR managers monitor the state of the job market to help the organization stay competitive. This
could include ensuring compensation and benefits are competitive, events are planned to keep
employees from burning out and job roles are adapted based on the market.

How does HRM work?

HR professionals manage the day-to-day HR-related functions. Typically, human resources is a standalone
department within an organization.

• HR departments vary in the size, structure and nature of their individual positions.

• For small organizations, one HR generalist might perform a broad array of functions.

• Larger organizations have several HR professionals who handle specialized roles, such as recruiting,
immigration and visas, talent management, employee benefits and compensation. Though these HR
positions are specialized, job functions might still overlap.

Example:
Amazon is an example of a large company with multiple types of specialized HR positions. Few examples
of the HR job titles are:

 HR assistant.
 HR business partner.
 HR manager.
 Recruiter.
 Recruiting coordinator
 Recruiting manager.

Activities of HRM
Recruitment and Planning: It develops a pool of qualified candidates. During the selection phase they
select the right man for the right job.

Training and development: It is an ongoing process of developing workers ability and skills.
Performance appraisal and feedback: Provides information of how to train, motivate and reward workers.
HR managers can evaluate and give relevant feedback that may improve workers performance.

Compensation and benefits: High performing employees should be rewarded. Perks and benefits must be
provided to employees.

Labour relations and Trade union: HR managers need to have a good relation with unions that represents
workers. Unions set pay and talk about working conditions.

I..Recruitment Planning
Recruitment planning is the first step of recruitment process where vacant positions are analyzed and
described.

Identifying vacancy: The first step is identifying vacancy. This begins with receiving the requisitions
(demand) for recruitments from different departments of the organization to the HR department which
contains number of positions, qualifications and experience required, number of posts to be filled.

Job Analysis: The process of identifying, analyzing and determining the duties, responsibilities, skills,
abilities and work environment of a specific job. These factors help in identifying what a job demands and
what an employee must possess in performing a job productively.

 Job description: It provides the information about job roles, responsibilities and the positioning of
the job in an organization. Example is of job title, job location.
 Job Specification: The specification of the candidate, whom the HR team is going to hire. A job
specification provides information on elements like Qualification, Experiences, Training and
development. The first step in job specification is preparing the list of all jobs in an organization and
locations. The second step is to generate information about each job. Information about each job can
be Physical specification, Emotional and Behavioral specification, Mental specification

Job Evaluation: It is a process of analyzing, assessing and determining the worth of a job in relation to
other jobs in an organization. Its main objective is to analyze and determine which job commands how much
pay. There are several methods such as job grading, job classification and job ranking.

Internal sources of recruitment

Internal sources of recruitment:

• Hiring of the employees within the organization internally.

• Applicants seeking for different positions are those who are currently employed with the same
organization.

Various sources of internal sources of recruitment:

Promotions: Promoting employees within the organization by upgrading their cadre.

Transfers: Interchanging from one job to another without any change in rank and responsibility.

Internal advertisements: Process of advertising jobs within the organization.

Pros
 It is quicker to implement
  No need of induction training as employees already know the system
 Developing employee loyalty towards organization

Cons
 Prevents hiring of new potential candidates.
 An internal issue can take place of who got promoted and who was not promoted.
 Employees who are not promoted can be unhappy.

External sources of recruitment

It is basically hiring of employees outside the organization. Applicants seeking job opportunities in this case
are external to the organization.

Types of external recruitment:

Direct recruitment: The recruitment of qualified candidates is done by placing a notice of vacancy on the
notice board in the organization. This method of sourcing is also called as factory gate recruitment, as the
blue- collar and technical workers are hired through this process.

Advertisements: This is the most popular way of external source of recruitment. Job vacancy is announced
through print or electronic media with a specific job description.

Campus recruitment: Organizations visit colleges and universities for professional recruitment.

Pros
 New opportunities for job seekers
 Organization branding through external sources
 No partiality between employees.

Cons
 Time consuming process
 Cost incurred for hiring is high
 External candidates demand more benefits

II..Training and Development

Training is meant for operatives

 Aim: To develop additional skills

 Objectives: To meet the present need of employees

Development is meant for executives

 Aim: To develop the total personality

 Objective: To meet the future needs of employees.

Advantages:
 Help employees develop new skills
 Improves efficiency and productivity of individuals
 Keeps employees motivated and refreshes their goals
Disadvantages
 It is an expensive process which includes trainer’s cost
 Employees can quit after training and development

III..Performance Appraisal
Importance
Performance feedback: Employees are interested in knowing how they are performing and how they can
do better in future. They want this information to improve their performance in order to get promotions.

Requirement of Training and development: It is used to find out if an employee requires additional
training and development. Deficiencies in performance maybe inadequate knowledge or skills.

Lay off decisions: Performance appraisal is a good way of taking lay off decisions. Employees must be
asked to lay off, if the need arises. Weakest performers are first to be laid off.

Problems:
Comparing errors: We cannot compare two employees. Each employee is gifted in their unique way and
has different strengths and weaknesses.

Bias: Bias is also one of the problems. Everyone has bias towards someone or something.

Halo effect: It is a tendency to let the assessment of an individual’s one trait influence the evaluation of that
person’s other specific traits.

Stereotyping: Providing judgement based on what you may label the group similar to one that particular
employee belongs to.

Techniques of performance appraisal

Management by objectives:

It means management by objectives and performance is rated against achievements of objectives stated
by management. This process goes as under:

 Establish goals and desired outcomes for each subordinate.

 Setting performance standards.
 Comparison of actual goals with goals attained by the employees.
 Establish new goals and new strategies that are not achieved in previous years

Psychological appraisals:

These appraisals are directed to assess employee’s potential for future performance rather than past
one. It is done in the form of in-depth interviews, psychological tests and discussion with supervisors.

Assessment centers:

Managers may come together to have their job related exercises evaluated by trained observers.
Characteristics observed can be communicative ability, planning and organizational ability, assertiveness,
persuasive ability, planning and organizational ability, self-confidence, resistance to stress, energy level,
decision making, creative and mental assertiveness.

360 degree feedback:

It is an assessment system in which employees receive confidential, anonymous evaluations from the people
who work around them. This typically includes managers, peers and their subordinates.

IV..Compensation and benefits

Compensation: It refers to all forms of pay to employees arising from their work and this is offered in
monetary value.

Benefits: Benefits are membership based. They are meant to motivate and improve welfare of employees.

Types of compensation
Piece-Rate: Employees are paid for what they have do. This is also known as commission based
compensation.

Basic Compensation: Some companies offer basic salaries as compensation to their employees. People
belonging to same grade get equal basic pay. However, people who have high qualification and have
advanced skills may get higher pay as compared to their counterparts with lower levels of education as well
as skills. Another example is of experience.

Performance related compensation: Pay can be adjusted to reflect some performance measure and that can
be individual productivity or departmental productivity.

Compensation Schedule: They prefer to pay their employees on monthly basis while others can choose
weekly or fortnightly payment days. Aspects such as experience and levels of qualifications are mainly used
to determine compensation rate for each employee within organization.

Types of Benefits
Insurance: This category includes all types of health insurance (medical, dental, vision), as well as life
insurance and disability insurance. Health insurance options help meet employees’ and their families’
ongoing needs, while life and disability insurance policies provide funds for occasional or permanent
unforeseen circumstances.

Retirement plans: Retirement benefits allow employees to earn employer contributions or save and invest
some of their wages for the future. Opportunities to enroll in these plans and automatic payroll deductions
support and simplify the process of preparing employees for retirement.

Time off: People need breaks from their regular work schedule, and competitive employers understand the
worth of granting time off with pay. Holidays, sick leave, vacations, family leave are an example.

V..Trade Union and labour relations

Trade union: It is a group of workers who join together in order to promote their own interests. Employees
who wish to join a trade union must pay annual fee which contributes towards the cost and expenses that the
trade union provides to its members.

Aims of a trade union

 To improve the pay of its members
 To improve working conditions of its members
 To support the training and professional development of its members
 To ensure that their members interests are considered by employers when any decision is made which
will affect the workforce.