Unit – 1

Evolution of HRM in Indian context

INDEX

1. Meaning of Human Recourse Management

2. Nature
3. Scope
4. Importance of HRM
5. Evolution & development of HRM
6. HRM function & objectives
7. HRD in India
8. Difference between HRM & HRD
9. Difference between HRM & personnel management
10.HRM & its environment- Internal & external
11.Challenges before HRM in present & changing environment.

By: Dr. Charul Verma

 UNIT- 1
Human Resource Management (HRM)
Human: refer to the skilled workforce in the organisation.
Resource: refer to limited availability or scarce.
Management: refer to maximise or proper utilisation and make best use of limited
and a scarce resource.
Dessler defines “HRM as a process of acquiring, training, appraising, and
compensating employees, and attending to their labor relations, health and safety, and
fairness concerns”.
Mathis and Jackson define “HRM deals with the design of formal systems in an
organization to ensure the effective and efficient use of human talents to accomplish
organizational goals”.
John Storey, states that “HRM is a distinctive approach to employment management
which seeks to achieve competitive advantage through the strategic deployment of a
highly committed and capable workforce, using an integrated array of cultural,
structural and personal techniques”.
Nature of HRM
1. Pervasive Force: Human Resource Management is an inherent part of an
organization. It is pervasive in nature and present in all enterprises at all levels of
management. It is the responsibility of each manager to select the right candidate
under him and pay attention to the development and satisfaction of each sub-ordinate.

2. People Oriented: HRM is concerned about people at work, both in individual

capacity as well as members of groups. It aims to put people on assigned jobs in order
to produce good results. The resultant gains are used to reward people and motivate
them towards further improvements in productivity.

3. Action-Oriented: Human Resource Management does follow rules, records, and

policies but it stresses the action. The focus is on providing an effective and timely
solution to employees for any problems, tensions, or controversies faced by them.

4. Future-Oriented: To sustain and grow in this competitive environment organizations

follow long term strategic planning. Effective Human Resource Management prepares
people for current as well as future challenges, especially working in an environment
characterized by dramatic changes.

5. Development Oriented: HRM continuously works towards the development of

employees. There are various tools used to make the employees reach their maximum
potential. Training programs are held to help employees enhance their skills and
knowledge. Monetary and non-monetary reward structures are tuned to motivate the
employees.

6. Enhance Employee Relations: HRM helps to build a healthy relationship between

the employees at various levels. It encourages mentoring and counseling to help

By: Dr. Charul Verma

 employees in times of need. It aims at creating a culture in the organization that is
conducive to learning and growth.

7. Interdisciplinary Function: The knowledge that has influenced Human Resource

Management is interdisciplinary in nature. It drives knowledge from five major
bodies: education, system theory, economics, psychology, and organizational
behavior.

Scope/Significance of HRM

1. Human resources planning: Human resource planning is a process by which the

company to identify the number of jobs vacant, whether the company has excess staff
or shortage of staff and to deal with this excess or shortage.

2. Job analysis design: Another important area of HRM is job analysis. Job analysis
gives a detailed explanation about each and every job in the company. Based on this
job analysis the company prepares advertisements.

3. Recruitment and selection: Based on information collected from job analysis the
company prepares advertisements and publishes them in the newspapers. A number of
applications are received after the advertisement is published, interviews are
conducted and the right employee is selected thus recruitment and selection are yet
another important areas of HRM.

4. Orientation and induction: Once the employees have been selected an induction or
orientation program is conducted. The employees are informed about the background
of the company. They are told about the organizational culture and values and work
ethics and introduce to the other employees.

5. Training and development: Every employee goes under training program which
helps him to put up a better performance on the job. Training program is also
conducted for existing staff that have a lot of experience. This is called refresher
training. Training and development is one area were the company spends a huge
amount.

6. Performance appraisal: Once the employee has put in around 1 year of service,
performance appraisal is conducted i.e. the HR department checks the performance of
the employee. Based on these appraisal future promotions, incentives, increments in
salary are decided.

7. Compensation planning and remuneration: There are various rules regarding

compensation and other benefits. It is the job of the HR department to look into
remuneration and compensation planning.

8. Motivation, welfare, health and safety: Motivation becomes important to sustain the
number of employees in the company. It is the job of the HR department to look into
the different methods of motivation. Apart from this certain health and safety
regulations have to be followed for the benefits of the employees.

By: Dr. Charul Verma

 9. Industrial relations: Another important area of HRM is maintaining co-ordinal
relations with the union members. This will help the organization to prevent strikes
lockouts and ensure smooth working in the company.

Importance of Human Resource Management

There are some points of importance of human resource management in the industrial
organization of the whole world. These considerations can help to understand the importance
of human resource management. We can say that there is important to human resource
management if all of these items are well managed. However, the following is a quick
discussion of these points:
1. Policy Formulation
If HRM can effectively create a human resource policy, its importance may be
acknowledged. It is the managerial insight into human resources. If all these policies are
formulated as per desire and for the fulfillment of organizational objectives.
2. Retaining Employees and Motivation for Gaining Goals
Human Resources Management (HRM) plays an important role in retaining employees and
motivating them to accomplish the company’s goal. By developing effective HR policies and
practices, HRM helps directly in creating a positive work environment that attracts and
retains talented employees. Additionally, by providing training and development
opportunities, HRM helps employees grow professionally which can lead to increased
motivation levels. Ultimately, by effectively managing employee relations, HRM can help
ensure that all employees are working towards the same common goal – the success of the
company.
3. Policy Execution
Efficient human resource management executes all human resource policies in accordance
with the goals and objectives of an organization. Efficient human resources can implement
human resource policies effectively and indiscriminately.
4. Maintaining Quality Work Life
Maintaining the quality of work life is a major condition for organizations. HRM helps
directly by ensuring that employees are treated fairly and equitably, providing a framework
for managing employee performance, and creating policies and procedures that support a
positive work environment. By addressing the needs of employees, HRM helps to maintain
morale and productivity, which in turn leads to better organizational outcomes.
5. Review of Employee Needs
Human resource management reviews employee needs, hopes, and aspirations from time to
time and regularly. If all these needs, hopes, and aspirations are properly assessed and
fulfilled, there may be good labor-management relations.
6. Increasing Profit and Productivity
By helping to increase productivity and profit, human resource management helps directly to
improve the bottom line. Additionally, by ensuring that employees are properly managed and
trained, human resource management can help reduce turnover and improve employee
satisfaction, both of which can also lead to increased profits.

By: Dr. Charul Verma

7. Utilization of Human Resources
Efficient human resource management can successfully utilize the efforts and sincerity of
employees. As a result, organizational goals may be met and all tasks can be successfully
carried out.
8. Producing Skilled Employees
Producing employees who are easily adaptable to change is the main function of human
resource management. By helping to directly shape the workforce, HR professionals can
create an organization that is better able to respond quickly and effectively to new
opportunities and challenges. This adaptability is essential in today’s rapidly changing
business environment, where changes in technology, consumer preferences, and other factors
can occur suddenly and with little warning. By proactively preparing employees for change,
HR managers can help their organizations stay ahead of the curve and maintain a competitive
edge.
9. Social Welfare
Employees are social beings. There may have various needs and demands that deserve to be
mitigated. Social welfare can enhance the involvements of employees, which can help the
satisfaction of top management.
10. Sustaining Business in Market
Human resource management is very important in an organization for sustaining business in
the market. It helps to ensure that employees are properly trained and have the skills
necessary to meet the needs of the company. Additionally, human resource management can
help to identify potential problems with employee relations and resolve them before they
become bigger issues. By effectively managing human resources, businesses can create a
positive work environment that is conducive to productivity and success.
Objectives of HRM/Personnel Management
The primary objective of HRM is to ensure the availability of competent and willing
workforce for an organization. Beyond this, there are other objectives too.
Specifically, HRM objectives are four folds: Societal, Organization, Functional and
personal.
1. Personal Objectives
HR has to assist employees in achieving their personal goals, such as higher wages
and salaries, job satisfaction, better working conditions, standard working hours,
promotion, motivation, welfare facilities, prestige, recognition, status, social security
leading to employee satisfaction. Strive to provide healthy hygienic working
conditions to the employees. HRM should motivate the employees and keep their
morale high. Every HR should convert the organization into an engaged
workplace by bringing together both engaged employees and engaged employers.
Employee engagement ideas encourage employees to gain confidence in the
organization.

2. Functional Objectives
HRM performs many functions for other departments directly or indirectly. HR to
develop HRMS to maintain healthy working relationships among all the employees
and to adopt sound, desirable organization structure. HR to oversee whether the

By: Dr. Charul Verma

 functions are performed in time or not. Create opportunities and facilities for an
individual or group developments according to the growth and development of the
organization. Develop human assets continuously through the training and
development programs.

3. Organizational Objectives
HRM has to prepare human resources to accomplish organizational goals. HRM to
achieve the organizational objectives like to earn profit, growth, expansion, survival,
diversification etc. via the HR functions namely planning, recruiting, selecting,
placement, induct, train and develop the human resources and to arrange for
performance appraisal of the employees. HRM serves other functional areas, so as to
help them to attain efficiency in their operations and benefit the organization. HR
should achieve organizational goals through the proper utilization of human
resources. Succession planning is an important aspect to be taken up as a
contemporary organizational objective.

4. Societal Objectives
HRM should follow the rules and laws or legal restrictions imposed by society. It has
to develop and maintain healthy relations between union and management. It is the
responsibility of Human Resource to ensure that legal, ethical, and social-
environmental issues are suitably dealt with. Contribute to minimization of socio-
economic evils such as unemployment problems, in equal distribution of income and
wealth, more employment opportunities for women etc. Aim in creating healthy work
relations in the organization and to work towards corporate social responsibility
(CSR) involving employees to contribute to the cause.

Functions of HRM

By: Dr. Charul Verma

The functions of HRM can be understood as:
1. Managerial functions
2. Operative functions
3. Advisory functions

1. Managerial Functions
a. Planning: Planning is necessary to determine the goals of the organisation and lay-
down policies and procedures to reach the goals. For a human resource manager,
planning involves planning of human resource requirements, recruitment, selection,
and training. It also includes anticipating vacancies, planning job requirements, job
descriptions and determination of the sources of recruitment.
b. Organizing: After planning, HR manager must design and develop organisation
structure to carry out the various operations. For this:
 Grouping of personnel activity logically into functions or positions
 Assignment of different functions to different individuals
 Delegation of authority according to the tasks assigned and responsibilities
involved
 Coordination of activities of different individuals.
Organizing helps the organisation in establishing relationships among the employees
so that they can collectively contribute to the attainment of company goals.
c. Directing: After planning and organizing, proper direction should be provided for
proper execution of the plan. Direction function of the HR manager involves
encouraging people to work willingly and effectively for the goals of the enterprise.
Direction is an important managerial function in building sound industrial and human
relations besides securing employee contributions.
d. Controlling: Controlling is concerned with the regulation of activities in accordance
with the plans, which in turn have been formulated on the basis of the objectives of
the organisation. The performance is to be verified in order to know that the personnel
functions are performed in conformity with the plans and directions. Controlling also
involves checking, verifying, and comparing of the actuals with the plans,
identification of deviations if any, and correcting of identified deviations. It also
involves performance appraisal, critical examination of personnel records and
statistics and personnel audit.

2. Operative Functions: The operative functions are those tasks or duties which are
specifically entrusted to the human resource department. These are concerned with:
a. Procurement
b. Development
c. Compensation
d. Integration
e. Maintenance

a. Procurement: It is concerned with obtaining the proper kind and right number of
personnel at the right time and at the most economical rates. It deals specifically with
the determination of manpower requirement, recruitment, selection, induction and
placement.
b. Development: Development of Human Resources is done through the training and
development programme. Development process includes improving the skills and
knowledge, creativity, ability, intellectual ability, capacities of employees.
Development process also moulds and changes the attitude and behavior of the

By: Dr. Charul Verma

 employees, improves their aptitude, commitment etc. Performance appraisal helps in
employee development programme. A systematic training programme has to be
arranged by the HRM for employee and management development. He has to prepare
career planning and development programme. HRM has to frame the policies and
plans of promotion, demotion and transfer of employees.
c. Compensation: It means providing adequate, equitable, regular and fair remuneration
to the employees. According to the services rendered by the employees, remuneration
should be given. For equitable and fair compensation, it should be based on job
evaluation, merit rating Techniques. HRM has to look after the wage and salary
administration. He has to formulate the incentives, bonus, fringe benefits, and social
security measures in the interest of the employees.
d. Integration: It deals with the integration of individuals, societal and organizational
goals. This function mainly focuses on employee satisfaction, grievance handling, and
maintenance of discipline and free flow of communication at all levels.
e. Maintenance: This function deals with sustaining and improving of already
established conditions. These include measures taken for health, safety, and comfort
of the workforce. The human resource department also provides for various welfare
services which relate to the physical and social well-being of the employees. These
may include provision of cafeteria, rest rooms, counselling, group insurance,
education for children of employees, recreational facilities, etc.

3. Advisory Functions: Human Resource Management is expert in managing human

resources and so can give advice on matters related to human resources of the
organization. Human Resource Management can offer advice to:
a. Advised to Top Management: The personnel manager advises the top management
in the formulation and evaluation of personnel programs, policies, and procedures.
b. Advised to Departmental Heads: The personnel manager advises the heads of
various departments on matters such as manpower planning, job analysis, job design,
recruitment, selection, placement, training, performance appraisal, etc.

History of HRD in India

HRD practices in India have emerged as the dominant topic in the broad area of personnel
management. The Indian approach to HRD (Human Resource Development) can be traced
back to the 1970s when it was articulated by Pareek and Rao. Additionally, L&T in
association with IIM-A reviewed all aspects of its operations.

In 1974, consultants Prof. Udai Pareek and Prof. T.V. Rao studied the organisation and
prepared a new integrated system called the Human Resource Development (HRD) System.
This was probably the first of its kind in India. The new system established the linkages
between the various personnel-related aspects such as performance appraisal, employee
counselling, potential appraisal training, etc. Prof. Pareek and Prof. Rao presented an
approach paper to the top management in the new ideas and this was accepted.

Based on the recommendations of the approach paper, a very high-level role was created at
the Board level to give a greater thrust to the new system. A separate HRD department was
created. A high-level internal team headed by a General Manager monitored the progress of
the implementation of the new system before transferring responsibility to the HRD
department.

By: Dr. Charul Verma

The HRD system has since then been reviewed from time to time and improvements made,
retaining the basic philosophy. The original consultancy reports authored by Dr. Udai Pareek
and Dr. T.V. Rao have laid the foundation for this new function and new profession. This
pioneering work of Dr. Rao and Dr. Pareek led later to the establishment of HRD
departments in the State Bank of India and its Associates, and Bharat Earth Movers Limited
in Bangalore in 1976 and 1978.

Current Scenario of HRD in India

It is no secret that employees’ attitudes about their jobs, benefits and employers can vary
greatly, ranging from enthusiastic to negative. Human resource development and
management is culture-sensitive, therefore it is important to examine the recent scenario of
HRD in India context by having a brief preview of HRD scenario in the global context.

An increasing number of employers are assessing the value returned from each penny spent
on their employees. They are targeting specific programmes and practices to the employees
that value them the most and becoming more important than ever. Determining what matters
most to employees and aligning expenditures with priorities is a strategic challenge for the
HRD function. Employees change continuously due to changes in personal preferences.

However, it is not possible to meet the needs of every employee cost-effectively and
practically. Therefore, understanding employees and the issues they face during their jobs
holds the key to the function to respond quickly. Professionals and employees differed on the
relative importance of all factors except one. In some organisations, the HRD function is very
much in tune with what their employees are thinking, while in others the gap may be larger.

Human Resource Development (HRD)

HRM is the framework for helping employees develop their skills, knowledge, and
abilities, which in turn improves an organization's effectiveness.

HRD is a series of planned processes that aim towards the enhancement of

knowledge, skill, personal development, well-being, and lifelong learning & training
of the workforce or human resources at an individual, organizational, regional, and
national level for creating effectiveness & better workplace environment for the
organization & employees.

According to Leonard Nadler, "Human resource development is a series of

organized activities, conducted within a specialized time and designed to produce
behavioral changes.”

Features of Human Resource Development

The essential features of human resource development can be listed as follows:

 Human resource development is a process in which employees of the organizations
are recognized as its human resource. It believes that human resource is most valuable
asset of the organisation.
 It stresses on development of human resources of the organisation. It helps the
employees of the organisation to develop their general capabilities in relation to their
present jobs and expected future role.

By: Dr. Charul Verma

  It emphasizes on the development and best utilization of the capabilities of individuals
in the interest of the employees and organisation.
 It helps is establishing/developing better inter-personal relations. It stresses on
developing relationship based on help, trust and confidence.
 It promotes team spirit among employees.
 It tries to develop competencies at the organisation level. It stresses on providing
healthy climate for development in the organisation.
 HRD is a system. It has several sub-systems. All these sub-systems are inter-related
and interwoven. It stresses on collaboration among all the sub-systems.
 It aims to develop an organisational culture in which there is good senior-subordinate
relations, motivation, quality and sense of belonging.
 It tries to develop competence at individual, inter-personal, group and organisational
level to meet organisational goal.
 It is an inter-disciplinary concept. It is based on the concepts, ideas and principles of
sociology, psychology, economics etc.
 It forms on employee welfare and quality of work life. It tries to examine/identify
employee needs and meeting them to the best possible extent.
 It is a continuous and systematic learning process. Development is a lifelong process,
which never ends.

Key Differences Between HRM and HRD

The significant differences between HRM and HRD are discussed in the following points:

1. Human Resource Management refers to the application of principles of management

to manage the people working in the organisation. Human Resource Development
means a continuous development function that intends to improve the performance of
people working in the organisation.
2. HRM is a function of management. Conversely, HRD falls under the umbrella of
HRM.
3. HRM is a reactive function as it attempts to fulfil the demands that arise while HRD is
a proactive function, that meets the changing demands of the human resource in the
organisation and anticipates it.
4. HRM is a routine process and a function of administration. On the other hand, HRD is
an ongoing process.
5. The basic objective of HRM is to improve the efficiency of employees. In contrast to
HRD, which aims at developing the skill, knowledge and competency of workers and
the entire organisation.
6. HRD is an organizationally oriented process; that is a subsystem of a big system. As
opposed to HRM where there are separate roles to play, which makes it an
independent function.
7. Human Resource Management is concerned with people only. Unlike Human
Resource Development, that focus on the development of the entire organisation.

By: Dr. Charul Verma

By: Dr. Charul Verma
Personnel Management

According to Edwin B. Flippo, “Personnel management is the planning, organizing,

directing and controlling of the procurement, development, compensation, integration
and maintenance and separation of human resources to the end that individual and
societal objectives are accomplished.”

According to French Wendell, “Personnel management is the recruitment, selection,

development, utilization, compensation and motivation of human resources by the
organization.

According to Brech, “Personnel Management is that part which is primarily

concerned with human resource of organization.”

Nature of Personnel Management

The following points will bring out the nature of personnel management:

1. Managing People: Personnel management is concerned with managing people at

work. It does not manage only organized or unorganized workers in the organization,
but everyone working in the enterprise. It covers all persons including clerical staff,
executives, managers.
2. Concerned with Employees: Personnel management deals with employees both as
individuals as well as in groups. The aim is to motivate people for getting best results
from them.
3. Helping Employees: The employees are helped to develop their talent fully by
providing them appropriate opportunities. This will give them job satisfaction and
may improve their performance at work.
4. Universal Application: Personnel management may be used everywhere and in every
type of organization. It is equally useful in a government, semi-government, non-
profit organizations as is beneficial to industrial and commercial houses. It is a part of
general management and has roots extending throughout and beyond each
organization.
5. Continuous Application: Personnel management is continuously used in every type
of situation. It is not something which may be used here and there or now and then. In
the words of George Terry, “It cannot be turned on and off like water from a faucet; it
cannot be practiced only one hour each day or one day a week. Personnel
management requires a constant alertness and awareness of human relations and their
importance in everyday operations.”

Scope of Personnel Management

The scope of personnel management has become wide and is concerned with
organizing human resources with a view to maximize output and profits of the
organization and to develop the talent of the employees at work to the fullest possible
extent securing personal satisfaction (job satisfaction of the employees) and personal
satisfaction (as far as the organization is concerned).

By: Dr. Charul Verma

 1. Employment Function: It covers areas connected with the employment of
employees such as manpower requirements, recruitment, selection, placement and
induction.
2. Training Function or Development Function: In order to perform work
properly, employees must be trained. This function is concerned with increasing
the efficiency of employees by enhancing their skill.
3. Formulation of Promotion Policy: This function deals with the formulation of
policy setting out the basis of promotion (viz., seniority, merit or both).
4. Job Analysis: In job analysis, factors concerning jobs are analyzed (such as skill,
responsibility, working conditions, training, qualifications etc.). It is concerned
with anatomy of a job. It is a detailed study of job from all angles.
5. Merit Rating: It refers to the evaluation of an employee’s performance after he
has been placed on the job.
6. Job Evaluation: In order to know the worth of the job in terms of money job
evaluation process may be undertaken.
7. Compensation: This function deals with the determination of fair wages for the
employees. Wages may be paid according to the time spent or units produced or
there may be a combination of time and piece rate system in the form of incentive
plans.
8. Providing Service and Benefits: This function is concerned with the provision of
good working conditions and other benefits such as safety provisions, counselling,
medical services, recreational facilities, etc. The scope of personnel management
is changing over the years.

Key Differences Between Personnel Management and Human Resource Management

The following are the major differences between Personnel Management and Human
Resource Management:

1. The part of management that deals with the workforce within the enterprise is known
as Personnel Management. The branch of management, which focuses on the best
possible use of the enterprise’s manpower is known as Human Resource
Management.

2. Personnel Management treats workers as tools or machines whereas Human Resource

Management treats it as an important asset of the organization.

3. Human Resource Management is the advanced version of Personnel Management.

4. Decision Making is slow in Personnel Management, but the same is comparatively

fast in Human Resource Management.

5. In Personnel Management there is a piecemeal distribution of initiatives. However,

integrated distribution of initiatives is there in Human Resource Management.

6. In Personnel Management, the basis of job design is the division of work while, in the
case of Human Resource Management, employees are divided into groups or teams
for performing any task.

By: Dr. Charul Verma

7. In PM, the negotiations are based on collective bargaining with the union leader.
Conversely, in HRM, there is no need for collective bargaining as individual contracts
exist with each employee.

8. In PM, the pay is based on job evaluation. Unlike HRM, where the basis of pay is
performance evaluation.

9. Personnel management primarily focuses on ordinary activities, such as employee

hiring, remunerating, training, and harmony. On the contrary, human resource
management focuses on treating employees as valued assets, which are to be valued,
used and preserved.

By: Dr. Charul Verma

Difference between Personnel Management & HRM

By: Dr. Charul Verma

Evolution of HRM: From Personnel to Human Resource
Personnel Management has been a recognized function in the USA since National Cash
Register Company (NCR founded in 1884) opened a Personnel Office in 1890s. American
Personnel Managers worked within a goal-oriented tradition, identifying closely with the
objectives of their organization.
In other countries, the personnel management function arrived more slowly and came via a
number of roots. In the UK, for example, the origin was from 'Welfare Officers' by Quaker
owned companies such as Cadbury. At an early stage, it became evident that there was an
inherent conflict between their activities and those of line managers. The Welfare Officer
orientation placed Personnel Management as a buffer between the business and its
employees.
The concept of HRM emerged in the mid 1980s against the background of the works of
famous writers on management, like Pascale and Athos (1981) and Peters and Waterman
(1982), who produced lists of the attributes that they claimed characterized successful
companies.
The American Society for Training & Development (ASTD) has developed a Human
Resource Wheel in 1983 (Figure 1.1) highlighting different functions of HRM leading to
quality of work life, productivity and readiness for change.

 T&D focus: Identifying, assessing and through planned learning- helping develop the
key competencies which enable individuals to perform current or future jobs. Quality
of work life
 OD focus: Assuring healthy inter- and intra-personal relationships and helping groups
initiate and manage change.
 Organization/Job design focus: Defining how tasks, authority and systems will be
organized and integrated across organization units, and, in individual jobs.
 HRP focus: Determining the organization's major HR needs, strategies and
philosophies.
 Selection and staffing: Matching people and their career needs and capabilities with
jobs and career paths.
 Personnel research and information systems: Assuring a personnel information
base.
 Compensation/Benefits focus: Assuring compensation and benefits fairness and
consistency.

By: Dr. Charul Verma

  Employee assistance focus: Providing counselling to individual employees, for
personal problem-solving.
 Union/Labour relations focus: Assuring healthy union/organization relationships.

HRM & its environment- Internal & external.

The Fombrun Model

One of the first over statements of the RM concept was made by the Michigan School
(Fombrun et al., 1984; see Figure). They explained the human resource cycle that consists of
four generic processes or functions. These are:
1. Selection:- Matching available human resources to jobs.
2. Appraisal:- Performance management.
3. Rewards:- It must reward short as well as long-term achievements.
4. Development:- Developing high quality employees.
They suggest that the HR function should be linked to the line organization by providing the
business with good databases, by ensuring that senior managers give HR issues as much
importance as they give to other functions.

Figure: Fombrun Model

By: Dr. Charul Verma

The Harvard Model
The Harvard Framework of HRM was developed by Beer et al. (1984). This framework is
based on the believe that the problems of historical personnel of how they wish to see
employees involved in and developed by the enterprise, management can only be solved
when general managers develop a view point and out of what HRM policies and practices
may achieve those goals. Without either a central philosophy or a strategic vision-which can
be provided by the general managers- HRM is likely to remain a set of independent activities,
each guided by its own practices and traditions. The Harvard School suggested that HRM has
two characteristics. They are:
1. Line managers accept more responsibility for ensuring the alignment of competitive
strategy and personnel policies;
2. The personnel function has the mission of setting policies that govern how personnel
activities are developed and implemented in ways that make them more mutually re-
enforcing.

The Harvard model has integrated the history and practice of HRM. particularly emphasizing
HRM as a general management function rather than personnel function only. Figure explains
that the HRM policy should evolve taking into consideration stakeholder's interest and
situational factors, which will lead to HRM outcomes, like commitment, congruence and
cost-effectiveness. This ultimately will lead to long-term consequences, like individual well-
being organizational effectiveness and societal well-being which in turn will impact the
stakeholder interest and situational factors and also the HRM policy choices.

By: Dr. Charul Verma

Walton (1985) has further expanded the concept of HRM stating that the new HRM model is
composed of policies that promote mutuality-mutual goals, mutual influence, mutual
respects, mutual rewards and mutual responsibility. The theory propounds that policies of
mutuality will elicit commitment which in turn will yield both economic performance and
greater human development.
Story (1989) has distinguished between hard and soft version of human resource
management. The hard approach to HRM emphasizes the quantitative, calculative and
business strategic aspects of managing the head count resource in as 'rational' a way as is
done for any other economic factor, whereas the soft model of HRM traces its roots to the
human relations school, emphasizing communication, motivation and leadership. It involves
treating employees as valued assets, a source of competitive advantage through their
commitment, adaptability and high quality (of skills, performance and so on).
Karen Legge (1989) had defined the HRM theme that human resource policies should be
integrated with strategic business planning and used to reinforce an appropriate (or change an
inappropriate) organizational culture, that human resources are valuable and a source of
competitive advantage that. they may be tabbed most effectively by mutually consistent
policies that promote commitment and which, as a consequence, foster a willingness in
employees to act flexibly in the interest of the organization in its pursuit for excellence. In the
year 1990, another milestone was achieved by renaming of American Society for Personnel
Administration (ASPA) as Society for Human Resource Management (SHRM). Over the
years, a new approach-the Human Resource Management-has emerged which focuses more
on developmental aspects of human resource with a pragmatic and flexible approach.
Keith Sisson (1990) suggests that there are four main features increasingly associated with
HRM. These are:
1. Stress on the integration of personnel policies both with one another and with business
planning more generally.
2. The focus of responsibility for personnel management no longer resides with HR
specialists.
3. Focus shifts from manager, trade union relations to management, employee relations and
from collectivism to individualism.
4. Stress on commitment and the exercise of initiative, with managers now donning the role
of enabler, empowerer and facilitator.

By: Dr. Charul Verma

The Warwick Model
The Warwick Model of HRM illustrated in Figure 1.4 was developed from the Centre for
Corporate Strategy & Change at the University of Warwick and with two particular
researchers, namely, Hendry and Pettigrew. This model has five key elements-outer context,
inner context, business strategy content, HRM context, HRM content.
The model has thrown emphasis on two important interfaces like macro environment (outer
context) and micro environment (inner context), and it has integrated business strategy
content, HRM context and content which ultimately lead to organizational performance.
Warwick model has taken the cognizance of the business environment, business strategy and
HRM practices.

Hendry and Pettigrew (1990) argue that better descriptions of structures and strategy making
in complex organizations, and of frameworks for understanding them, are essential
underpinnings for HRM. In Armstrong's (2003) view, Hendry and Pettigrew (1990) believe
that as a movement, HRM expressed a mission, achieve a turnaround in industry. HRM was
in a real sense heavily normative from the outset; it provided a diagnosis and proposed
solutions. Hendry and Fettigrew (1990) further added that, what HRM did at this point was to
provide a label to wrap around some of the observable changes, while providing a focus for
challenging deficiencies-in attitudes, scope, coherence, and direction- of existing personnel
management.

By: Dr. Charul Verma

The Guest Model
David Guest, Professor of Organizational Psychology and HRM at King's College, London
has developed an HRM model in 1997. He has taken the Harvard model and worked on it
further. The central idea of his model is that HRM practices should ultimately lead to profits
and return on investment. This model emphasizes on human resource management strategies
which should lead to HRM practices, like hiring, training, appraisal, compensation and
relations which will have the HR outcomes like commitment, quality and flexibility. HR
outcomes will lead to behavioural outcomes, performance outcomes and financial outcomes.
This model has clearly reflected the input, throughput, output process ultimately leading to
organisational effectiveness. The uniqueness of this model is that it has emphasised on
integrating HR strategy with business strategy. Guest (1997) has given importance to
organizational citizenship as a powerful driver of the ultimately organizational effectiveness
(see Figure).

The overall purpose of HRM is to ensure that the organization is able to achieve success
through people. HRM has been defined as a strategic and coherent approach to the
management of an organization's most valued assets-the people working there who
individually and collectively contribute to the achievement of its goals.

By: Dr. Charul Verma

The Dave Ulrich Model
In this history of human resource management, there is a clear-cut paradigm shift from more
of a 'Prabachan' approach to a concrete value delivery approach. The pioneering work of the
Harvard model gave a holistic approach and an integrated framework for the HR
professionals to work. Subsequently, research was undertaken by several authors and
researchers who have come out with new Vistas of HRM linking to the business strategy.
One of the pioneering works is by Prof. Dave Ulrich on HR-Business partnering through a
systematic model in his book Human Resource Champions in 1997. This initiative was
basically on what HR could deliver for businesses i.e., it basically focused on outcomes
rather than what HR did. According to him, four outcomes are the most important for HR-
strategy execution, administrative efficiency, employee contribution and capacity for change.
He illustrated this through his multiple role model of HRM in 1997, which is depicted in
Figure.

The model defines four roles each titled to an outcome of what HR professionals
should deliver (Ulrich, 1997).
 Strategic partner-aligns HR practices with business strategies.
 Administrative expert-delivers HR practices with efficiency.
 Change agent-helps the organization adapt to new conditions.
 Employee champion-focuses attention on helping employees, developing competence,
generating commitment and discovering contribution.
All four roles must be played by HR professionals to be effective, yet an individual HR
contributor may be a Master of one role while being only sympathetic to and supportive of
the other three. Some HR leaders may be moving HR towards the strategic and change roles
and ignoring the employee champion and administrative expert roles, which threaten HR
credibility. When the basics are not being done well, strategic impact is short-lived (Ulrich,
Allen, Brockbank, Younger and Nyman, 2009). The business environment and business
conditions have evolved over the years which have also compelled the HR roles to develop
and change. Therefore, keeping abreast the change & evolution, Ulrich et. Al. (2009) in their

By: Dr. Charul Verma

book ‘HR Transformation’ have morphed these original four roles to five new roles which are
reflected in Table.

Ulrich et al. (2009) have explained that HR professionals as a strategic partner always help
line managers ultimately to reach their goals. Eventually in any organization, the value
creation has to be done mutually by both line and HR managers. The above roles by HR
professionals will create a larger impact in the organization.
Evolution of HRM in India
Though the development of personnel management in UK and USA was largely voluntary, in
India the concept emerged because of the governmental interventions and compulsions. In the
beginning of the 20th century, various malpractices in the recruitment of workers and
payment of wages were prevalent which caused a colossal loss in production due to industrial
disputes. The Royal Commission of Labor in India (1931) under the chairmanship of J.H.
Whitley recommended the abolition of the 'Jobber System' and the appointment of labor
officers in industrial enterprises to perform the recruitment function as well as to look after
the welfare of the employees. After independence, a labor welfare officer was identified as
personnel manager created by legislation under Section 49 of the Factories Act, 1948. The
role of a personnel manager was more of a custodian of personnel policy implementation and
compliance to different acts of the Factories Law. Two professional bodies were formed
namely, Indian Institute of Personnel Management (IIPM) at Kolkata and the National
Institute of Labor Management (NILM) at Mumbai. In 1980s, these two professional bodies
merged together and formed the National Institute of Personnel Management (NIPM),
headquartered at Kolkata.

By: Dr. Charul Verma

HRM Challenges
Successive economic crisis and depression-one after the other-have made business
environment completely uncertain and volatile. It has also been observed that there is no
industry which is recession proof. In spite of this, there is a fascinating development that
while there is a rapid growth in the developing world, there is also a weak growth in the
developed economies.
This has thrown several challenges for the HR professionals throughout the world. The recent
global report of 2012 by the Boston Consulting Group and the World Federation of People
Management Associations examines critical trends in people management by exploring
twenty-two key HR topics. The online survey polled 4288 executives from companies
through numerous executives, 102 countries and six major regions including 63 executives
from well-known companies all around the world. The critical topics that are considered of
the greatest urgency remained the same as in 2010 Global Survey. Three topics stand out as
the most critical:
(i) Managing talent
(ii) Improving leadership development
(iii) Strategic workforce planning
The new age HR challenges should be derived from the organizational challenges. Keeping in
view the developments in the present decade, the following challenges have emerged. These
are discussed in detail.
HR in Recession
The most serious economic recession in Ireland in 2011 and acute recession of all developed
economies have created challenges for HR professionals to evolve strategies to manage
organizations in recession. The recent study by Roch Queens University, Belfast has
identified top three most effective HR practices in the recession, namely, communications
and information disclosure, involving employees and creating efficiencies and cost control
measures in the business.
Further, MIT Sloan Management Review article 'Principles of the Master Cyclist' has
proposed that to anticipate moments and key turning points in the business cycle is one of the
key challenges.
HR role during Recession:
Human resource management is responsible for seeing that employees of an organization are
utilized in the most efficient and economical way possible. During recessionary times, when
budgets are tight, this vital human resource’s role becomes even more important to keep a
company on fiscal track. Human resources must pair the staffing needs of the business with
the necessity of maintaining lean overhead and operating costs.
Smart Hiring
Businesses may continue to hire new staffers during recessionary times. However, it is
important that human resources recruits, screens and hires individuals who are highly
qualified in their field and can bring a significant amount of potential to the business. Human
resources is charged with interviewing candidates to ensure each new hire is qualified for the
position and is not likely to leave any time soon. Fast turnover in employee ranks is costly to

By: Dr. Charul Verma

a small business that then has to reinvest in recruitment and rehiring. Human resources must
also select employees who can quickly come up to speed to ensure a short learning curve.
New employees who take a significant amount of time to become acclimated to the work
environment have the potential to slow productivity and decrease earnings.
Staff Reductions
Layoffs and downsizing are often an inevitable part of business operations during
recessionary times. Human resources managers must evaluate current staffers and their
responsibilities and make decisions about which positions are expendable and combinable.
This can mean reallocating staff members and financial resources to areas of the company
that are indispensable to operations. As part of this process, human resources managers may
have to determine severance packages, and in some cases, assist terminated employees with
job placement assistance and unemployment filing.
Employee Evaluations
Human resources is often involved in conducting employee evaluations. During a
recessionary period, it is vital to ensure all employees are performing at optimum levels. An
evaluation process usually involves salary adjustments and raises based on performance. This
is something that must be carefully taken under advisement based on the company’s available
budget. Human resources may need to discuss a freeze on raises as well as potentially
renegotiate the terms of some employee contracts to ensure the business remains financially
viable.
Strategic Planning
Human resources managers should be involved in short and long-term strategic planning
when it comes to payroll expenditures, particularly as it relates to looking for ways to
decrease overhead operating expenses. Some strategies can include reducing full-time
positions to part-time positions to save on health care and other benefits; moving some
positions from salary or hourly payroll jobs to independent consultant or freelance
contracting positions; and introducing job sharing or work-from-home telecommuting
positions, which can reduce some overhead and operating expenses.

By: Dr. Charul Verma