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Human Resource ManagementNotes3.Kautilya in India (in his book Arthasastra) made reference to various concepts like jobanalysis, selection procedures, executive development, incentive system and performanceappraisal.Stage I: Pre-Industrial Era (1400-1700 AD)Beginning around 1400 AD and continuing until 1700 AD. This period is marked by an absenceof any formal Human Resource Management function within the organization. Several dramaticchanges occurred during this first stage that represent seeds from which modern HumanResource Management later grew.First, there was cessation of feudalism, release of labour from land and beginning of freeemployment relationship on which modern labour markets are based.Second, there was a shift from subsistence agriculture to a commercial mixed economy, the riseof urban economy, a diffusion economic control and distribution of wealth and income.Third, there was a spectacular growth of towns and villages along with a middle class thatincluded skilled craftsmen and merchants who were the forerunners of factory owners.Stage II: Industrial Revolution and Factory System (1700-1900 AD)The Industrial relations began in 18th century in the UK, in 19th century in the USA and in thesecond half of 20th century in India. It was made possible by the replacement of human effortand skill by the work of machines. One of the contributions of industrial relations was thedevelopment of the ‘factory’ system. Factories greatly expanded production and created a newclass of workers and managers. It brought about division of work. It necessitated supervising largenumber of workers. With the advent of factory system, personnel practices became autocratic,based on Commodity concept of Labour. Labour was purchased at terms designed to maximizethe employer’s profit. Consequently, there was a total neglect of “Human Factor”; the focus wasupon materials, market and production.Stage III: Scientific Management, Welfare Work and Industrial Psychology(1900-1935 AD)Scientific Management and Welfare Work represent two separate and concurrent movementsthat began in the 19th century and along with contribution from Industrial Psychology, mergedaround the time of World War I to form the field of Human Resource Management.Scientific management represents an effort to deal with labour and management inefficienciesthrough reorganisation of production methods and rationalization of work.Welfare work is defined as anything done for comfort and improvement, intellectual or social forthe employees over and above wages paid, which is not the necessity of industry, not required bylaw. It represents efforts to deal with labour problems by improving workers’ conditions.Industrial psychology represented the application of psychological principles towards increasingthe efficiency of industrial workers.Major Developments during this Stage:1881-1891: Factories Act of 1881 and 1891 was passed showing concern for the worker’s welfare.These acts were limited to working hours of women and children.1919: All India Trade Union Congress (AITUC) was formed.4LOVELY PROFESSIONAL UNIVERSITY

Unit 1: An Introduction to Human Resource ManagementInternational Labour Organisation was established as an autonomous organ of the League ofNations in 1919. It has its headquarters at International Labour Office in Geneva, Switzerland.The main objectives of social justice include:(a)It adopted an International Labour Convention and recommended to protect the worker’sclaims in the event of the insolvency of their employer.(b)It elaborated resolutions on the role of enterprises in employment growth, employmentpolicy as a component of overall development and the rights of migrant workers.NotesStage IV: Golden Age of Industrial Relation and Personnel ManagementMaintenance Function (1935-1970)After the World War I, there was great depression. Following the depression, there was anincreased need for the practice of Human Resource Management as a result of a growth in unionsand collective bargaining. At this time, there was a shift in emphasis towards the IndustrialRelation Function of Human Resource Management.During the period from 1945 to 1970, the primary focus of the employment relationship wason industrial relations and this human resource management function rose in prominence. Thepro-union legislation was followed by World War II, which created an extraordinary demandfor labour, resulted in unprecedented union prestige and fuelled a phenomenal growth in unionmembership.The industrial relation side of human resource management experienced its golden age between1948 and 1958. The general focus of human resource management was on industrial relationsbecause the primary need of many organizations was to operate in collective bargainingframework of labour relations.Major changes during the Period:1.The first step was the enactment of Industrial Disputes Act, 1947, which not only providesfor the establishment of permanent machinery for the settlement of industrial dispute butalso makes these awards binding and legally enforceable.2.Another development was setting up of Indian Labour Conference— a tripartite body tolook into industrial relation problems in India. It was constituted with the objective ofestablishing co-operative between government, employers and trade unions.3.Another important feature was change in attitude of government towards labour and theirproblems. Many labour laws were enacted to protect the interests of industrial workersduring 1947 to 1956. These laws cover many issues concerning labour such as seniority,wage rates, paid holidays, disciplinary matters, social security etc.Stage V: Control of Labour Tradition (1970-1990)The institution of the trade union, which is a product of capitalist industrialization, emerged inBritain and other developed countries in the West in the 19th century, basically to protect againstthe injustice and exploitation meted out to workers by the owners of Capital during the courseof industrialization. Labour movement in many countries started its own political parties andengaged in struggle at both the political and economic fronts. Gradually, over the years, thelabour class got integrated into the larger society with the acceptance of their demands by theemployers, first for collective bargaining and then for worker’s participation in management. Thisled to their rise to prominence and power in industry and society in the 20th century. But tradeunions witnessed significant loss of membership during the 1980s and 1990s. Various reasons forthe loss of control of labour tradition could be analyzed as follows:LOVELY PROFESSIONAL UNIVERSITY5

Human Resource ManagementNotes1.Trade union developed not under the leadership of workers but under the leadershipof outsiders that is social workers and nationalist leaders. It was led by political leaders.Moreover, the political leadership was internally divided on ideological lines.2.Governments increasingly took upon themselves the wage-welfare functions of tradeunions for which it passed a plethora of labour legislations, protecting jobs of workersand also providing for various welfare measures. This, however, further weakened tradeunions and impeded the growth of the system of collective bargaining in the industry. Infact, even though India has probably the largest number of labour laws in the world, it doesnot have a central law that provides for the recognition of trade unions.3.There has been significant change in the social composition of the labour force. A newgeneration of workers has emerged in their industries since the mid 50s or so, who arelargely from upper castes and who are also young, educated and urban in origin. Tothem, a trade union constitutes not a movement, but an agency which has to provide themservices in return for their subscription and political support. They leave a union when itis unable to provide them benefits and join those who promise to give them these benefits.Consequently, inter-union rivalry is high and the recognized unions particularly facedifficulty in retaining the support of workers on a continuing basis.4.In fact, rising unemployment and underemployment and increasing price have hit theworking class hard. Such a situation not only makes the workers primarily interested inquestions of job security, pay and other material rewards that is to strive for consumption,which is conspicuous by its nature. This, in turn, makes them more individualistic.5.The majority of Indian organizations are small and medium-sized and consequent size oftrade unions in these enterprises has to be small. The political fragmentation of the unionmovement also contributes to its small size. This small size of unions also accounts for theirpoor financial strength.6.The nature of linkage between unions at different levels and political parties varies a greatdeal from complete ‘ownership’ of unions by particular to allowing of different degrees ofautonomy to unions by parties like congress party.However, despite various weaknesses, unions in India often enjoyed considerable power at boththe national and bargaining levels, especially till the early 1970s or so, because of their linkagewith political parties and the support they got from the governments in power.Stage VI: Professional Tradition (1990-till Date)With the passage of time, personnel management has become mature and professionalized.Professional management is that management where decision-making rests with professionalmanagers, where there has been a divorce between capital and control and where owners ofbusiness are functionless owners.Specialized formal education: It requires advanced, specialized formal education and training.Besides, they should also have specialized in some discipline of management (like production,finance, marketing, personnel etc.)At this stage, personnel management became a professional field of management.Academic Qualification of Personnel Manager: An occupation in order to be called as a professionshould possess advanced specialized formal education and training.1.6Qualification varies from organization to organization and from one state to another stateof a country. It has undergone several changes from time to time. The list of qualificationincludes Post Graduate degree or diploma in Social Science, Sociology, Social Work,Personnel Management and Industrial Relation, Labour Welfare, Labour Laws, MBA withspecialization in Human Resource Management and Industrial Relations.LOVELY PROFESSIONAL UNIVERSITY

Unit 1: An Introduction to Human Resource Management2.There is no specific educational qualification prescribed for the post of PersonnelManagement in India. Technical managers without any experience or qualification areposted as Personnel Managers in public sector organizations like Indian railways, BHEL,SAIL. There has been increased importance to acquire knowledge or degree for the post ofHuman Resource manager.NotesFollowing are the characteristics of professional institution:1.Professional bodies: A profession is organized as a body with its own experts. Theprofessionals have developed a number of administrative societies, associations andinstitutions, which have a large membership of those who have qualified in personnelaffairs. The National Institute of Personnel Management, the Indian Labour EconomicsSociety, All India Management Association, International Personnel ManagementAssociation and American Society of Personnel Administration are some of such bodies.2.Members of the profession must maintain at all times an attitude towards their work andsociety, be interested, in continued acquisition of skills and knowledge, have a sense oftrusteeship, individual initiative and a right to expert and received financial recognition.3.Code of Ethics: Various professions like Medicine, Accountancy have ethical codes. But thepersonnel profession does not have such ethical codes.It cannot, therefore, be concluded, from the above analysis, that personnel management in Indiacompletely possesses the characteristics to be called as a profession. The situation may changein the years ahead, where organization requirements for professionally qualified people mightincrease.Task Arrange yourself in small groups of four or five students and compare and contrastthe differences among the organizations you investigated. Can you isolate any factors thatappear to influence how an organization perceives the value of its employees?1.3 HRM FunctionsThe function of human resource management is to plan, develop, and administer policies andprogrammes designed to make expeditious use of an organization’s human resources. It is thatpart of management which is concerned with the people at work and with their relationshipwithin an enterprise. A brief description of usual human resource functions is given below:Human Resource PlanningIn the human resource planning function, the number and type of employees needed toaccomplish organizational goals are determined. Research is an important part of this functionbecause planning requires the collection and analysis of information in order to forecast humanresources supplies and to predict future human resources needs. The basic human resourceplanning strategy is staffing and employee development.Job AnalysisJob analysis is the process of describing the nature of a job and specifying the human requirements,such as skills, and experience needed to perform it. The end product of the job analysis processis the job description. A job description spells out work duties and activities of employees. Jobdescriptions are a vital source of information to employees, managers, and personnel peoplebecause job content has a great influence on personnel programmes and practices.LOVELY PROFESSIONAL UNIVERSITY7

Human Resource ManagementNotesStaffingStaffing emphasises the recruitment and selection of the human resources for an organization.Human resources planning and recruiting precede the actual selection of people for positionsin an organization. Recruiting is the personnel function that attracts qualified applicants to filljob vacancies. In the selection function, the most qualified applicants are selected for hiringfrom among those attracted to the organization by the recruiting function. On selection, humanresource functionaries are involved in developing and administering methods that enablemanagers to decide which applicants to select and which to reject for the given jobs.OrientationOrientation is the first step toward helping a new employee adjust himself to the new job andthe employer. It is a method to acquaint new employees with particular aspects of their new job,including pay and benefit programmes, working hours, and company rules and expectations.Training and DevelopmentThe training and development function gives employees the skills and knowledge to performtheir jobs effectively. In addition to providing training for new or inexperienced employees,organizations often provide training programmes for experienced employees whose jobs areundergoing change. Large organizations often have development programmes which prepareemployees for higher level responsibilities within the organization. Training and developmentprogrammes provide useful means of assuring that employees are capable of performing theirjobs at acceptable levels.Performance AppraisalThis function monitors employee performance to ensure that it is at acceptable levels. Humanresource professionals are usually responsible for developing and administering performanceappraisal systems, although the actual appraisal of employee performance is the responsibility ofsupervisors and managers. Besides providing a basis for pay, promotion, and disciplinary action,performance appraisal information is essential for employee development since knowledge ofresults (feedback) is necessary to motivate and guide performance improvements.Career PlanningCareer planning has developed partly as a result of the desire of many employees to grow in theirjobs and to advance in their career. Career planning activities include assessing an individualemployee’s potential for growth and advancement in the organization.CompensationHuman resource personnel provide a rational method for determining how much employeesshould be paid for performing certain jobs. Pay is obviously related to the maintenance of humanresources. Since compensation is a major cost to many organizations, it is a major considerationin human resource planning. Compensation affects staffing in that people are generally attractedto organizations offering a higher level of pay in exchange for the work performed. It is relatedto employee development in that it provides an important incentive in motivating employees tohigher levels of job performance and to higher paying jobs in the organization.8LOVELY PROFESSIONAL UNIVERSITY

Unit 1: An Introduction to Human Resource ManagementBenefitsNotesBenefits are another form of compensation to employees other than direct pay for workperformed. As such, the human resource function of administering employee benefits sharesmany characteristics of the compensation function. Benefits include both the legally requireditems and those offered at employer’s discretion. The cost of benefits has risen to such a point thatthey have become a major consideration in human resources planning. However, benefits areprimarily related to the maintenance area, since they provide for many basic employee needs.Labour RelationsThe term “labour relations” refers to interaction with employees who are represented by a tradeunion. Unions are organization of employees who join together to obtain more voice in decisionsaffecting wages, benefits, working conditions, and other aspects of employment. With regardto labour relations, the personnel responsibility primarily involves negotiating with the unionsregarding wages, service conditions, and resolving disputes and grievances.Record-keepingThe oldest and most basic personnel function is employee record-keeping. This function involvesrecording, maintaining, and retrieving employee-related information for a variety of purposes.Records which must be maintained include application forms, health and medical records,employment history (jobs held, promotions, transfers, lay-offs), seniority lists, earnings andhours of work, absences, turnover, tardiness, and other employee data. Complete and up-to-dateemployee records are essential for most personnel functions. More than ever employees todayhave a great interest in their personnel records. They want to know what is in them, why certainstatements have been made, and why records may or may not have been updated. Personnelrecords provide the following:zzA store of up-to-date and accurate information about the company’s employees.zzA guide to the action to be taken regarding an employee, particularly by comparing himwith other employees.zzA guide when recruiting a new employee, e.g. by showing the rates of pay received bycomparable employees.zzA historical record of previous action taken regarding employees.zzThe raw material for statistics which check and guide personnel policies.zzThe means to comply with certain statutory requirements.Personnel ResearchAll personnel people engage in some form of research activities. In a good research approach, theobject is to get facts and information about personnel specifics in order to develop and maintain aprogramme that works. It is impossible to run a personnel programme without some pre-planningand post-reviewing. For that matter, any survey is, in a sense, research. There is a wide scope forresearch in the areas of recruitment, employee turnover, terminations, training, and so on. Througha well-designed attitude survey, employee opinions can be gathered on wages, promotions,welfare services, working conditions, job security, leadership, industrial relations, and the like. Inspite of its importance, however, in most companies, research is the most neglected area becausepersonnel people are too busy putting out fires. Research is not done to put out fires but toprevent them. Research is not the sole responsibility of any one particular group or departmentin an organization. The initial responsibility is that of the human resource department, whichLOVELY PROFESSIONAL UNIVERSITY9

Human Resource ManagementNoteshowever should be assisted by line supervisors and executives at all levels of management. Theassistance that can be rendered by trade

CONTENTS Unit 1: An Introduction to Human Resource Management 1 Unit 2: Strategic Human Resource Management 35 Unit 3: Job Analysis, Job Enrichment and Job Enlargement 46 Unit 4: Recruitment and Selection Process 73 Unit 5: Induction and Placement 91 Unit 6: Training and Development 101 Unit 7: Performance Management 123 Unit 8: Compensation Management 141 Unit 9: HRD 166