Concept of Human Resoure Management.

Organisations are made up of people and functions through people. With out people
organization cannot exist. The resources of men, money, material and machinery are
collected, coordinate and utilized through people. These resources cant fulfill the objectives
of an organization. They need to be united into a team. It is through the combined effort of
people that material and monetary resources are effectively utilized for the attainment of
common objectives. Without united human effort no organization can achieve its goal. All the
activities of an organization are initiated and completed by the persons who make up an
organization. This resource is called human resources and it is the most important factor of
production.
From the general view point, human resources may be defined as the knowledge,
skills, creative abilities, talents and aptitudes obtained in the population. From the viewpoint
of an organization, human resources represent the people at work. Indeed human resources
represent the quantitative and qualitative measurement of the workforce required in an
organization. Human resource (or personnel) management, in the sense of getting things done
through people. It's an essential part of every manager's responsibilities, but many
organizations find it advantageous to establish a specialist division to provide an expert
service dedicated to ensuring that the human resource function is performed efficiently.
"People are our most valuable asset" is a clich which no member of any senior management
team would disagree with. Yet, the reality for many organizations is that their people remain
under valued
under trained
under utilized
poorly motivated, and consequently
perform well below their true capability
The rate of change facing organizations has never been greater and organizations must absorb
and manage change at a much faster rate than in the past. In order to implement a successful
business strategy to face this challenge, organizations, large or small, must ensure that they
have the right people capable of delivering the strategy.
The market place for talented, skilled people is competitive and expensive. Taking on new
staff can be disruptive to existing employees. Also, it takes time to develop 'cultural
awareness', product/ process/ organization knowledge and experience for new staff members.
As organizations vary in size, aims, functions, complexity, construction, the physical nature
of their product, and appeal as employers, so do the contributions of human resource
management. But, in most the ultimate aim of the function is to: "ensure that at all times the
business is correctly staffed by the right number of people with the skills relevant to the
business needs", that is, neither overstaffed nor understaffed in total or in respect of any one
discipline or work grade.

Definition:Human resources management (HRM) may be defined as a set of policies, practices,

and programmes designed to maximize both personal and organizational goals. It is the
process of hiring people and organization together so that the objectives of each are achieved.
According to Flippo, personnel management or human resource management is the
planning, organizing, directing, and controlling of the procurement, development,
compensation, maintenance, and reproduction of human resources to the end that individual,
organizational and societal objectives are accomplished.

Scope of HRM
We can describe the scope of Human Resource Management into the following aspects.
1. The labour or Personnel Aspects: It is concerned with manpower planning, recruitment,
selection, placement, orientation, transfer, promotion, demotion, termination, training, and
development, layoff, wage and salary administration, incentives, producitivity, etc.
2. The welfare Aspects: This aspects is concerned with working conditions and amentias
such as canteens, creahes, rest rooms, housing, transport, education. Medical help, health and
safety, washing facilities, recreation and cultural facilities etc.
3. The Industrial relations Aspects:
This is concerned with the companys relation
with employees which includes union-management relationship, joint consultation,
negotiation, collective bargaining, grievance handling, disciplinary actions, settlement of
industrial disputes etc.
The scope of human resource can be described widely staying under the periphery of the
above listing on the following ways.
i. Setting general and specific management policy management policy for organizational
relationships, and establishing and maintaining a suitable organization for leadership
and co-operation.
ii. Collective bargaining, contract negotiation, contract administration, and grievance
handling,.
iii. Staffing the organization, finding, getting and holding prescribed types and number of
workers.
iv. Aiding in the self-development of the employee at all levels providing opportunities for
personal development and growth as well as for acquiring requisite skill and experience.
v. Developing and maintaining motivation for workers by providing incentives.
v. Reviewing and auditing manpower management in the organisation.
vi. Industry relations research- carrying out studies designed to explain employees
behaviour and thereby effecting improvement in manpower management.

Objectives of HRM
Human resources are the people that work for an organisation, and Human Resource
Management is concerned with how these people are managed. However, the term Human
Resource Management (HRM) has come to mean more than this because people are different
from the other resources that work for an organisation. People have thoughts and feelings,
aspirations and needs. The term HRM has thus come to refer to an approach, which takes into
account both:
1. The needs of the organisation
2. The needs of its people.
Different individuals have their own needs and aspirations. HRM therefore involves finding
out about the needs and aspirations of individual employees, for example through the
appraisal process and then creating the opportunities within the organisation (e.g. through job

enlargement) and outside the organisation (e.g. through taking up educational opportunities at
local colleges/universities) for employees to improve themselves.
HRM therefore relates to every aspect of the way in which the organisation interacts with its
people, e.g. by providing training and development opportunities, appraisal to find out about
individual needs, training and development needs analysis, etc.
Every organisation has some objectives and every part of it should contribute directly
or indirectly to the attainment of desired objectives. Objectives determined the character of an
organisation and serve as the basis for voluntary co-operation and coordination among
employees. Objectives also provide benchmarks or standards of evaluating performance.
Objectives of Human Resource Management are derived from the basic objectives of
the organisation. In order to achieve organizational objectives integration of employees
interest and employee interest is necessary. In this light the objectives of Human Resource
Management may be summarized as follows:
i. To help the organisation attain its goal by providing well-trained and well
motivated employees.
ii. To employ the skill and knowledge of employees efficiently and effectively i.e. to
utilize human resource effectively.
iii. To enhance job satisfaction and self-actualisation of employees by encouraging
and assisting every employee to realize
his/her full potential.
iv. To establish and maintain productive, self-respecting and internally satisfying
working relationships among all the member
of the organisation.
v. To bring about maximum individual development of member of the organisation by
providing opportunities for training and
advancement.
vi. To develop and maintain a quality work life(QWL) which makes employment in
the organisation a desirable personal and
social situation.
v. To maintain high morale and good human relations within the organisation.
ix. To help maintain ethical policies and behaviour inside and outside the organisation.
x. To manage change to the mutual advantage of individuals, groups, the organisation
and the society.
xi. To recognize and satisfy individual needs and group goals by offering appropriate
monetary and non-monetary incentives.

Characteristics of HRM
The following features or characteristics of HRM can be identified:
a. Comprehensive function: HRM is concerned with managing people at work. It
covers all types of people at all levels in
the organisation. It applies to workers, supervisors, officers, managers and other
types of personnel.
b. People-oriented: HRM is concerned with employees as individuals as well as
groups. It is the task of dealing with human

relationship within an organisation. It is the process of achieving the best fit

between individuals, jobs, organisations and
the environment. It is the process of bringing people and organisation together so
that the goals of each are met.
c. Action-oriented: Human resource management focuses on action rather than on
recordkeeping and procedures. It stresses
the solution of personnel problems to achieve both organizational objectives and
personal goals.
d. Individual oriented: Under human resource management, every employee is
considered as an individual so as to provide
services and programmes to facilitate employee satisfaction and growth.
e. Development oriented: HRM is concerned with developing potential of employees
so that they get maximum satisfaction
from work and give their best efforts to the organisation. It takes into account the
personality, interest, opportunities and
capacities of employees for this purpose. It seeks to help the employee to release
their full potential.
f. Pervasive function: HRM is inherent to all organisations and at all level. It is not
confined to the industry alone. It is useful
and necessary in government offices, armed forces, sports organisations, social
organisations and the like.
g. Continuous function: Management of human resources is an on going or never
ending exercise rather than one shot
function. It cannot turn on or off like water tap: neither can it only perform its
function one hour a day and 1 or 2 days a
week.
h: Future oriented: HRM is concerned with helping an organisation achieving its
objectives in he future by providing for
competent and well motivated employees. It attempts to obtain willing cooperate of
people for the attainment of the desired
objectives.
i. Challenging function: Managing of HR is a challenging job to the dynamic nature
of people. People have sentiments and
emotions so they cannot be treated like machines. It is, therefore necessary to
handle them tactfully. It is not simply
managing people but administrating a social system.
j. Science as well as Arts: HRM is a science as it contains as organised body of
knowledge consisting of principals and
techniques. It is also an art because it involves application of theoretical knowledge
into the problems of human resources.
In fact handling a human resource is one of the most creative acts.
k. Inter Discipline: HRM involves application of knowledge drawn from several
disciplines like sociology, psychology,
economics etc in order to deal with human problems effectively. A manager must
depend upon such knowledge.
l. Nervous system: HRM is similar to the nervous system in the human body. The
nervous system is not adjunct to the body
but is inherent in the whole body and intimately associated with its every
movement. Similarly, HRM is not an extraneous

element to the organisation structure. Rather it lies embedded in the structure, is

inherent in its functioning and an integral
part of the process of management itself.

Functions of HRM
The definition and nature indicates that management of human resources consists of
several inter-related functions. These functions are common to all organisations though
organisation may have its own human resources programme. These functions of human
resources may be broadly classified into two categories, viz i. managerial functions and ii.
Operative functions.
Managerial functions:
Managing people is the essence of being a manager. Like other managers, a human
resource manager performs the functions of planning. Organizing, directing, and controlling.
1. Planning: A plan is a predetermined course of action. Planning is the process of
deciding the goals and formulating policies and programmes to achieve goals. Planning
involves forecasting and research. Forecasting implies scientific anticipation of the future
environment. Human resource management involves forecasting needs for Human Resources,
predicting trend in labour market, wages, union demand etc and their impact on the
organisation. Planning helps to face successfully the changes that are likely to take in future.
It bridges the gap between where we are and where we want to go.
2. Organising: In order to implement the plans, a sound organisation structure is
required. Organising is the process of allocating tasks among the member of the group,
establishing authority- responsibility relationship among them and integrating their activities
towards the common objectives. In this way a sound relation between job, personnel, and
physical factors is developed.
3 Directing: Directing is the process of motivating , activating , leading and
supervising people. Directing includes all those activities by which a manager influences the
actions of subordinates. It involves getting other to act after all preparation have been made.
4. Controlling: It implies checking, verifying and regulating to ensure that everything
occurs in conformity with the palns adopted and the instructions. Controlling includes all
those activities which involves bringing back any out tracked activities into the normal track.
Controlling the management of human resources involves auditing training programmes,
analyzing labour turnover records, directing morale surveys, conducting separation
interviews and such other means.

Functions of Human Resource Management

MANAGERIAL FUNCTIONS

OPERATIVE FUNCTION

Planning

Organising

Directing

Controlling

Procurement
Development
-Job Analysis
-Performance
-Human Resource
appraisal
Planning
-Training
-Recruitment
-Executive
-Selection
development
-Placement
-Orientation
-Transfer
-Promotion

Compensation
-Job

Maintenance
Health
evaluation
Safety
- Wages and
Social security
salary administrationWelfare scheme
- Bonus and
Personnel records
incentives.

Operative Functions
The operative or service of Human Resource Management are the tasks which are
entrusted to the personnel department. These activities are concerned with specific activities
of procurement, development, compensation, and maintenance of an effective work force.
1. Procurement Function: It is concerns with securing and employing the right kind
and proper number of people required
to accomplish the organizational objectives. It consists of the following activities.
a. Job Analysis: It is the process of studying in detail the operation and
responsibilities involved in a job so as to
identify the nature and level of human resources required to perform the job
effectively.
b. Recruitment: It is the process of searching for required personnel and
stimulating them to apply for jobs in the
organisation. A proper balance should be maintained between the internal
and external sources of recruitment.
c. Selection: It implies judging the suitability of different candidates for the
job in the organisation and choosing
the best and most appropriate one.
d. Placement: It means assigning suitable jobs to the selected candidates so as
to match employee qualifications with
job requirements.
e. Induction or Orientation: It involves familiarizing the new employees with
the company, the work
environment and the existing employees so that the new people feel at home
and can start work confidently.
2. Development Function:
a. Performance and potential appraisal: It implies systematic evaluation of
employees with respect to their performance
on the job and their potential for development.

b. Training: It is the process by which employees learn knowledge, skills, and

attitude to further organizational and
personal goals.
c. Executive Development: It is the process of developing the managerial
talent through appropriate programmes like
conducting seminar, giving different types of training and making
arrangement to visit other places and factory for
study purpose.
3. Compensation Function:
It refers to providing equitable and fair remuneration to employees for their
contribution to the attainment of
organizational objectives. It consists of the following activities:
a. Job Evaluation: It is the process of determining the relative worth of the job.
b.Wages and salary administration: It implies developing and operating a
suitable wage and salary
programme. Survey are conducted to determine wages and salary structure
for various job in the
organisation.
c. Bonus: It involves payment of bonus as well as other incentives.
4. Maintenance Function:
It is concerned with protecting and promoting the physical and mental health
of employees. For this purpose several types of benefit such as housing, medical aid,
education facilities, conveyance facilities etc are provided to employees. Social security
measures like provident fund, pension, gratuity, maternity benefit, injury/disablement
allowance, group insurance etc are also arranged. Health, safety and welfare measures are
designed to preserve the human resources of the organisation.

Personal Vs Human Resource Management

Personnel management - The renewed emphasis on the importance of human resources in the 1980s
and 90s drew attention to the way in which people management was organized. Specifically, this
meant a critical review of the functions of personnel management.
Personnel management has been a recognized function in the USA since NCR opened a personnel
office in the 1890s. In other countries the function arrived more slowly and came through a variety of
routes. This excerpt from Human Resource Management in a Business Context looks at Personnel
management from a historical perspective.
Further notes: Traditional Personnel Functions which are also adapted to HRM are:
Recruitment - advertising for new employees and liaising with employment agencies.
Selection - determining the best candidates from those who apply, arranging interviews, tests, and
references.
Promotion - running similar selection procedures to determine progression within the organization.
Pay - a minor or major role in pay negotiation, determination and administration.
Performance assessment - co-ordinating staff appraisal and counselling systems to evaluate
individual employee performance.
Grading structures - as a basis for pay or development, comparing the relative difficulty and
importance of functions.
Training and development - co-ordinating or delivering programmes to fit people for the roles
required by the organisation now and in

the future.
Welfare - providing or liaising with specialists in a staff care or counselling role for people with
personal or domestic problems affecting
their work.
Communication - providing internal information service, perhaps in the form of staff newspapers or
magazines, handouts, booklets,
videos.
Employee Relations - handling disputes, grievances and industrial action, often dealing with
unions or staff representatives.
Dismissal - on an individual basis as a result of failure to meet requirements or as part of a
redundancy, downsizing or closure exercise,
Perhaps involving large numbers of people.
Personnel administration - record-keeping and monitoring of legislative requirements related to
equal opportunities and possibly
Pensions and tax.
HRM-type themes, including 'human capital theory' and 'human asset accounting' can be
found in literature dating as far back as the 1970s. But the modern view of human resource
management first gained prominence in 1981 with its introduction on the prestigious MBA course at
Harvard Business School. The Harvard MBA provided a blueprint for many other courses throughout
North America and the rest of the world, making its interpretation of HRM particularly influential.
Simultaneously, other interpretations were being developed in Michigan and New York.
These ideas spread to other countries in the 1980s and 1990s, particularly Australia, New Zealand,
parts of northern Europe - especially the UK, Ireland and Scandinavia - and also South and SouthEast Asia and South Africa. Today, the HRM approach is influential in many parts of the world.

The major differences of Personnel Management and Human Resource Management

are as follows

Personnel Management
Managem
1. Management has a short-term focus and
therefore deals with certain simple problems only
with piece meal solution.
2. Personal management regards investment in
people as variable cost.

Human Resource Management

1.

HRM is proactive in nature and makes system

wide intervention before any problem or change
takes place the integration of HRM. It is longterm approach.
2. HRM regards investment in people as social
capital.

Note: For rest points follow the Book fundamentals of Human Resource Management: Dev
Raj Adhikari

The External and Internal environment affecting HRM with special

reference to Nepal

Human Resource Management like other department is performed in internal and external
environment of an organisation.
Internal Environment
Internal environment exercises profound influence because it interacts closely and
frequently with the HRM function in an organisation. The internal environment consists of
organizational objectives, policies, formal structure and human resource system. Objectives
of HRM are derived form the organizational objectives. But the shortage of data on human
resources often makes it difficult to include it in the planning process. Personnel should
increase their activities and should use this information about performance to acceptance and
recognition. Personnel will have to speak the language of business in order to relate its
objectives to organizational goals. Jobs are designed and analysed on the basis on
organizational planning.
External Environment
Changes in the external environment of an organisation exercise a significant
influence on its personnel. The main environmental factors are described below.
a. Economic: Low growth rate, high rate of inflation and growing unemployment have been
main economic problem of Nepal. Per capita income is low and loyal educational policy is
producing more educated person which is creating more problem on educated unemployed.
All the above factors exercise significant influence on wage and salary levels.
b. Socio-cultural: Class structure, social values, occupational structure, religion and such
other socio-cultural factors influence the human resource management. Unionisation of
employees has created pressure for frequent increase in pay levels and benefits.
c. Political: Independence and democracy increased the expectations of working class.
Government has enacted a plethora of laws to regulate working conditions and employment
relation. The hold of political parties on trade unions has created problems of multiple unions
and union rivalry.
d. Technological: Technological changes have advanced the gap between factory work and
office. Job content and social relations among employees are changing. Job performance has
become dependent on dexterity in handling machineries rather than on craft skills. Individual
pride in work has been lost due to increasing interdependence. The situation calls for new
organizational relationship and different personnel techniques.
As South Asia becomes more integrated in the global economy, the firms in the region are
likely to make increasing use of sophisticated HRM tools. Macro-economic compulsions of
the national governments and decline in union power in these countries will help the
employers to push for such changes to further their business objectives. HRM is expected to
spread faster in those countries where the state of industrial relations has significantly
transformed from the reactive adversarial mode. Within a country changes will be faster in
the private sector where firms enjoy more flexibility. In this changing landscape, future

research should focus on how the HRM practices evolve over time. Do the cyclical
recessionary pressures in the product market force change of policy from soft to hard
HRM? Do the unionised firms make incrementally increasing use of soft HRM policies in
order to obtain greater employee involvement? Or, do the unions themselves envisage
transformation in their traditional roles? For now, the South Asian drama is unfolding to a
new act where HRM plays the key role.

Example study:
Leadership in Waiting
Article by:By Bishnu Aryal
If leadership is the most important determinant for the success or failure of a business unit or a nation
as a whole, an analysis of the current situation in Nepal calls for immediate corrections in leadership
development systems and practices. The ruling party is plagued by leadership crisis time and again. Girija
Prasad Koirala did not resign earlier as the CEO of the country despite his earlier promises. Interestingly and
surprisingly, the reason he gave was, he did not see his successor. Similarly, the position of Chairman in NCP
(UML) is also lying vacant as they have not figured out the person to hold the position since the demise of their
party chairman some years ago. Moreover, the nation is still to hear the declaration of the heir to the throne.
The business sector is following the suit. Most of the organizations do not have succession planning system to fill
senior level executive positions including CEO when the incumbent retires. As a result people at work are
directionless and doubtful about the future. Even the organizations having some succession planning are not
doing well. Many companies are closed or badly affected by incapable people holding the reins by way of family
relation. The whole picture may be described as leadership by default or shortsightedness.
Generally, the leadership in Nepal does not try to develop its successor because they feel insecure from the
second line, and hence do not delegate authority. Management development programs are not carried out. Bhola
Thapa the incumbent president of Nepal Association of Travel Agents (NATA) and owner of President Travels,
was once quoted as saying that there would be no second man in Nepal because as one becomes second man,
he tries to be the first and, indeed, would become the first. Leaders are neither visionary nor transformational. So
the country is the loser and its people are the sufferers. The reasons may be different depending upon whom you
ask, but from the HRM perspective this is due to lack of effective management of peoples dimension in
governance.
Succession planning is developing leadership in waiting. At corporate level this is a part of employee
planning and forecasting. Generally this refers to the plans a company makes to fill its important executive
positions. It ensures the supply of successors for current and future requirements for senior or key positions
arising from business strategy.
At corporate level succession planning includes eight major activities as suggested by Peter Walum
(see box). The real life practices in Nepal avoid the very first step and as a result all the activities in this field are
carried out in a fire-brigade style. For example, one may recall the situation in the bureaucracy and in public
enterprises in early 1990 when all those who had either completed a certain number of years of service or
reached a certain age, were removed suddenly. Follow up activities to ensure that the remainder of the
bureaucracy functioned more effectively, thus justifying the move, were not carried out. The "Friday Massacre"
(as it is also called sometimes because the decision was made public on a Friday to avoid the sudden burst of
emotions by such a large mass of sacked employees) made the bureaucracy and PEs rudderless. Inexperienced
and immature juniors had to fill most of the leadership position. The situation today is the result of the decision to
a large extent, it can be argued. Similar examples are aplenty in the private sector as well.
However, there are indications to show that the private sector business houses have started realizing
the importance of succession planning. As Prithivi Bahadur Pandey, who has been watching the countrys private
sector as a banker for last couple of decades, observes, the business houses are sending the younger
generation of their families for studies in business management. That they are sending for such studies not
merely the males but also the females, is an indication of the realization growing. Still, these are not going to be
enough. The employees themselves should be given the opportunity to gradually make it to the top through well
thought-out career planning opportunities offered to them.
Todays tomorrow is tomorrows today. Todays second man is tomorrows first man. Development of second
generation means preparation for tomorrow. Succession planning serves as an effective tool to create leadership
in waiting that will ensure organizational continuity and effectiveness in the long run. HR intervention in political
and corporate leadership development is the demand of the day.