Fundamentals of Human Resource Management - Study Notes

Lesson summary

Chapter 9 opens Unit IV, Human Resource Management, of the Class 12 Commerce book. It begins with Thirukkural couplet 578: the world is theirs who are able to show kindness without injury to their affairs. The human resource is the most important element in any organisation; its success, growth and development depend on the quality of the work force, and only through people are all other resources actively utilised.

9.01 Meaning of human resource

• Globalisation, liberalisation and privatisation, with advances in information, communication and technology, opened the way for innovation and creativity in human resource.
• Unless an organisation recruits, selects and utilises high quality human resource, its sustainability remains a question.
• In an organisation, human resource means the employees, who are inevitable for its survival and success.
• Peter F. Drucker: "Man, of all resources available to him, can grow and develop."
• Not all human beings are human resources; only those who have acquired the required skill sets, talents, knowledge, competencies and capabilities.

9.02 Characteristics of human resources

1. The only factor of production that lives.
2. Created all other resources.
3. Only the labour of employees is hired, not the employee himself.
4. Exhibits innovation and creativity.
5. Alone can think, act, analyse and interpret.
6. Emotional beings.
7. Can be motivated financially or non financially.
8. Behaviour is unpredictable.
9. Gains value and appreciates over the years.
10. Movable.
11. Can work as a team.

9.03 Significance of human resources

• Only through human resource are all other resources effectively used.
• Sustainable growth of an organisation depends on it.
• Industrial relations depend on it; human relations are possible only through it.
• It manages all other factors of production.
• Its skills can be improved through training and development programmes.
• It can be utilised at all levels of management.
• It is well protected by legislative frameworks.

9.04 Meaning and definition of HRM

The branch of management that deals with managing human resource is Human Resource Management. It is managing people of different strata for organisational goals and includes the overall progress of the employee and the enterprise. HRM is concerned with hiring, motivating and maintaining people in an organisation.

E.F.L. Brech: HRM is that part of the management process which is primarily concerned with the human constituents of an organisation.

9.05 Features of HRM

9.06 Significance of HRM

The strategic role of HRM is acquiring, training, appraising and compensating employees and attending to labour relations, health, safety and fairness. Reasons:

1. To identify manpower needs: a form of investment; numbers fixed accurately to optimise cost.
2. To incorporate change: HRM acts as an agent to make change effective.
3. To ensure the correct requirement of manpower: no shortage or surplus.
4. To select right man for right job: no one under or over qualified.
5. To update skill and knowledge through training.
6. To appraise performance of employees periodically.
7. To improve competitive advantage in the globalised market.
8. To provide incentives and bonus to best performers, financial or non financial.
9. To determine employee commitment through interview or questionnaire.
10. To emphasise socialisation: cordial relations with peers, subordinates and managers.
11. To promote favourable employee attitude: conflict resolution, counselling, grievance handling.
12. To provide scope for collective bargaining: unions represent grievances.

9.07 Functions of HRM

Managerial functions

Operative functions