Human Resource Management PDF

Human
Resource
Management DCOM407/DMGT406 HUMAN RESOURCE MANAGEMENT Copyright © 2012 Madhurima Lall & Sakina Qasim Zaidi All rights reserved Produced & Printed by EXCEL BOOKS PRIVATE LIMITED A-45, Naraina, Phase-I, New Delh...

Human
Resource
Management DCOM407/DMGT406 HUMAN RESOURCE MANAGEMENT Copyright © 2012 Madhurima Lall & Sakina Qasim Zaidi All rights reserved Produced & Printed by EXCEL BOOKS PRIVATE LIMITED A-45, Naraina, Phase-I, New Delhi-110028 for Lovely Professional University Phagwara  SYLLABUS Human Resource Management Objectives: To provide a framework for understanding the HR policies and their impact on employees. To cover the entire range of HR functions and the strategic role of HRM in business. DCOM407 HUMAN RESOURCE MANAGEMENT Sr. No. Content 1 Introduction to Human Resource Management, Evolution of HRM, Objectives and Functions, HRM Policies, HR as a source of competitive advantage, Strategic HRM, e- HRM. 2 Human Resource Planning – HRP Process, Human Resource Information System (HRIS), Job analysis, job design & redesign, job carving, de – jobbing. 3 Recruitment & Selection: sources of recruitment, e –recruitment, alternatives to recruitment, Process of selection, Modern selection tools, Types of interviews, Induction / on boarding, Placement 4 Training and Development - Concept and Need, T & D Process, Training need Identification, Methods of Training, Designing T&D Programme, Outsourcing training. Executive development programme. Evaluation of training & developmental programmes 5 Performance management system: Its components, Essentials of effective Performance management system, Methods and techniques of Performance Appraisal, Potential appraisal. 6 Compensation Management : components of Employee remuneration, Devising a remuneration plan, Job evaluation, Paying a diverse workforce: cafeteria types pay plans, Performance based pay : Individual & Team incentives. Modern methods of gain sharing 7 Human resource Development: Concept, scope, need & objectives.HRD framework: Techniques, outcomes. Career planning and development, Quality of Work Life , Employee empowerment participation in management, Employee retention: Factors leading to turnover , employee retention strategies 8 Industrial Relations: Dunlop’s Model, Evolution Trade unions , causes of industrial dispute , Dispute Resolution mechanism, grievance handling, collective bargaining 9 Employee Health and Safety Management: the statutory & voluntary measures, Social security measures 10 Global HRM: Global staffing strategies, Managing a diverse workforce, Pre- departure training, expatriate repatriation, role of HRM in Mergers & acquisitions across the globe.  DMGT406 HUMAN RESOURCE MANAGEMENT Sr. No. Topics 1. Understanding the nature and scope of Human Resource Management: HRM functions and objectives, Personnel Policies and Principles, Evolution of HRM. 2. Human Resource Planning: HRP Process, Requisites for successful HRP, Job Analysis, Job design. 3. Recruiting HR: Nature, Purpose, Factors and Process, Evaluation and Control, Effective recruiting internal and external sources, Selection, Selection process, Employee induction and Placement: Requisites & Problems 4. Training,development and career management: Inputs in training and development, Gaps in training, training process, and career development 5. Performance management system: Performance appraisal, process, challenges in performance appraisal, job evaluation – process, methods. 6. Compensation & Benefits: Components, importance, factors influencing employee remuneration, Establishing strategic pay plans, pay for performance, employee benefits and services. 7. HRD: Need and scope of HRD, HRD practices in Indian organization. Welfare: Nature, Types, and Merits & Demerits Of Welfare. 8. Industrial Relations: Nature, Importance and approaches to IR, Trade union, Industrial conflicts, Labour Legislation in India. Workplace Safety And Health: Industrial Safety and Industrial health. 9. HRM effectiveness, Contemporary Issues in HRM, International HRM: Domestic HRM and IHRM compared, Managing international HR activities, Cultural Diversity &The Expatriate Problem.  CONTENTS Unit 1: Understanding the Nature and Scope of Human Resource Management 1 Unit 2: Human Resource Planning 19 Unit 3: Job Analysis 43 Unit 4: Job Design 56 Unit 5: Recruiting HR 66 Unit 6: Selection, Induction and Placement 83 Unit 7: Training, Development and Career Management 102 Unit 8: Performance Management System 126 Unit 9: Job Evaluation 140 Unit 10: Compensation and Benefits 153 Unit 11: Human Resources and Development 176 Unit 12: Welfare 188 Unit 13: Industrial Relations 202 Unit 14: Workplace Safety and Health 239 Unit 15: HRM Effectiveness 252 Unit 16: International HRM 269  Unit 1: Understanding the Nature and Scope of Human Resource Management Unit 1: Understanding the Nature and Scope of Notes Human Resource Management CONTENTS Objectives Introduction 1.1 Human Resource Management 1.1.1 Definitions 1.2 HRM Functions 1.3 Objectives of Human Resource Management 1.4 Nature and Scope of Human Resource Management 1.5 Personnel Policies and Principles 1.6 Principles of HRM 1.7 Evolution of HRM 1.8 Significance of Human Resource Management 1.9 Summary 1.10 Keywords 1.11 Review Questions 1.12 Further Readings Objectives After studying this unit, you will be able to:  Define HRM functions  Discuss objectives of HRM  State the relevance of Principles  Explain the concept of Personnel Policies  Learn Evolution of HRM Introduction HRM is concerned with managing the people resources of an organization. In fact, managing human resources is the most crucial and challenging task that management has to perform, crucial because it is the key to sustainability in the present competitive world and challenging because no two individuals are same (they have different set of needs, ambitions, aspirations, mental make-up, backgrounds. Can you recall more differences!!). Now imagine the task of the human resource manager who has to satisfy not only the different set of needs of its people but also meet the overall organizational objective. LOVELY PROFESSIONAL UNIVERSITY 1 Human Resource Management Notes It is necessary to recall what management is before studying Human Resource Management. Management has been defined by Mary Parker Follett as, "the art of getting things done through people". Management has been further defined as, "…..that field of human behaviour in which managers plan, organize, staff, direct and control human, physical and financial resources in an organized effort, in order to achieve desired individual and group activities with optimum efficiency and effectiveness." The important resources that have to be managed by the organization include: human, finance, operations and information. Out of these, human resource management is the only resource that is living part of the organization. It is this living part which vibrates positive energy and leads to the planning, organizing, controlling, coordinating and directing of the rest of the resources within the organization. It is this sub-system which will ultimately lead to the overall growth of the organization. Thus, human resource is a crucial sub-system in the process of management. 1.1 Human Resource Management HRM is important for all the managers because failing to manage human resource leads to following problems: 1. Hire the wrong person for the job 2. Experience high turnover 3. Have job misfits 4. Waste time with useless interviews 5. Lead to grievances amongst employees and even employees unrest 6. Allow a lack of training to undermine department's effectiveness 7. Commit any unfair labour practices 8. Get into legal issues related to labour laws. Remember, one can do everything else right as manager – lay brilliant plans, draw clear organization charts, set up modern assembly lines, and use sophisticated accounting controls – but still fail as a manager by hiring the wrong people or by not motivating subordinates, for instance. On the other hand, many managers – presidents, generals, governors, supervisors – have been successful even with inadequate plans, organizations, or controls. They were successful because they had the quality of developing their people. Human Resource Management is a process of bringing people and organization together so that the goals of each are met. It is that part of the management process which is concerned with the management of human resource in an organization. It tries to secure the best from people by winning their whole hearted co-operation. It may be defined as the art of processing, developing and maintaining competent workforce to achieve the goals of an organization in an effective and efficient manner. It is concerned with the most effective use of people to achieve organizational and individual goals. Human Resource Management is the process of managing the vibrating human resource in an organization, so that the employee and employer will be able to achieve their respective objectives. In fact, human resource management is the most important asset for an organization. The quality of human resource will determine its fate. 2 LOVELY PROFESSIONAL UNIVERSITY  Unit 1: Understanding the Nature and Scope of Human Resource Management 1.1.1 Definitions Notes According to M L Cuming, "Human Resource Management is concerned with obtaining the best possible staff for an organization and having got them looking after them, so that they want to stay and give their best to their jobs." Dale Yoder defines Human Resource Management as that part of the phase of management dealing effectively with control and use of manpower as distinguished from other source of power. According to F. E. L. Brech, Human Resource Management is that part of management progress which is primarily concerned with the human constituents of an organization. Edison defines, Human Resource Management as the science of human engineering. According to Leon C. Megginson, the term human resource can be thought of as, "the total knowledge, skill, creative abilities, talents and aptitudes of an Organization's workforce, as well as the values, attitudes and beliefs of the individuals involved." RM is a progressive field: We can pave back its evolution from administration to personnel management and now to human resource management. The scope of each of these fields is now discussed: 1. Administration: In early days of establishment of various fields of management, a department called administration was made. The objective of this department was to hire, monitor, supervise and compensate the workforce for the organization and also to monitor the overall operation. Later on with the growth of industrialization and advent of more systematic and scientific management, a natural offshoot of administration in the name of personnel management was formed, which later on gained importance and became a full-fledged and distinct field of management. 2. Personnel Management: As defined by the Institute of Personnel Management in the U.K. and also adopted by Indian Institute of Personnel Management: "Personnel Management is the responsibility of all those who manage people as well as being a description of the work of those who are employed as specialists. It is that part of management which is concerned with people at work and with the relationships within an enterprise. It applies not only to industry and commerce but to all fields of employment". 3. Human Resource Management: With rising competition and globalization, it was realized that the only way to maintain a superior position or rather, even remain in competition is to have such resources that are distinct from competitors and the only means to maintain that distinctiveness is through attracting and retaining the right human resource in the organization. Hence, the field of human resource management evolved from personnel management. The differences between the two are more on philosophical changes than on the functions. On the one hand, personnel management has the philosophy of maintaining human resources in the organization, whereas HRM has a philosophy of developing its human resources and considers human resources as the most important resource of the organization. 1.2 HRM Functions All managers are, in a sense, HR managers, since they all get involved in activities like recruiting, interviewing, selecting, and training. Yet most firms also have a human resource department LOVELY PROFESSIONAL UNIVERSITY 3 Human Resource Management Notes with their own top manager. How are the duties of this HR manager and his or her staff related to "line" managers' human resource duties? HR managers have both line and staff functions. Let us first discuss who are line and staff managers: Line Managers are authorized to direct the work of subordinates-they're always someone's boss. In addition, line managers are in charge of accomplishing the organization's basic goals. HR managers are generally line managers of their own department, they have their own hierarchy of jobs like V.P. (HR), Senior Manager (Recruitment), Senior Manager (Training), etc. Staff Managers, on the other hand, are authorized to assist and advise line managers in accomplishing these basic goals. HR managers are generally staff managers in areas like recruiting, hiring, and compensation. For example, one major company outlines its line supervisors' responsibilities for effective human resource management under the following general headings: 1. Placing the right person on the right job. 2. Starting new employees in the organization (orientation). 3. Training employees for jobs that are new to them. 4. Improving the job performance of each person in the department. 5. Gaining creative cooperation and developing smooth working relationships with the department. 6. Directing subordinates about their duties and responsibilities. 7. Developing the abilities of each person in the department. 8. Creating and maintaining department morale. Whereas the staff responsibilities for the same organization include: 1. Preparing and conducting an effective performance management system. 2. Administering the compensation management system of the organization. 3. Preparing career plans for all employees. 4. Recruitment, selection, training and development and grievance handling at various levels and departments in the organization. 5. In small organisations, line managers may carry out all these personnel duties unassisted. But as the organization grows, they need the assistance, specialized knowledge, and advice of a separate human resource staff. The human resource department provides this specialized assistance. In doing so, the HR manager carries out three distinct functions: 1. A Line Function: The HR manager directs the activities of the people in his or her own department and in related service areas. In other words, he or she exerts line authority within the HR department. 2. A Coordinative Function: HR managers also coordinate personnel activities, a duty often referred to as functional control. Here, the HR manager and department act as the right arm of the top executive to ensure that line managers are implementing the firm's HR objectives, policies, and procedures (for example, adhering to its sexual harassment policies). 4 LOVELY PROFESSIONAL UNIVERSITY  Unit 1: Understanding the Nature and Scope of Human Resource Management 3. Staff (service) Functions: Assisting and advising line managers is the main function of the Notes HR managers' job. For example, HR assists in the hiring, training, evaluating, rewarding, counseling, promoting, and firing of employees. It also administers the various benefit programmes (health and accident insurance, retirement, vacation, and so on). It helps line managers comply with equal employment and occupational safety laws, and plays an important role in handling grievances and labour relations. It carries out an innovator role, by providing "up-to-date information on current trends and new methods of solving problems-such as today's interest in instituting six-sigma quality programs and creating "learning organizations". And it plays an employee advocacy role: it helps define how management should be treating employees, makes sure employees can contest unfair practices, and represents the employees' interests within the framework of its main obligation to senior management. In most firms today, HR also plays a strategic role, by helping the CEO craft and implements the firm's strategy. Did u know? What is meant by competitive advantage? It is an ability of an organization to perform activities exceptionally well (availing profitable opportunities and thereby maximizing returns on investment) and gaining an edge over rivals when competing. 1.3 Objectives of Human Resource Management 1. Advising management on the human resource policies required to ensure that the organization has a highly motivated and performing workforce, has people equipped to cope with change and meet its legal employment obligations. 2. Attracting, hiring, rewarding, maintaining and developing the human resource of the organization. 3. Handling crisis and difficult human relations situations to ensure that they do not get in the way of the organization achieving its objectives. 4. Providing a communication link between the work force and organisation's management. 5. Acting as a custodian of organizational standards and values in the management of human resources. 1.4 Nature and Scope of Human Resource Management 1. It is the most important sub-system of management: Human resource is an indispensable element in an enterprise. Labour is a must in every organization. Management is concerned with achieving the objectives of business through people. It makes Human Resource Management a part of management. Human Resource Management applies to all principles of management also, so it is called sub-system of management. 2. Human Resource Management is related to managing the human beings working in an organization: Human Resource Management is related to selection and appointment of workers and employees. It is concerned with training, organizing, controlling and other welfare amenities of employees. 3. HRM has a pervasive function: Every management function at every level of management has to be performed by subordinate employees. Every functional area whether production, marketing or finance requires employees. It makes the Human Resource Management pervasive. LOVELY PROFESSIONAL UNIVERSITY 5 Human Resource Management Notes 4. HRM has a Wide Scope: Human Resource Management can be applied to wide range of activities in the organization such as selection, recruitment, training, development, remuneration. Thus, it has wide scope in all the levels, departments and hierarchies of an organization. 5. HRM involves co-ordination and co-operation: Human Resource Management aims at establishing harmonious relationship within the organization. It aims to develop relations on the basis of mutual trust and confidence. 6. HRM aims at employee satisfaction: Human Resource Management offers maximum satisfaction to employees and extracts their maximum contribution towards the organization. 7. HRM aims at effective leadership and motivation: Human Resource Management leads and directs the energies of workers and offers solutions to their problems. It motivates and encourages employees to their best services and contribution to the enterprise. 1.5 Personnel Policies and Principles The personnel policies and procedures distinguish in nature. It is very important to first understand how policy and procedure are different from one another. Table 1.1: Policy Vs Procedure Sl. No. Policy Procedure 1. Plan of action Action guideline 2. It is flexible because it gives area of It prescribes the exact sequence of discretion to manager e.g., leave policy activities without any scope of variation 3. More important at high level More important at low level 4. Views organization in totality so that Standards are prescribed uniformity is maintained 5. More specific Method of carrying out a policy 6. More stable – it removes uncertainty These are not very stable in nature and creates a climate of security for the employee 7. More flexible Procedure cannot be changed unless policies change Table 1.2: Personnel Policies and Strategy Sl. No. Policy Strategy 1. Guidelines to thinking and action of It is concerned with direction in which those who make decisions human and physical resources are deployed 2. It is repetitive in nature Made in partial ignorance of the environment 3. De legation of authority is downward It cannot be delegated Example: The personnel policy of Tata Steel, as contained in the Statement of Objectives, is given below. The company tries to take care of its employees:  by a realistic and generous understanding and acceptance of their needs and rights and by having an enlightened awareness of the social problems of the industry; 6 LOVELY PROFESSIONAL UNIVERSITY  Unit 1: Understanding the Nature and Scope of Human Resource Management  by providing adequate wages, good working conditions, job security, an effective machinery Notes for redressal of grievances and suitable opportunities for promotion and self-development through in-company and external programmes;  by treating them as individuals, giving them a sense of self-respect and better understanding of their role in the organisation and satisfying their urge for self-expression through a closer association with the management;  by creating a sense of belonging through human and purposeful activities as an integral part of human relations ensuring their willing cooperation and loyalty. Self Assessment State whether the following statements are true or false: 1. Competent employees will remain competent forever. 2. Economic resources, by definition, are scarce. 3. Getting and keeping good people is critical to the success of every organisation. 4. People are a source of competitive advantage when they improve the efficiency or effectiveness of the company. 5. Human Resource Management is not an end in itself. 6. The term 'workforce' means people working at lower levels only. 7. Human Resource is an open system within an organisation but organisations themselves are closed. 8. HRM policies are an amalgamation of ideas, concepts, principles and practices drawn from a number of fields. Task Take example of one company you are familiar with, which is not considering international human resource management and health and safety measures for getting the potential of their employees. Notes Policies, as useful instructional devices, offer many advantages to the personnel working at various levels. These are: Delegation: They help managers operating at different levels to act with confidence without the need for consulting superiors every time. Uniformity: They increase the chances of different people at different levels of the organisation making similar choices, when independently facing similar situations. They make the actions of organisational members more consistent. Better control: As personnel policies specify the relationship shared between the organisation, management and its employees, they allow members to work towards achievement of the objectives of the organisation without friction/conflict, paving the way for better control. Contd... LOVELY PROFESSIONAL UNIVERSITY 7 Human Resource Management Notes Standards of efficiency: Policies can also serve as standards in the execution of work. They enable the management to see if they have been translated into action by various groups in the organisation or not. In the light of actual performance, existing policies may be subjected to amendment/refinement. Confidence: Policies make the employees aware of where they stand in the organisation and create confidence in them while confronting routine and recurring problems. They reduce chances of misinterpretation, misrepresentation and friction. Speedy decisions: Policies can speed up decision making by providing a blanket framework within which personnel decisions can be made. They summarise past experience. Coordinating devices: Personnel policies help in achieving coordination. If organisational members are guided by the same policies, they can predict more accurately the actions and decisions of others. They ensure a steady course of action and prevent unwarranted deviations from planned operations. In the absence of a policy, similar questions must be considered time after time. Lack of a policy means that the organisation has established no continuing position. Despite their usefulness, personnel policies are not always easy to formulate and implement. 1.6 Principles of HRM The word principle means, the fundamental truth or law as basis of reasoning or actions. Human resource management is a very extensive area of operation, there should be certain principles or laws through which they can be governed. These principles are laid down with an objective that it proves as a guide for all types of organizations. Characteristics of Principles The characteristics of these principles should be that they are universally applicable and are easy to be followed in any type of organization. The HR principles are: 1. A fundamental or universal truth. 2. Generally applicable to originations. 3. It guides managers in formulating policies, programs and procedures. For example, principles of fair remuneration, principles of scientific selection of workers. 4. It is applicable at all levels of the organization. 5. It is dynamic in nature and leads to employee motivation and satisfaction. Notes Strategic Human Resource Management If a firm's competitiveness depends on its employees, then the business function responsible for acquiring, training, appraising and compensating those employees has to play a bigger role in the firm's success. The notion of employees as competitive advantage has therefore led to new field of study known as strategic human resource management, "the linking of HRM with strategic goals and objectives in order to improve business performance and develop organizational cultures that foster innovation and flexibility." Ideally, HR and top management together craft the company's business strategy. That strategy then provides the framework that guides the design of specific HR activities such as recruiting Contd... 8 LOVELY PROFESSIONAL UNIVERSITY  Unit 1: Understanding the Nature and Scope of Human Resource Management and training. This should produce employee competencies and behaviours that in turn Notes should help the business implement its business strategy and realize its goals. HR strategies are the courses of action HR uses to help the company achieve its strategic aims. 1.7 Evolution of HRM The historical evolution of HR can be drawn into six stages: Stage I : Pre-Industrial Era (1400-1700 AD) Stage II: Industrial Revolution and Factory System (1700-1900 AD) Stage III: Scientific Management, Welfare Work and Industrial Psychology (1900-1935 AD) Stage IV: Golden Age of Industrial Relations and Personnel Management Maintenance Function (1935-1970) Stage V: Control of Labour Tradition (1970-1990) Stage VI: Professional Tradition (1990- till date) Early Phase Though it is said that Human Resource Management as a discipline is of recent growth, it has had its origin dating back to 1800 BC. 1. For example, the minimum wage rate and incentive wage plans are included in the Babylonian Code of Hammurabi around 1800 BC. 2. The Chinese, as early as 1650 BC, had originated the principle of division of labour and they understood labour turnover even in 400 BC. 3. Kautilya in India (in his book Arthasastra) made reference to various concepts like job analysis, selection procedures, executive development, incentive system and performance appraisal. Stage I: Pre-Industrial ERA (1400-1700 AD) Beginning around 1400 AD and continuing until 1700 AD. This period is marked by an absence of any formal Human Resource Management function within the organization. Several dramatic changes occurred during this first stage that represent seeds from which modern Human Resource Management later grew. First, there was cessation of feudalism, release of labour from land and beginning of free employment relationship on which modern labour markets are based. Second, there was a shift from subsistence agriculture to a commercial mixed economy, the rise of 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 that included 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 the second half of 20th century in India. It was made possible by the replacement of human effort and skill by the work of machines. One of the contributions of industrial relations was the LOVELY PROFESSIONAL UNIVERSITY 9 Human Resource Management Notes development of the 'factory' system. Factories greatly expanded production and created a new class of workers and managers. It brought about division of work. It necessitated supervising large number 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 maximize the employer's profit. Consequently, there was a total neglect of "Human Factor"; the focus was upon 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 movements that began in the 19th century and along with contribution from Industrial Psychology, merged around 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 inefficiencies through re-organisation of production methods and rationalization of work. Welfare work is defined as anything done for comfort and improvement, intellectual or social for the employees over and above wages paid, which is not the necessity of industry, not required by law. It represents efforts to deal with labour problems by improving workers' conditions. Industrial psychology represented the application of psychological principles towards increasing the efficiency of industrial workers. Fredrick William Taylor's Scientific Management can be summed up as: 1. Science, not the rule of thumb 2. Harmony, not discord 3. Co-operation, not individualism 4. Maximum output, in place of restricted output. Contribution of Scientific Management to Human Resource Management 1. Taylor's proposal for functional management called attention to the need for separate Human Resource functions in organization. 2. Taylor demonstrated the feasibility of job analysis as a basis for employee selection, training, job evaluation and compensation. 3. Taylor demonstrated that work and jobs can be systematically studied, analysed, redesigned or improved upon. 4. He stressed the importance of proper selection procedure and training methods. 5. Taylor advanced the idea of differential pay on the basis of productivity. 6. He highlighted the need of workers to be won over and led by management. Industrial Psychology From scientific management, industrial psychology evolved. The objective of industrial psychology was to increase human efficiency by focusing on the maximum well-being of the workers and decreasing the physiological and psychological costs of work. Hugo, Munsterberg and William Gilbreth, contemporary psychologist sought to integrate psychology 10 LOVELY PROFESSIONAL UNIVERSITY  Unit 1: Understanding the Nature and Scope of Human Resource Management with Scientific Management by incorporating individuality in the selection, study and motivation Notes of employees. Major Areas of Welfare Work Efforts were made in 19th and early 20th centuries to improve the working conditions of the factory workers. The welfare work movement became widespread during this period. Welfare work, like Scientific Management, was an attempt at a more systematic approach to labour problems. It has been defined as anything done for the comfort and improvement, intellectual or social, of the employees over and above wages paid, which is not the necessity of industry, not required by law. The primary purpose of welfare work included: 1. Averting industrial conflict and unionization 2. The promotion of good management and worker relations 3. The efforts to increase workers' productivity and reduce turnover Around 1900 AD, some industries in the US hired welfare secretaries to administer welfare programs. Welfare measures included: 1. Enable workers to have a richer and more satisfactory life. 2. Raise the standard of living of the workers. 3. Absorb the shocks injected by industrialization and urbanization on workers. 4. Promote sense of belonging among workers, prevents absenteeism, labour turnover, strike, etc. 5. Prevent social evils like drinking, gambling, prostitution, etc. 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. International Labour Organisation was established as an autonomous organ of the League of Nations 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's claims in the event of the insolvency of their employer. (b) It elaborated resolutions on the role of enterprises in employment growth, employment policy as a component of overall development and the rights of migrant workers. 1931 In order to improve the conditions of workers, the Royal Commission on Labour (J H Whitley Commission) recommended to abolish Jobber System, appoint labour officers and introduce Works Committees. Later Section 3(1) of Industrial Dispute Act, 1947 has provided for Works Committee and Section 49 of the Factories Act, 1948 made a provision for the appointment of Labour Welfare Officers in all the units with worker strength of 500 or more. These provisions are already implemented. LOVELY PROFESSIONAL UNIVERSITY 11 Human Resource Management Notes Stage IV: Golden Age of Industrial Relation and Personnel Management Maintenance Function (1935-1970) After the World War I, there was great depression. Following the depression, there was an increased need for the practice of Human Resource Management as a result of a growth in unions and collective bargaining. At this time, there was a shift in emphasis towards the Industrial Relation Function of Human Resource Management. During the period from 1945 to 1970, the primary focus of the employment relationship was on industrial relations and this human resource management function rose in prominence. The pro-union legislation was followed by World War II, which created an extraordinary demand for labour, resulted in unprecedented union prestige and fuelled a phenomenal growth in union membership. The industrial relation side of human resource management experienced its golden age between 1948 and 1958. The general focus of human resource management was on industrial relations because the primary need of many organizations was to operate in collective bargaining framework of labour relations. Major Changes during the Period 1. The first step was the enactment of Industrial Disputes Act, 1947, which not only provides for the establishment of permanent machinery for the settlement of industrial dispute but also makes these awards binding and legally enforceable. 2. Another development was setting up of Indian Labour Conference- a tripartite body to look into industrial relation problems in India. It was constituted with the objective of establishing co-operative between government, employers and trade unions. 3. Another important feature was change in attitude of government towards labour and their problems. Many labour laws were enacted to protect the interests of industrial workers during 1947 to 1956. These laws cover many issues concerning labour such as seniority, wage rates, paid holidays, disciplinary matters, social security, etc. 4. In 1957, the emphasis shifted from legal enactments to voluntary arrangements. In fact, the period between 1957-1965 can be regarded as an attempt to move away from legalism to voluntarism, which had dominated the industrial relations in India- through Works Committees/Joint Management Councils (JMC), recognition of unions, grievance procedures for workers, workers participation schemes, etc. 5. Subsequent to this period, many political and international events affected the course of industrial relations. Between 1962 and 1971, India fought three wars, one with China and two with Pakistan. In 1966, National Commission of Labour (NCL) was appointed by the government to look into the matters. Some of the recommendations are in various stages of implementation namely; relating to workers' training, induction and education, working conditions, social security, labour administration, etc. At present, at the plant level, Indian industrial relations are dominated by legalists. Many of these laws reflect the government's socialistic orientation. On the other hand, the government has also made efforts, in addition to management and union attempts in several cases to promote a bipartite collective bargaining situation. Stage V: Control of Labour Tradition (1970-1990) The institution of the trade union, which is a product of capitalist industrialization, emerged in Britain and other developed countries in the West in the 19th century, basically to protect 12 LOVELY PROFESSIONAL UNIVERSITY  Unit 1: Understanding the Nature and Scope of Human Resource Management against the injustice and exploitation meted out to workers by the owners of Capital during the Notes course of industrialization. Labour movement in many countries started its own political parties and engaged in struggle at both the political and economic fronts. Gradually, over the years, the labour class got integrated into the larger society with the acceptance of their demands by the employers, first for collective bargaining and then for worker's participation in management. This led to their rise to prominence and power in industry and society in the 20th century. But trade unions witnessed significant loss of membership during the 1980s and 1990s. Various reasons for the loss of control of labour tradition could be analyzed as follows: 1. Trade union developed not under the leadership of workers but under the leadership of 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 trade unions for which it passed a plethora of labour legislations, protecting jobs of workers and also providing for various welfare measures. This, however, further weakened trade unions and impeded the growth of the system of collective bargaining in the industry. In fact, even though India has probably the largest number of labour laws in the world, it does not 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 new generation of workers has emerged in their industries since the mid 50s or so, who are largely from upper castes and who are also young, educated and urban in origin. To them, a trade union constitutes not a movement, but an agency which has to provide them services in return for their subscription and political support. They leave a union when it is 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 face difficulty in retaining the support of workers on a continuing basis. 4. In fact, rising unemployment and underemployment and increasing price have hit the working class hard. Such a situation not only makes the workers primarily interested in questions 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 of trade unions in these enterprises has to be small. The political fragmentation of the union movement also contributes to its small size. This small size of unions also accounts for their poor financial strength. 6. The nature of linkage between unions at different levels and political parties varies a great deal from complete 'ownership' of unions by particular to allowing of different degrees of autonomy to unions by parties like congress party. However, despite various weaknesses, unions in India often enjoyed considerable power at both the national and bargaining levels, especially till the early 1970s or so, because of their linkage with political parties and the support they got from the governments in power. Reasons for the Failure 1. Development under outside leadership. 2. Government took upon itself Wage-Welfare function and passed number of labour laws which weakened the trade unions. 3. Significant changes in social composition of labour force took place. 4. Rising unemployment and increasing price made unions more individualistic. LOVELY PROFESSIONAL UNIVERSITY 13 Human Resource Management Notes 5. Most Indian organizations being small and medium sized, small size of trade union, poor performance and poor financial strength further weakened the trade union. 6. Nature of linkage between union and political parties varies, allowing different degree of autonomy to union by the parties. 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 professional managers, where there has been a divorce between capital and control and where owners of business 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 profession should possess advanced specialized formal education and training. 1. Qualification varies from organization to organization and from one state to another state of a country. It has undergone several changes from time to time. The list of qualification includes Post Graduate degree or diploma in Social Science, Sociology, Social Work, Personnel Management and Industrial Relation, Labour Welfare, Labour Laws, MBA with specialization in Human Resource Management and Industrial Relations. 2. There is no specific educational qualification prescribed for the post of Personnel Management in India. Technical managers without any experience or qualification are posted 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 of Human Resource manager. Following are the characteristics of professional institution: 1. Professional bodies: A profession is organized as a body with its own experts. The professionals have developed a number of administrative societies, associations and institutions, which have a large membership of those who have qualified in personnel affairs. The National Institute of Personnel Management, the Indian Labour Economics Society, All India Management Association, International Personnel Management Association 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 and society, be interested, in continued acquisition of skills and knowledge, have a sense of trusteeship, individual initiative and a right to expert and received financial recognition. 3. Code of Ethics: Various professions like Medicine, Accountancy have ethical codes. But the personnel profession does not have such ethical codes. It cannot, therefore, be concluded, from the above analysis, that personnel management in India completely possesses the characteristics to be called as a profession. The situation may change in the years ahead, where organization requirements for professionally qualified people might increase. 14 LOVELY PROFESSIONAL UNIVERSITY  Unit 1: Understanding the Nature and Scope of Human Resource Management Self Assessment Notes Multiple Choice Questions: 9. The ratio of an organisation's output to its inputs. (i) efficiency (ii) performance (iii) productivity (iv) objectivity 10. The process of bringing people and organisations together so that the goals of each are met. (i) career planning (ii) employee welfare (iii) human resource management (iv) training 1.8 Significance of Human Resource Management The significance of human resource management can be discussed at three levels: 1. As an instrument for growth to an organization: The survival and growth of the organization depends largely on the competence and its effective management. Human Resource Management is viewed as a dynamic life giving element in any organization. Without HRM, the other resources of production, that is, materials, machinery and money can never become output. Human resource management makes workers efficient and motivated through training, supervision and inspiring leadership. 2. As a liaison between the employee and employer: The human resource management is the link between the people and management. It tries to maintain the balance between the available jobs and the job seekers according to their need and organizational requirement. It helps the organization in effective utilization of human resources and removal of wastes. Its significance can also be determined by the elimination of wastages and providing a healthy and conducive environment for employee growth. 3. As a professional field: Human Resource Management has moved to a specialist function. It realizes business strategy through people. The professionalisation of human resource management is gaining momentum. It is no longer considered to be a line function. It incorporates teamwork. The realization of employee goals is the sole responsibility, as a specialist function. Its focus has moved from employee management to employee development. The skills development and individual capacity utilization are the challenges faced by the human resource managers in the current scenario. Self Assessment Fill in the blanks: 11. The survival and growth of the organization depends largely on the..................... and its...................... 12. Human Resource Management is viewed as a..................... life giving element in any organization. 13. The human resource management is the..................... between the people and management 14. The professionalisation of human resource management is gaining...................... 15. The skills development and individual capacity utilization are the..................... faced by the human resource managers in the current scenario. LOVELY PROFESSIONAL UNIVERSITY 15 Human Resource Management Notes  Case Study Role Play D o this role play, writing the dialogues both for the Manager and for the Graduate. The focal theme is "PRAISE AND DEVELOP". Brief for the Manager You are the manager of a design department, whose task is to plan, organise and control layout and equipment changes in the manufacturing division of the company. One of your staff, a graduate aged 25, has just completed a project to install a new layout of conveyors, sorters and packing machines at the end of a line, producing small plastic bottles. This has been highly successful. The manager of the line and the staff working on it are all pleased with it and prefer it to the original layout. Now is the time to talk to your young graduate, show how pleased you are with this project and try to discover which areas are ones in which further help, training and development of skills are required. Brief for the Graduate You have been working for one year in this design department, whose task is to plan, organise and control layout and equipment changes in the manufacturing division of the company. You have just completed a project to install a new layout of conveyors, sorters and packing machines at the end of a line, producing small plastic bottles. This has been highly successful. The manager of the line and the staff working on it are all pleased with it and prefer it to the original layout. Your boss has asked to see you. You hope he is as pleased as you are with the outcome of this project. If you get the chance, you would like to become involved in an automation and computerisation project next. You have heard that the main line producing the shrink wrapped 6-pack of half-litre bottles is due to be automated further later this year. You would like to do that. The most difficult issue during this last project was negotiating with several different companies for the purchase of the conveyor equipment; their salesmen were fairly aggressive and you found it difficult to deal with them. Start the role play now. 1.9 Summary  HRM is defined as the art of procuring, developing and maintaining competent workforce to achieve the goals of an organisation in an effective and efficient manner.  HRM is responsible for the people dimension of the organisation. It is a pervasive force, action-oriented, individually-oriented, development-oriented, future-focused, and integrative in nature and is a comprehensive function.  HRM policies are guides to actions. They serve as roadmaps for managers on a number of issues such as recruitment, selection and promotion. They cover almost all functions of personnel management. HRM policies have relation with other fields also. 16 LOVELY PROFESSIONAL UNIVERSITY  Unit 1: Understanding the Nature and Scope of Human Resource Management 1.10 Keywords Notes Competitive Advantage: It is an ability of an organization to perform activities exceptionally well (availing profitable opportunities and thereby maximizing returns on investment) and gaining an edge over rivals when competing. HRM: A process of bringing people and organisations together so that the goals of each one is met, effectively and efficiently. HRM Policies: A set of proposals and actions that act as a reference point for managers in their dealings with employees. Line Managers: They are authorized to direct the work of subordinates-they're always someone's boss. Management: The process of efficiently achieving the objectives of the organisation with and through people. Personnel Management: It is that part of management which is concerned with people at work and with the relationships within an enterprise. It applies not only to industry and commerce but to all fields of employment. Principles: The word principle means, the fundamental truth or law as basis of reasoning or actions. Productivity: The ratio of an organization's outputs to its inputs. Staff Managers: They are authorized to assist and advise line managers in accomplishing these basic goals. Strategic Human Resource Management: The linking of HRM with strategic goals and objectives in order to improve business performance and develop organizational cultures that foster innovation and flexibility 1.11 Review Questions 1. Define the term HRM. Discuss its objective, nature and scope. 2. In this era of free economy, what should be the objectives of HRM? 3. Are people always an organisations most valuable assets? Why or why not? 4. Identify the typical features of human resource management in today’s competitive world. 5. What are the different types of HRM policies? 6. In your opinion, whether increase in global workforce affect the formulation of HRM policies? 7. What are the different fields do you think are related with HRM policies? 8. Critically evaluate HRM as a disciplinary study. 9. What do you think is the biggest challenge in front of an HR manager and why? 10. HRM is an interdisciplinary activity. Discuss with examples. LOVELY PROFESSIONAL UNIVERSITY 17 Human Resource Management Notes Answers: Self Assessment 1. F 2. T 3. T 4. T 5. F 6. F 7. F 8. T 9. (iii) 10. (iii) 11. Competence, effective management 12. dynamic 13. link 14. momentum 15. challenges 1.12 Further Readings Books Aswathapa, K.(2008), Human Resource Management, 5th ed, Tata McGraw Hill. Dipak Kumar Bhattacharyya, Human Resource Management, Excel Books. French, W.L. (1990), Human Resource Management, 4th ed., Houghton Miffin, Boston. H.J. Bernardin, Human Resource Management, Tata McGraw Hill, New Delhi, 2004. Ivancevich, J. M. (2008), Human Resource Management, Tata McGraw Hill. Madhurima Lall and Sakina Qasim Zaidi, Human Resource Management, Excel Books. Rao P.S. (2008), Essentials of Human Resource Management and Industrial. Relations, Text cases and Games, Himalaya Publication. Online links www.hrmguide.net http://3.bp.blogspot.com 18 LOVELY PROFESSIONAL UNIVERSITY  Unit 2: Human Resource Planning Unit 2: Human Resource Planning Notes CONTENTS Objectives Introduction 2.1 Human Resource Planning 2.2 Need for Human Resource Planning 2.3 HRP Process 2.3.1 Steps in HR Planning 2.3.2 Strategic Human Resource Planning 2.3.3 Factors Influencing Human Resource Management 2.3.4 HRIS (Human Resource Information System) 2.4 Significance of Human Resource Planning 2.5 Requisites for Successful HRP 2.6 Rightsizing the Enterprise 2.7 Summary 2.8 Keywords 2.9 Review Questions 2.10 Further Readings Objectives After studying this unit, you will be able to:  Define Human Resource Planning  Discuss need for Human Resource Planning  State the HRP Process  Explain the significance of Human Resource Planning  Learn Requisites for Successful HRP  Understand Rightsizing the Enterprise Introduction Human resource planning is the term used to describe how companies ensure that their staff is the right staff to carry out the jobs. Sub topics include planning for staff retention, planning for candidate search training and skills analysis and much more. Human Resource Planning is 'the process by which management ensures that it has the right personnel who are capable of completing those tasks that help the organization reach its objectives.' LOVELY PROFESSIONAL UNIVERSITY 19 Human Resource Management Notes It is a process that anticipates and maps out the consequences of business strategy on an organization's human resources. This is reflected in planning of skill and competence needs as well as total headcounts. The role of the human resource function is two-fold: 1. To participate in the decision process by providing information and opinion on each option, including: (a) redundancy or recruitment costs (b) consequences on morale (c) redeployment/outplacement opportunities (d) availability of skilled staff within the organization (e) availability of suitable people in the job market (f) time constraints (g) development/training needs/schedules (h) management requirements. This forms part of the information collected from the organization as a whole. 2. People as numbers: The manpower planning approach which addresses questions such as: (a) How many staff do we have/need? (b) How are they distributed? (c) What is the age profile? (d) How many will leave in each of the next five years? (e) How many will be required in one, five, ten years? 3. Forecasting methods: Human resource planners have a choice of techniques open to them, including: extrapolation (of past trends); projected production/sales; employee analysis; scenario building. 4. Employee turnover: Turnover covers the whole input-output process from recruitment to dismissal or retirement and takes the consequences of promotion and transfer into account. 5. 'Soft' planning: HRM implies that planning has to go beyond the 'numbers game' into the softer areas of employee attitudes, behaviour and commitment. These aspects are critical to HR development, performance assessment and the management of change. 2.1 Human Resource Planning Human resource or manpower planning is, "the process by which a management determines how an organization should move from its current manpower position to its desired manpower position. Through planning, a management strives to have the right number and the right kinds of people at the right places, at the right time to do things, which results in both the organization and individual receiving the maximum long-range benefits. Stainer has defined human resource or manpower planning as, "Strategy for the acquisition, utilization, improvement and preservation of an enterprise's human resources. It relates to establishing job specification or the quantitative requirements of job determining the number of personnel required and developing sources of manpower". 20 LOVELY PROFESSIONAL UNIVERSITY  Unit 2: Human Resource Planning Coleman has defined human resource or manpower planning as, "the process of determination Notes of manpower requirements and means of meeting those requirements in order to carry out the integrated plan of the organization". According to Wickstrom, human resource planning consists of the following activities: 1. Forecasting future manpower requirements, either in terms of mathematical projections of trends in the economic environment and development in industry, based upon the specific future plans of a company; 2. Making an inventory of the present manpower resources and assessing the extent to which these resources are employed optimally; 3. Anticipating manpower problems of projecting present resources into future and comparing them with forecast of requirements to determine their adequacy, both quantitatively and qualitatively; 4. Planning the necessary programmes of requirement, selection, training, development, utilization, transfer, promotion, motivation and compensation to ensure future manpower requirements are properly met. 2.2 Need for Human Resource Planning Human resource planning is practically useful at different levels, as stated by Narayanrao. According to him; 1. At the national level: It is generally done by the government and covers items like population projections, programme of economic development, educational facilities, occupational distribution and growth, industrial and geographical mobility of personnel. 2. At the sector level: It may be done by the government – central or state – and may cover manpower needs of agricultural, industrial and service sector. 3. At the industry level: It may cover manpower forecast for the specific industries, such a cement, engineering, heavy industries, consumer goods and public utility industries, etc. 4. At the level of individual unit: It may relate to its manpower needs for various departments and for various types of personnels. Human resource planning is deemed necessary for all organizations for one or the other of the following reasons: 1. HR planning is needed to identify areas of surplus personnel or areas in which there is shortage of personnel. 2. To meet the challenges of a new and changing technology and new techniques of production, existing employees need to be trained or new people to be brought to the organization. 3. To carry on its work, each organization needs personnel with necessary qualifications, skills, knowledge, work experience and aptitude for work. These are provided through effective manpower planning. 4. Human resource planning is necessary for meeting frequent labour turnover which is unavoidable. 5. In order to meet the demands for expansion programmes (which are necessary for organisation's growth), these call for larger requirement of human resources in the organization. LOVELY PROFESSIONAL UNIVERSITY 21 Human Resource Management Notes Notes Accuracy: Projecting manpower needs over a period of time is a risky one. It's not possible to track the current and future trends correctly and convert the same into meaningful action guidelines. Factors such as absenteeism, labour turnover, seasonal trends in demand, competitive pressures, technological changes and a host of other factors may turn the best of manpower plans into fashionable, decorative pieces. Support: Planning is generally undertaken to improve overall efficiency. In the name of cost cutting, this may ultimately help management weed out unwanted labour at various levels. The few efficient ones that survive such frequent onslaughts complain about increased workload. Support from management is equally missing on more than one occasion. They are unwilling to commit funds for building an appropriate human resource information system. The time and effort involved - with no tangible, immediate gains – often force them to look the 'other way'. Numbers game: HRP, in the final analysis, may suffer due to an excessive focus on the quantitative aspects. The quality side of the coin (consisting of employee motivation, morale, career prospects, training avenues, etc.) may be discounted thoroughly. 2.3 HRP Process The process of human resource planning is one of the most crucial, complex and continuing managerial function. This process has gained importance in India with the increase in size of the enterprises, complex manufacturing process, and adoption of professional management techniques. It is a multi-step process. 2.3.1 Steps in HR Planning 1. Investigation: It is the primary stage of HRP in any organisation. In this stage, organisations try to develop their awareness about the detailed manpower scenario with a holistic view, looking at their current manpower. A SWOT analysis can reveal a better picture with due consideration of the external environment, performance and productivity trends, working practices, operational and strategic plans. Scientific homework, at this stage itself can help to identify present and future skill gaps. For a better result, SWOT analysis can proceed a cause-effect diagram (fish-bone diagram), which is simple to comprehend. While doing external manpower review, macro level issues need to be understood with due cognizance to the relevant literatures like Annual Economic Survey, Year Book on Indian Labour, Survey of Indian Industries, ILO International Year Book on Labour, various reports of Planning Commission on manpower, etc. Internal manpower review has to be done with enterprise-wide current operational data, like; marketing, finance, performance data, current employment practices and methods, etc. Also internal manpower review is done with a futuristic view with due cognizance to strategic plans and objectives. 2. Forecasting: After adequate investigation, in the next phase of HRP process, analysis of demand and supply of manpower is done. There are different models of demand forecasting. Manpower supply analysis is done considering both internal and external supply. While doing internal supply analysis, career planning and development, training and development and succession plan aspects are considered along with corporate policies and procedures. For example, 'promotion from within' as a corporate policy may or may not exist in a particular organisation. Where it exists, it has to be understood for which levels it is applicable, is it a time-scale (seniority) promotion or promotion on merit, is there any policy on this, etc. Interestingly promotional decision is a prerogative of 22 LOVELY PROFESSIONAL UNIVERSITY  Unit 2: Human Resource Planning management, hence an employee, prima facie cannot contest such a decision of management Notes in a court of law, unless otherwise he or she can prove that such a decision has prejudiced his or her interest. The onus of proving this lies with the employee concerned. Many organisations have their documented promotion policy, to address to the problem of personal bias in promotional decision. External supply analysis is done considering macro- level issues to understand their availability. Since current employment practice is to employ people for a given time period, employment status also needs to be assessed in terms of availability. Demand forecasting helps in identifying requirements of manpower for various positions at different points of time. What should be the status of employment (permanent, temporary, part-time contract labour, sub-contracting, etc.) will depend to some extent also on the nature of position. While in abroad, they have the flexibility to hire for all positions from employee leasing companies on assignment basis, in our country the scope of such engagement is limited to some specific jobs only. Moreover, people are by nature sensitized for contractual employment terms. This practice however, is slowly catching up and since it is a total transition of attitude, it will take some time to settle down. May be in 5-10 years time, job mobility will increase and people of the new-age will consider it normal. HR planning requires that we gather data on the organizational goals objectives. One should understand where the organization wants to go and how it wants to get to that point. The needs of the employees are derived from the corporate objectives of the organization. They stem from shorter and medium-term objectives and their conversion into action budgets. 3. Inventory: After knowing what human resources are required in the organization, the next step is to take stock of the current employees in the organization. The HR inventory should not only relate to data concerning numbers, ages, and locations, but also an analysis of individuals and skills. Skills inventory provides valid information on professional and technical skills and other qualifications provided in the firm. It reveals what skills are immediately available when compared to the forecasted HR requirements. Did u know? Markov analysis: This technique uses historical rates of promotions, transfer and turnover to estimate future availabilities in the workforce. Based on past probabilities, one can estimate the number of employees who will be in various positions with the organization in future. 4. Audit: We do not live in a static world and our HR resources can transform dramatically. HR inventory calls for collection of data, the HR audit requires systematic examination and analysis of this data. The audit looks at what had occurred in the past and at present in terms of labour turnover, age and sex groupings, training costs and absence. Based on this information, one can then be able to predict what will happen to HR in the future, in the organization. 5. HR Resource Plan: Here, we look at career planning and HR plans. People are the greatest assets in any organization. The organization is at liberty to develop its staff at full pace in the way ideally suited to their individual capacities. The main reason is that the organization's objectives should be aligned as near as possible, or matched, in order to give optimum scope for the developing potential of its employees. Therefore, career planning may also be referred to as HR planning or succession planning. 6. Actioning of Plan: There are three fundamentals necessary for this step: (i) Know where you are going. LOVELY PROFESSIONAL UNIVERSITY 23 Human Resource Management Notes (ii) There must be acceptance and backing from top management for the planning. (iii) There must be knowledge of the available resources (i.e.) financial, physical and human (management and technical). Once in action, the HR plans become corporate plans. Having been made and concurred with top management, the plans become a part of the company's long-range plan. Failure to achieve the HR plans due to cost, or lack of knowledge, may be a serious constraint on the long-range plan. 7. Utilization: In this final stage of HRP process, success is measured in terms of achievement trend, both quantitatively and qualitatively. While quantitative achievement is visible from productivity trend, manpower cost, etc., qualitative achievement is a subjective appraisal on achievement of organisational objectives. Reflection of qualitative achievement can also be studied in the context of prevailing industrial relations, level of motivation and morale, grievance pattern, etc. 2.3.2 Strategic Human Resource Planning Human resources planning is defined as the process for identifying an organisation's current and future human resource requirements, developing and implementing plans to meet these requirements and monitoring their overall effectiveness. Human resources planning should serve as a link between human resources management and the overall strategic plan of an organization. Aging worker populations in most western countries and growing demands for qualified workers in developing economies have underscored the importance of effective Human Resources Planning. 1. Employment: HRP is affected by the employment situation in the country i.e. in countries where there is greater unemployment; there may be more pressure on the company, from government to appoint more people. Similarly some company may force shortage of skilled labour and they may have to appoint people from other countries. 2. Technical changes in the society: Technology changes at a very fast speed and new people having the required knowledge are required for the company. In some cases, company may retain existing employees and teach them the new technology and in some cases, the company has to remove existing people and appoint new. 3. Organizational changes: Changes take place within the organization from time to time i.e. the company diversify into new products or close down business in some areas, etc. in such cases the HRP process i.e. appointing or removing people will change according to situation. Implementation Stages The following implementation stages are suggested for mid to large organizations implementing competencies in support of Strategic Human Resources Planning. Short-term Human Resource Planning Stage 1 1. Establish a Competency Architecture and Competency Dictionary that will support Strategic Human Resource Planning. 24 LOVELY PROFESSIONAL UNIVERSITY  Unit 2: Human Resource Planning 2. For each group to be profiled, define the roles and career streams to help identify current Notes and future human resources needs. 3. Determine how competencies will be integrated with the existing HR Planning process and systems (e.g., Human Resource Information Management systems; other computer- based tools, for example forecasting models). Stage 2 1. Build or revamp HR Planning tools, templates and processes to incorporate elements as determined in Stage 1. 2. Train managers and/or facilitate corporate HR Planning process. 3. Continuously monitor and improve processes, tools and systems to support HR Planning. Mid to large Organizations Stage 1 1. Identify the infrastructure and system requirements to support full implementation (e.g., Human Resources Information Management System; other on-line software tools needed to support various CBM applications). 2. Develop the competency profiles. 3. Implement the competency profiles in a staged-way to demonstrate benefits and create buy-in (e.g., as soon as profiles for a group are developed, implement quickly within a low-risk high-benefit planned application for the group). 4. Communicate success stories as competency profiles are implemented. Stage 2 1. Develop, revise/update competency profiles to meet changing demands. 2. Monitor and evaluate applications to ensure that they are meeting organizational needs, and adjust programs/plans, as needed, to meet evolving needs. Notes Supply forecasting measures the number of people likely to be available from within and outside the organization, after making allowance for absenteeism, internal movements, promotion, changes in hours and other conditions of work. Supply analysis covers: 1 Existing human supply 2. Internal source of supply 3. External source of supply Existing Employees Analysis of existing employees is greatly facilitated by HR audits. The audits of non-managers are called skills inventories and those of management are called management inventories. Contd... LOVELY PROFESSIONAL UNIVERSITY 25 Human Resource Management Notes Internal Supply The techniques used for this purpose are: 1. Potential Losses and Potential Gains: They can be of four different types: Permanent Total, Permanent Partial, Temporary Total, Temporary Partial Lay off New hires Department Promotion out Retrenchment Promotions in Or Deputation out Dismissal Transfer in Sub -unit Absenteeism Voluntary Demotion in Present Loss of some skills, Quits Acquiring Human capability, etc. due to new skills Resource ill health or accident Knowledge Demotion out Loss of values, Transfer out aptitude, etc. due to change in the attitude of existing employees towards job, department and organization 2. Turnover Rate: Turnover is defined as the number of people leaving the organization in a given period of time, usually one year. The turnover rate can be expressed by a number of different formulas. These involve such terms as accessions, addition to payroll, separations, quits, discharges, retirement, deaths, replacements, one accession plus one separation and average workforce, number at the beginning of the period plus number at the end of the month divided by 2. If our workforce averages 1000 employees this month, during which time there were 50 accessions and 58 separations, the accessions rate is 5%, the separation rate is 5.8%, and the replacement rate is 0.8%. Number of separations during one year Turnover Rate = Average number of employees during the year For example: If in a year, 30 out of an average force of 150 skilled fitters of a company left (20% turnover) and this trend continued, then the company will have to recruit 110 fitters during the following year, in order to increase and hold the labour force at 200 in that year (50 extra fitters, plus 40 to replace the 20% separation of the average 200 fitters employed, plus 20 percent to replace separation of the 90 recruits) 3. Conditions of work and absenteeism: Changes in condition of work such as normal weekly working hours, overtime policies, length and timings of holidays, retirement policy for employees part-timers and shift systems need to be taken care properly. On the other hand, absenteeism is the title given to a condition that exists when a person fails to come to work. Absenteeism is understood as unauthorized absence from work. Stated differently, it amounts to absenteeism when an employee is scheduled to work but fails to report for duty. Number of persons – days lost Absenteeism = Average number of persons × number of working days Contd... 26 LOVELY PROFESSIONAL UNIVERSITY