Evolution of HRM

The earth is the only address of living beings. Human

being and all other biotic animals are living on the

earth. Human being came on the earth at last. All other

biotic animals except human beings came on the earth

first. Primitive man after the ape came on the earth.

Primitive man always attempted at innovating matters

to meet his wants (viz., repetitive frictions of stones

produced fire). Gradually over the years primitive man

attempted to be civilized. The processes of civilization

learnt the lessons to human beings to become

dependents on other biotic resources on the earth. Man

learnt to preserve the abiotic resources. Man learnt

management of all biotic and abiotic resources

maintaining ecological balance for self.

Naturally, all biotic animals are not dependent on

human beings because they cannot learn the

civilization codes like human beings. But human

beings have to depend on other biotic resources on the

earth because they teach all civilization codes on the

earth.

Lion share of natural resources are not being

functionally used due to lack of know-how. Many

natural resources are still remaining untapped and

unexplored on the earth. Many efforts are being

adopted to make natural resources useful for mankind.

With these steps cottage system and large industrial

set ups have come up for making input-output system

of organization effective.

All industrial modes of production led to industrial

revolutions which ultimately develop to enhance

economic progress.

Keeping in mind the vast pressure of industrial

revolutions over the globe and development of human

resource over the passage of time period we have

classified into eras.

Era of Industrial Revolution (19th

Century):

The industrial revolution had begun with the

emergence of the wheel and the steam engine. The

new economic doctrine was advocated in the form of

laissez-faire, which meant that an individual has full

freedom to make/create what she/he intends to do and

to go where she/he desires to be. Initially, the

industrial organization was characterized by the

‘cottage system’ where the works were performed in

the native place/home town of workers. Then with the

innovation of wheels and steam engine, the ‘factory

system’ was developed where the new economic

freedom was started to establish to the workers and

enhanced movement and specialization. The result

was tremendous form of job specialization and

standardization. “Division of Labour” was felt and

supported by Adam Smith and Charles Babbage

(1792-1871). However, injustices in varied forms

were done with the workers in this era.

The working and living condition of workers were so

poor and the child labourers were deployed to work

hard. At that time Robert Owen (1820-1850) made all

possible efforts in order to win the confidence of

workers by means of improving living conditions and

extended several facilities as a result of which he was

able to strike a better productive rate among his

workers. In view of his efforts, he has been recognized

as the pioneer of personnel management.

So, the government started to come forward and to

take active interest in the operation of both public and

private enterprises and started to provide enunciated

supports to regulate employer-employee relationship.

Governmental steps for maintaining employ-employee

relationship is very important resource for improving

productivity.

Industrial revolution has greatly accelerated the

development of business and commerce through the

achievement of greater productivity levels of workers

and ensuring better industrial relationship with the

employer and employees. Sound employer-employee

relationship is a useful resource of an economy to

accelerate pace for growth.

The Indian Institute of Social Welfare & Business

Management (IISWBM), Kolkata completed fifty

years of its existence as a separate legal entity on

April 25, 2003. It was created through a resolution

adopted by the Syndicate of the University of Calcutta

on April 25, 1953. IISWBM introduced the first

programme on labour and social welfare management

education in India. The institute felt the tremendous

significance of labour and social welfare management

in India.

The Golden Jubilee Celebration of the IISWBM,

therefore, also meant the celebration of ‘Fifty years of

Management Education in India’. Consequently, the

workers’ level of purchasing power in terms of per

capita value-added wealth and working conditions

have started to be better than the cottage system of

industrial production. The concept of sharing of

value-added has started to revolutionize over the

universe. Value-added is created by work forces. But

in sharing the pie of value-added between the factory

owner and deployed working force is awfully

exploited.

The Institute runs some programmes during the day

and others in the evening. The Masters in Business

Administration (MBA) course and the Masters in

Human Resource Management (MHRM) are affiliated

to the University of Calcutta. MBA is offered both

during the day and in the evening. Institute also runs

Master of Public Systems Management with

specialization in Environment Management.

Energy Management, Transportation & Logistics

Management, and Health Care & Hospital

Management are also being taught in this institute.

The MPSM course is affiliated to the University of

Calcutta. The Course on Post Graduate Diploma in

Business Management (PGDBM) is offered in the

evening. The Institute now has about 1200 students of

which over a third are women. The institute organizes

every year effective placement through campusing

helps students to start with satisfying and rewarding

careers. The academically equipped students are

satisfied with their jobs in the input-output system of

an organization.

Era of Trade Unionism and Collective Bargaining

(close to the 19th

Century):

Significantly, after the advent of the factory system,

groups of employees began to get together to discuss

their common problems. Consequent upon this fact of

togetherness the concept of trade unionism has been

emerged in the field of industrial productions. The

basic philosophy underlying trade unionism was that

through the strength and collective support, the

management could be forced to pay heed to the

workers’ grievances and there by initiate redress the

grievances. Viewed through the philosophy of labour,

in the era of laissez-faire economic state, the

development of free collective bargaining and the

American Labour Movement created the need for

what we are now coming to recognize the importance

of effective human resource management.

The 1st May is recognized as May Day to show the

universal respect for the labours. International

Workers' Day (also known as May Day) is a

celebration of the international labour movement. May

1 is a national holiday in more than 80 countries and

celebrated unofficially in many other countries,

though in some countries the public holiday is a

commemoration of the traditional European spring

festival known as May Day. Other countries

celebrate different Labour Days, usually on a

date with special significance to the labour movement

in that country.

The labour movement is a broad term for the

development of a collective organization of

working people, to campaign for better

working conditions and treatment from their

employers and governments, in particular through

the implementation of specific laws governing labour

relations.

Trade Unions are collective organizations within

societies, organized for the purpose of representing the

interests of workers and the working class.

Many ruling class individuals and political groups

may also be active in and part of the labour

movement.

In some countries, especially the United

Kingdom and Australia the labour movement

is understood to encompass a formal "political wing",

frequently known by the name labour

party or workers’ party, which complements the

aforementioned "industrial wing".

Era of Social Responsibility (beginning of the 20th

Century):

In the first decade of the 20th Century some owners of

the factory system of production started to implement

humanistic and paternalistic approach1 towards

workers. Paternalistic approach to labour management

is based on the philosophy that labour is just like child

1 Robert Owen, a British industrialist, reformer, and humanitarian,

expressed the most humanistic and paternalistic view of

management in his book, ‘A new view of Society’, The Golden

Book of Management, London, Newman, 1956.

and owner is just like a caring father. Owen himself

implemented the paternalistic approach in his cotton

mill at Scotland by introducing many facilities for

deployed human forces – shower bath and toilets in

the factory premises, model villages for factory

labourers, raising minimum age of employment of

child labourers, and shortening working hours

substantially (from 12 hours to 10 hours) and he

appealed to his fellow industrialists to follow this

approach. All these practices brought about the

concept of social welfare of labour management.

Critics to the paternalistic approach viewed that the

birth of labour movement as well as labour unrest that

led to trade unionism, which frequently interrupted

work performance. Employers observed that the

deployed work force was going out of their control

and to overcome the problems they were compelled to

implement labour welfare schemes under compulsion

which is not at all a philosophical perspective. Robert

Owen argued in his favour that in order to augment

productivity we need to create satisfactory working

conditions and to ensure social welfare measures

which is the social responsibility of the owner of the

factories2.

2 Social Responsibility of the owners of factories includes providing of

congenial work environment within the factories as well as to look after the

external environmental affairs to protect the hygienic atmospheric and

bioshperic conditions for continuous maintenance of good health of

neighborhoods.

Era of The Scientific Management (1900-1920s):

Perspectives of Scientific Management are viewed

through the contribution made by Fredrick Winslow

Taylor (1856-1955) for which he is known as the

father of scientific management. Taylor has suggested

four principles of scientific management. They are

noted below.

Scientific Standardization of Jobs (through Job

Analysis): Every job should be analyzed

systematically and broken down into its smallest

mechanical components and be rearranged them into

their most efficient combinations.

Division of Labour based on the right selection of

human resource for right job (Scientific Selection

and Training of Workers): Taylor argued that

individuals are to be selected to render the assigned

tasks as perfectly as designed. The selected

individuals must be perfectly matched with the

requirements of the task. Right work force is of utmost

need for improving productivity.

Scientific Training for every individual: Taylor laid

emphasis upon proper training of individuals that

should be ensured by the supervisors so that they can

be made capable enough to perform their assigned

jobs as per scientific analysis of those jobs.

Management must maintain friendly cooperation

with the personnel:

Taylor has laid much emphasis upon the friendly

cooperation between the management and personnel

so as to increase productivity and its mutual benefits.

Mental Revolution: Taylor has rightly said that

scientific management involves a complete mental

revolution on the part of the deployed working force

and a complete mental revolution on the part of the

employer and it involves equally complete mental

revolution on the part of those on the management’s

side - the foremen, the supervisors, the owner of the

business, the board of directors – a complete mental

revolution on their part as to their duties towards their

fellow workers, and towards all of their daily

problems based on mutual cooperation between

management and deployed working force.

Financial Incentives: Taylor has contributed the

concept of Differential Piece Rate System (DPRS) in

order to boost up productivity by providing incentives

for workers’ efficiency. At his time DPRS was highly

motivating. According to DPRS, a worker who

completes the normal works gets wages at higher rate

per piece and who does not do that, gets at lower rate.

Introducing DPRS, Taylor has suggested that wages

should be based on individual performance and not on

the position he/she occupies in the organization.

Further, the wages ought to be determined on accurate

knowledge and not on estimates. He understood the

role of financial incentives which can motivate

deployed working force to put in their maximum

efforts.

It is remarkable to note that the principles of scientific

management contributed by Taylor were correct at his

era because higher productivity achievement was

possibly achieved. Taylor was 100 per cent successful

in his period by implementing his philosophies of

scientific management in getting work done through

the men.

Era of Modern Management (1920-1940s):

Henri Fayol (Istanbul, 29 July 1841 – Paris, 19

November 1925) was a French mining engineer and

director of mines who developed a general theory of

business administration. He and his colleagues

developed this theory independently of scientific

administration but roughly contemporaneously. He

was one of the most influential contributors to modern

concepts of management. Fayol is known as the

father of modern management for his contribution. He

was a famous industrialist of France, has described

fourteen principles of management in his book

General and Industrial Management.

Explaining the difference between ‘principles’ and

‘elements’ he makes it clear that the principles of

management are fundamentally true and establish a

relationship between cause and effect, while the

‘elements’ of management point towards its

functions. While presenting the principles of

management Fayol has kept two things in mind.

Firstly, the list of the principles of management should

be compact, expressive, and universal.

The principles should be suggestive and only those

principles should be explained which become

applicable in most of the real life situations.

Secondly, the principles of management should not be

rigid so that changes can be incorporated in case of

need. Principles of management are useful both for

employers and employees. Management Principles

formulated by Henri Fayol may be coined for easy

memorization as a mnemonic (DADUU SEES SIR

OC):

DIVISION OF WORK: Work should be distributed

among individuals and groups to ensure that effort and

attention are focused on special portions of the task.

Fayol argued on work specialization as the best way

to use the human resources of the organization. This

principle of Fayol tells us that as far as possible the

whole work should be divided into different parts and

each individual should be assigned only one part of

the work according to his ability and taste rather than

giving the whole work to one person. Ability, taste

and attitude of a job doer towards the job is very

significant.

When a particular individual performs the same job

repeatedly and continuously for a long period of time,

he will become an expert in doing that particular part

of the whole job. Consequently, the benefits of

specialization will be as high as it is expected to be.

For example, a furniture manufacturer gets an order

for manufacturing 1000 chairs. He has four workers

who will do the job. There are two ways to complete

this order.

First, every worker should be asked to complete 250

chairs. The second method can be distributing

different parts of the chairs, top, centre support,

assembling and polishing-to all the four workers in a

manner that only one worker does the same job for all

the 1000 chairs. Fayol strongly supported the second

way to do this job and not the former one.

The ‘principle of division of labour’ is applicable not

only to the workers but also equally to the managers.

For example, if a manager is tuned to work on the

same kind of activities for a long period of time, he

will certainly be an expert in his particular job.

Consequently, more and beneficial decisions can be

taken in a comparatively less time by him. Fayol has

definitely thought about deployed working force at

factory level as well as the performance of a manager.

Positive effect of specialization is obtained, such as

increase in the quality of work, increase in the speed

of production, decrease in the wastage of resources.

Cost minimization and higher productivity is possible

to achieve with the applications of the principle of

division of labour.

AUTHORITY: The concepts of Authority and

responsibility are closely related. Authority was

defined by Fayol as the right to give orders and the

power to exact obedience. Responsibility involves

being accountable, and is therefore naturally

associated with authority. Whoever assumes authority

also assumes responsibility. According to this

principle, authority and responsibility should go hand

in hand. It means that when a particular individual is

given a particular work and he is made responsible for

the results, this can be possible only when he is given

sufficient authority to discharge his responsibility.

Authority without responsibility is meaningless.

Authority and responsibility must go hand in hand. If

authority does not commensurate with responsibility,

work performance is poor. It is not proper to make a

person responsible for any work in the absence of

authority. Workforce empowerment is appropriately

done when authority and responsibility become

coterminous. In the words of Fayol, “The result of

authority is responsibility. It is the natural result

whenever authority is used, responsibility are

automatically born.”

For example, the CEO of a company has set the sales

target of the sales manager for the coming year. To

achieve this target, authority for appointing necessary

sales representatives, advertising according to the

need, etc. shall have to be allowed. In case these

things are not allowed the sales manager cannot be

held responsible for not reaching at set targets.

DISCIPLINE: A successful organization requires the

common effort of workers. Penalties should be applied

judiciously to encourage this common effort.

Discipline is essential for any successful work

performance. Fayol considers discipline to mean

obedience, respect for authority, and observance of

established rules.

Discipline can be established by providing good

supervision at all levels, clearly explaining the rules,

and implementing a system of reward and punishment.

A manager can present a good example to his

subordinates by disciplining himself. If the top level

executives are not disciplined then the subordinates

are undisciplined. For example, if the employees

break their promise of working up to their full

capacity, it will amount to the violation of obedience.

Violation of obedience will breed corruption and

corruption breeds corruptions that act as white ants in

an organization.

But in case he allows this facility not to the general

customers but only to his relatives and friends, then it

will amount to ignoring his respect to his authority.

(Note: Both these examples give a message of

indiscipline which is an undesirable situation.)

Indiscipline obviously leads to negative attitudes

towards work culture which is the great hindrance in

achieving the objectives of an organization vis-à-vis

HRM.

UNITY OF COMMAND: Workers should receive

orders from only one manager. According to the

principle of unity of command, an individual

employee should receive orders from only one

superior at a time and that employee should be

answerable only to that superior. If there are many

superiors giving orders to the same employee, he will

not be able to decide as to which order is to be given

priority. He thus finds himself in a confused situation.

Such a situation adversely affects the efficiency of the

subordinates. Ego problem creates a possibility of

clash. Consequently, their efficiency is likely to be

affected. On the other hand, when there are many

superiors, every superior would like his orders to be

given priority. Ego among many bosses has to be

generated that harms efficiency in performance.

UNITY OF DIRECTION: The entire organization

should be moving towards a common objective in a

common direction. Unity of direction means that there

should be one head for one plan for a group of

activities having the same objective. In other words,

there should be one plan of action for a group of

activities having the same objective and there should

be one manager to control them.

For example, suppose an automobile company is

manufacturing two products, namely, scooters and

cars, hence having two divisions. As each product has

its own markets and problems therefore each division

must have its own targets. Now each division must

plan its target as per its environmental conditions to

get better results. It is necessary to distinguish

between the meaning of the unity of command (UoC)

and the unity of direction (UoD).

UoC means that there should be only one manager at a

time to give command to an employee, while UoD

means that there should be only one manager

exercising control over all the activities having the

same objective.

Unity of Command & Unity of Direction

In this connection Fayol felt that for the efficient

running of an organization the unity of direction is

important, while the unity of command is important to

enhance the efficiency of the employees.

SUBORDINATION OF INDIVIDUAL

INTERESTS TO THE GENERAL INTERESTS:

The interests of one person should not take priority

over the interests of the organization as a whole. This

principle can be named ‘Priority to General Interest

over Individual Interest.’ According to this principle,

the general interest or the interest of the organization

is above everything. If one is asked to place individual

interest and the general interest in order of priority,

definitely the general interest will be placed at the first

place.

For example, if a manager takes some decision which

harms him personally but results in a great profit to

the company, he should certainly give priority to the

interest of the company and take the decision

accordingly. On the contrary, if some decision helps

the manager personally but results in a great loss to

the company, then such a decision should never be

taken.

For example, a purchase manager of a company has to

purchase 1000 tonnes of raw material. His son

happens to be a supplier along with other suppliers in

the market. The manager purchases the raw material

from the firm of his son at a rate higher than the

market rate. This will give profit to the manager

personally. As a result, the company will get heavy

loss. This situation is undesirable.

EQUITY: All employees should be treated as equally

as possible. This principle tells that the managers

should treat their subordinates in a just and kind

manner so that they develop a feeling of dedication

and attachment for their work. All the employees

should be treated equally and impartially.

Fayol tells us in connection with this principle that

there should not be any equality of treatment between

a person whose work is really good and a person who

is a shirker by nature.

Rather, the latter should be treated sternly. Doing so

would be equitable. It is because of this point of view

that Taylor has presented his differential remuneration

method.

Sustainability and Equity: A Better Future for All

The 2011 Human Development Report argues that the

urgent global challenges of sustainability and equity

must be addressed together – and identifies policies on

the national and global level that could spur mutually

reinforcing progress towards these interlinked goals.

Bold action is needed on both fronts, the Report

contends, if the recent human development progress

for most of the world’s poor majority is to be

sustained, for the benefit of future generations as well

as for those living today. Past Reports have shown that

living standards in most countries have been rising -

and converging - for several decades now. Yet the

2011 Report projects a disturbing reversal of those

trends if environmental deterioration and social

inequalities continue to intensify, with the least

developed countries diverging downwards from global

patterns of progress by 2050.

The Report shows further how the world’s most

disadvantaged people suffer the most from

environmental degradation, including in their

immediate personal environment, and

disproportionately lack political power, making it all

the harder for the world community to reach

agreement on needed global policy changes. The

Report also outlines great potential for positive

synergies in the quest for greater equality and

sustainability, especially at the national level.

The Report further emphasizes the human right to a

healthy environment, the importance of integrating

social equity into environmental policies, and the

critical importance of public participation and official

accountability. The 2011 Report concludes with a call

for bold new approaches to global development

financing and environmental controls, arguing that

these measures are both essential and feasible.

ESPIRIT DE CORPS: Management should

encourage harmony and general good feelings among

employees. As per this principle, a manager should

continuously make efforts to develop a team spirit

among the subordinates. To do this, he/she should use

the word ‘We’ instead of “I” during the conversation

with subordinates.

In order to achieve the best possible

results, individual and group efforts

are to be effectively integrated and

coordinated. Production is a team

work for which the whole-hearted

support and co-operation of the

members at all levels is required.

Contribution of everyone comes from

the sacrifice of personal interest and

best energies to achieve the best

results. Attitudes towards effective

performance accelerate pace for

advancement and to cherish the

ultimate goals of an organization.

Spirit of loyalty, faithfulness on the

part of every member of the group

can be achieved by strong motivating

recognition and importance of the

members for their valuable

contribution, effective coordination,

informal mutual social relationship

between members of the group and

positive and constructive approach of

the management towards workers'

welfare.

What we see India today shines over

the globe that was not at all possible

before 15th

August 1947 because

concept of HRM was not present.

Concept of HRM has started to

percolate since 1942 because Bidhan

Chandra Roy felt its importance in

industry.

It has started to happen when

development of human resources in

India was realized with the best

possible applications of principles of

HRM in every walk of life through

various stages.

STABILITY OF TENURE OF PERSONNEL:

Retaining productive employees should always be a

high priority of management. Recruitment and

Selection Costs, as well as increased product-reject

rates are usually associated with hiring new workers.

From the point of view of management it is absolutely

harmful to change the employees frequently as it is a

reflection of inefficient management. Therefore,

according to this principle there should be stability of

tenure of the employees so that the work continues

efficiently.

Fayol thought that instability in the tenure of

employees is a cause of poor management and results.

High rate of labour turnover will result in increased

expenses because of selecting them time and again,

and giving them training afresh.

It also lowers the prestige of the organization and

creates a feeling of insecurity among the employees

which keeps them busy in finding out new avenues of

work. Consequently, the sense of dedication cannot be

created among them. For example, it is true that if the

workers in a company are not treated well and the

atmosphere in the company is also unhealthy, the

employees will not stay for a long time.

In other words, they will leave the company at the first

opportunity available. This situation is absolutely

harmful. For example, a labourer completes 20 units

of goods in a day. Another labourer who happens to be

a relative of the supervisor completes 18 units but both

get equal remuneration.

This violates the principles of equality. The second

worker must get lesser than that of the first one.

SCALAR CHAIN: Managers in hierarchies are part

of a chain like authority scale. Each manager, from the

first line supervisor to the president, possesses certain

amounts of authority. The President possesses the

most authority; the first line supervisor the least.

Lower level managers should always keep upper level

managers informed of their work activities. The

existence of a scalar chain and adherence to it are

necessary if the organization is to be successful. It

refers to a formal line of authority which moves from

highest to the lowest ranks in a straight line.

INITIATIVE: Management should take steps to

encourage worker initiative, which is defined as new

or additional work activity undertaken through self

direction. Initiative means the capacity to work while

expressing one’s thoughts. According to Fayol, it is

the duty of the manager to encourage the feeling of

initiative among his employees for doing some work

or taking some decision but within the limits of

authority and discipline.

It will be possible only when the manager will

welcome the thoughts of his/her subordinates.

Brainstorming ideas of subordinates must be

appreciated by all. Individuals’ brainstorming ideas

always add values in favour of the organizational

effectiveness.

By doing so the subordinates will present new and

useful ideas time and again and gradually they will

become an integral part of the organization. In order to

make this process a success a manager will have to

abandon his false sense of prestige. False sense of

prestige or ego problem will definitely hinder

productivity.

For example, a salesman suggests to his sales manager

to implement a new advertisement technique. The

sales manager sends him away by telling him that it is

not possible and ignores the suggestion altogether.

In such a situation the salesman, who has been

admonished and belittled, will never venture to offer

any suggestion in future because his desire of taking

initiative has been suppressed. On the contrary, if his

suggestion had been listened to carefully (even though

not to be implemented) he could have taken the

courage to offer some suggestion in future. Such an

action would simply have encouraged his initiative.

Positive Effect

(i) Increase in the thinking power of the employees;

(ii) Cooperation of the employees in implementing

decisions;

(iii) Increase in the sense of attachment to the

organization Violating Effect;

(iv) Decline in the thinking power of the employees;

(v) An atmosphere of non-cooperation;

(vi) Decline in the employees’ attachment to the

company;

REMUNERATION: Many variables, such as cost of

living, supply of qualified personnel, general business

conditions, and success of the business, should be

considered in determining a worker’s rate of pay.

Fayol is of the opinion that the employees should get a

fair remuneration so that the employees and the

owners find equal amount of satisfaction. It is the duty

of the manager to ensure that employees are being

paid remuneration according to their work. If,

however, they are not paid properly for their work,

they will not do their work with perfect dedication,

honesty and capacity.

As a result, the organization shall have to face failure.

Proper remuneration depends on some factors like the

cost of living, demand of labour and their ability.

Fayol feels that in order to motivate the employees,

apart from general remuneration, they should be given

some monetary and non-monetary incentives.

Monetary and non-monetary incentives often help to

boost up productivity at large scale.

For example, suppose that the things are getting dearer

and dearer and the company is getting good profits. In

such a situation, the remuneration of the employees

should be increased even without their asking. If this

is not done, the employees will leave the company at

the first opportunity.

Expenses shall have to be incurred on new recruitment

which shall bring loss to the company.

ORDER: For the sake of efficiency and coordination,

all materials and people related to a specific kind of

work should be treated as equally as possible.

According to the principle of order, a right person

should be placed at the right job and a right thing

should be placed at the right place. According to

Fayol, every enterprise should have two different

orders - Materials Order for Physical Resources and

Social Order for Human Resources. Keeping the

physical resources in order means that ‘a proper place

for everything and everything in its right place’ to be

maintained in the work environment.

Similarly, keeping the human resources in order

means ‘a place for everyone and everyone in his

appointed place’. Maintaining these two orders

properly will ensure that everybody knows his

workplace, what he is to do and from where he would

get his required material. Consequently, all the

available resources in the organization will be utilized

properly.

CENTRALIZATION: Fayol defined centralization

as lowering the importance of the subordinate role.

Decentralization is increasing the importance. The

degree to which centralization or decentralization

should be adopted depends on the specific

organization in which the manager is working.

According to this principle, the superiors should adopt

effective centralization instead of complete

centralization and complete decentralization. By

effective centralization, Fayol does not mean that

authority should be completely centralized.

He feels that the superiors should keep the authority of

taking important decisions in their own hands, while

the authority to take daily decisions and decisions of

less importance should be delegated to the

subordinates. The ratio of centralization and

decentralization can differ in different situations. It is

advantageous to have more centralization in a small

business unit and more decentralization in a big

business unit. Degree of centralization and

decentralization is functionally dependent on the size

and volume of business. Volume of business depends

on frequency of happening of transaction.

Large scale input-output system of organization needs

proper decentralization in order to achieve the target

of performance in time. For example, the decisions in

respect of determining the objectives and policies,

expansion of business, etc. should remain in the hands

of the superiors. On the other hand, authority for the

purchase of raw material, granting leave to the

employees, etc. should be delegated to the

subordinates.

Positive Effect

(i) Decrease in the workload of superiors;

(ii) Better and quick decisions;

(iii) Increase in the encouragement to the

subordinates;

Violating Effect

(i) Unnecessary increase in the workload of the

superiors in case of centralization and of the

subordinates in case of decentralization;

(ii) Impatient and wrong decisions by the superiors in

case of complete centralization and weak decisions by

the subordinates in case of complete decentralization;

(iii) Decline in the encouragement to subordinates in

case of complete centralization.

Industrial Psychological Era (1913 onwards):

Hugo Munsterberg is the father of Industrial

Psychology. His great book named as ‘Psychology

and Industrial Efficiency’ was published in 1913. He

introduced Alpha and Beta tests. He contributed

greatly in respect of job analysis in terms of mental

health and emotional requirements of the deployed

human forces into action. Research and development

in the area of human resources with respect to

selection, placement, training, testing, and research

practices have been advanced. Industrial psychology

has emphasized upon the matching of jobs with the

employees’ mental and emotional health.

Human Relation Era (1930s-1950s):

Elton Mayo (1818-1949) took initiative to conduct

research on (human aspects of work and working

conditions at Hawthrone Plant of Western Electric

Company, Chicago) Hawthrone Experiments and

supported researches were conducted by F.

Roethlisberger (1930’s) and W.J. Dickson (1940’s).

Mayo initiated research with a group of professors

from Harvard Business School conducted researches

(1924-1932) and arrived at the conclusions that

productivity of workers is dependent on – (a) social

factors at workplace; (b) group formation and group

influence; (c) nature of leadership and supervision;

and (d) communication3.

George Elton Mayo (26 December 1880-

7September1949), and Australian

Pshychologist, sociologist and

organization theorist experimented on

Hawthrone’s studies.

Mayo is known for his research Human Relations

Movement including the Hawthrone studies and his

book The Human Problems of an Industrialized

Civilization (1933). Mayo, Roethlisberger and

Dickson, conducted the practical experiments. This

enabled them to make certain deductions about how

managers should behave.

The research he conducted under the Hawthorne

Studies of the 1930s showed the importance of groups

in affecting the behaviour of individuals at work.

Mayo carried out a number of investigations to look at

ways of improving productivity, for example changing

3 Elton Mayo, The Human Problems of an Industrial Civilization, New

York; Macmillan, 1933.

lighting conditions in the workplace.

What he found however was that work satisfaction

depended to a large extent on the informal social

pattern of the work group. Where norms of

cooperation and higher output were established

because of a feeling of importance, physical

conditions or financial incentives had little

motivational value.

People will form work groups and this can be used by

management to benefit the organization. He concluded

that people's work performance is dependent on both

social issues and job contents.

He suggested a tension between workers' 'logic of

sentiment' and managers' 'logic of cost and efficiency'

which could lead to conflict within organizations.

Conflicts within organization are to happen every now

and then.

Observed disagreement regarding his employees'

procedure while conducting the studies:

→The members of the groups whose behaviour has

been studied were allowed to choose themselves.

→Two women have been replaced since they were

chatting during their work. They were later identified

as members of a leftist movement.

→One Italian member was working above average

since she had to care for her family alone. Thus she

affected the group's performance in an above average

way.

Summary of Mayo's Beliefs:

→Individual workers cannot be treated in isolation,

but must be seen as members of a group.

→Monetary incentives and good working conditions

are less important to the individual than the need to

belong to a group.

→Informal or unofficial groups formed at work have a

strong influence on the behaviour of those workers in

a group.

→Managers must be aware of these 'social needs' and

cater for them to ensure that employees collaborate

with the official organization rather than work against

it.

Mayo's simple instructions to industrial interviewers

set a template and remain influential to this day:

The simple rules of interviewing:

Give your full attention to the person interviewed, and

make it evident that you are doing so.

Listen - don't talk.

Never argue; never give advice.

Listen to: what he wants to say; what he does not want

to say; what he can not say without help.

As you listen, plot out tentatively and for subsequent

correction the pattern that is being set before you. To

test, summarize what has been said and present for

comment. Always do this with caution - that is, clarify

but don't add or twist.

Research studies suggested that the deployed

employees’ productivity is not only dependent on the

ways of jobs designed and methods by which

employees are rewarded but by the most effective

influential social and psychological factors as well.

The human relation movement is really significant

because it is concerned with the informal and

spontaneous behaviour of human beings. Human

sentiments and attitudes towards work performance

are significant and that cannot be ignored at all.

The scientific management was concerned with an

organization as an economic system and performance

of human beings was related to mechanized work

standards whereas the human relation movement

viewed the organizations as constituent parts of social

system. Since then the HRM has started to receive

global recognition as the most important discipline of

social science.

The Behavioural Science Era (1950s-1960s):

Maslow’s theory parallel many other theories of

human developments psychology, some of which

focus on describing the stages of growth in humans.

Maslow's hierarchy of needs is a theory in

psychology written by Maslow4 subsequently

4 Abraham Maslow wrote in his paper in 1943. The title of his paper was

"A Theory of Human Motivation." Maslow used the terms Physiological,

extended the idea to include his observations of

humans' innate curiosity. Productivity improvement

(p) is a function of motivation by human factors (m)

symbolically, p = f (m). The factors of productivity

improvement can be exhibited in the pyramid figure

below.

Safety, Belongingness and Love, Esteem, Self-Actualization and Self-

Transcendence needs to describe the pattern that human motivations

generally move through.

Maslow strongly believed that the innate ability of

every human being is very important that has to be

understood by the HRM in order to raise productivity.

Major conclusions found from the noted

behaviouralists’ research works can be summed up

below.

People’s great source of motivation and satisfaction

jobs itself. People love to do job if they are directed

towards achievement of their personal goals and

achievement of the established objectives of an

organization. We can categorically arrange those

observations below.

Peoples love self-direction towards their creativity.

Observed that many times people do have untapped

potentials.

Effective management always tries to use the

untapped human potentials in the service of the

organization.

People need healthy work environment. Management

has to provide healthy work environment wherein all

deployed human force can contribute to the best of

their capacity.

People love to participate in the doing function of

management. Good management always encourage

the deployed working force to come forward to

participate in the doing functions of management in an

organization.

Operating efficiency can be excelled with the use of

deployed working force by expanding subordinates

influence, self-direction, and self-control.

Subordinates are made to be happy when they are

given to full authority to use their full potentials into

the organization.

Productivity does not depend only on monetary

incentives but on many needs (viz., social, ego,

esteem, physiological, self-actualization, safety).

The behavioural science approach in managing human

being has significantly added importance to the human

relations studies. It was realized that each human

being is unique creature of the nature and highly

complex having different wants, needs, esteems, and

values. What motivates one employee may not

motivate another. Owing to this fact that has been

stated briefly HRM advances with its research and

development with the advancement over the passage

of time space.

Mary Follett's work set the stage for a generation of

effective, progressive changes in management

philosophy, style and practice, revolutionizing and

humanizing the American workplace, and allowing the

fulfilment of Douglas McGregor's management

vision—quantum leaps in productivity effected

through the humanization of the workplace.

Mary Parker Follett5 (3 September 1868 – 18

December 1933) was an American social

worker, management consultant and

pioneer in the fields of organizational theory and

organizational behaviour. She also authored a number

of books and numerous essays, articles and speeches

on democracy, human relations,

political-philosophy, psychology, and

conflict resolution. Along with Lillian

5 Marry Parker Follett admonished over managing employees, a process

now known as micromanaging, as “bossism” and she is regarded by some

writers as the “mother” of Scientific Management. As such she was one

of the first women ever invited to address the London School of

Economics, where she spoke on cutting-edge management issues.

Gilbreth, Mary Parker Follett was one of two great

women management gurus in the early days of

classical management theory. She also distinguished

herself in the field of management by being sought out

by President Theodore Roosevelt as his

personal consultant on managing not-for-profit, non-

governmental, and voluntary organizations.

In her capacity as a management theorist, Mary Parker

Follett pioneered the understanding of lateral

processes within hierarchical organizations (which

recognition led directly to the formation of matrix-

style organizations, the first of which was DuPont, in

the 1920s), the importance of informal processes

within organizations, and the idea of the "authority of

expertise"- which really served to modify the typology

of authority developed by her German contemporary,

Max Weber, who broke authority down into three

separate categories: rational-legal, traditional and

charismatic.

Follett was born in Massachusetts and spent much of

her early life there. In 1898 she graduated from

Radcliffe College, but was denied a doctorate at

Harvard on the grounds that she was a woman.

She recognized the holistic nature of community and

advanced the idea of "reciprocal relationships" in

understanding the dynamic aspects of the individual in

relationship to others. Follett advocated the principle

of what she termed "integration," or non-coercive

power-sharing based on the use of her concept of

"power with" rather than "power over." Her ideas on

negotiation, power, and employee

participation were highly influential in the

development of the fields of organizational

studies, Human Relations

Movement. Follett contributed greatly to the

win-win philosophy, coining the term in her work

with groups. Her approach to conflict was to embrace

it as a mechanism of diversity and an opportunity to

develop integrated solutions rather than simply

compromising. She was also a pioneer in the

establishment of community centres.

Even though most of Mary Parker Follett's writings

remained known in very limited circles until

republished at the beginning of this decade (beginning

with Pauline C. Graham's first-rate work), her ideas

gained great influence after Chester Barnard, a New

Jersey Bell executive and advisor to President

Franklin D. Roosevelt, published his seminal

treatment of executive management, The Functions of

the Executive Barnard's work, which stressed the

critical role of "soft" factors such as "communication"

and "informal processes" in organizations, owed a

telling yet undisclosed debt to Follett's thought and

writings. In addition, her emphasis on such soft

factors paralleled the work of Elton Mayo at Western

Electric's Hawthorne Plant, and presaged the rise of

the Human Relations Movement, as developed

through the work of such figures as Abraham Maslow,

Kurt Lewin, Douglas McGregor, Chris Argyris, Dick

Beckhard and other breakthrough contributors to the

field of Organization Development. Her

influence can also be seen indirectly perhaps in the

work of Ron Lippitt, Ken Benne, Lee Bradford, Edie

Seashore and others at the National Training

Laboratories in Bethel, Maine, where T-Group

methodology was first theorized and developed.

Thus, Follett's writings span the decades. In The New

State, Follett ponders many of the social issues at

hand today. "It is a mistake to think that social

progress is to depend upon anything happening to the

working people: some say that they are to be given

more material goods and all will be well; some think

they are to be given more "education" and the world

will be saved.

It is equally a mistake to think that what we need is

the conversion to "unselfishness" of the capitalist

class." Pawelec, (1998) found obscure reference

pointing to Mary Parker Follet having coined the term

"Transformational Leadership."

She quote: Rusch, Edith A. (1991) in "The social

construction of leadership: From theory to praxis

discovered that writings and lectures by Mary Parker

Follet from as early as 1927 contained references to

transformational leadership, the interrelationship of

leadership and followership, and the power of

collective goals of leaders and followers". Burns

makes no reference to Mary Parker Follet in

Leadership; Nonetheless Rusch was able to trace what

appear to be parallel themes in the works of Burns and

Follet."

Rusch presents direct references in Appendix A.

Pawelec (Deschenes) found further parallels of

transformational discourse between Follet's ( 1947,

1987) work and Burns (1978). Among the many social

and individual psychologists who have contributed a

lot to the management other than Maslow are

Herzberg (motivation-hygiene theory and job

enrichment); McGregor (theory X, Y); Likert

(management system and linking pin model);

Argyris (maturity-immaturity theory, integration of

individual and organizational goals and pattern of AB

analysis); Blake and Mouton (managerial grid); Sayles

(interpersonal behaviour); Bennis (organization

development); Tannenbaum and others (continuum

approach of leadership); besides these contributors

there are many more psychologist and sociologist

contributors e.g. Leavitt, Stogdill, Vroom, Reddin,

Homans (human group), Bakke (fusion process),

Lewin (group dynamics), Katz and Kahn (social

psychology of organizations), etc.

Systems and Contingency Approach Era (1960

onwards):

System and Contingency is an integrated approach

based on research according to empirical observations.

The part and parcel idea of this approach is that any

object must be objectively dependent on the

simultaneous variations of mutually-dependent

variables. This happens to be in real life situation

when the system approach applied in managing human

resource.

A system is essentially an assemblage of many parts

or components connected or interrelated so as to

constitute a complex unit; a whole composed of many

components in an orderly arrangement in accordance

with a particular scheme of action. A system must

have the under mentioned features.

A system is definitely assemblage of many essential

components or sub-parts in an orderly manner to

constitute the whole complex system.

All components or sub-parts must have the same

features and help achievement of the same objectives

of the whole system.

All components or sub-parts must be mutually related

to each other. All sub-systems are related to the whole

system. Any little change or alteration in sub-systems

must have some impact on the whole system as a

whole.

A system is not merely a totality of sub-systems but its

order arrangement is significant because of this

orderly arrangement the sum total of components will

have to be lesser than the whole.

A system must have a boundary that compels to

separate it from other systems. In any biological

system it is easy to determine but in the social system

it is very cumbersome to identify.

A system may be either close or open being based on

the principle of boundary. An open system is free to

interact with its environment and to collect all

essential inputs from its environment, and process

them in orderly manner to produce output and export

output into its environment. A closed system hinders

itself to interact with its environment and have some

barriers to develop further. All living systems and

social systems are essentially featured with the open

system to accomplish and perpetuate on its

accelerating pace for further development.

Contingency approach is relevant to the concept of an

open system. It is observed that a subsystem in an

organization responds to a little change and behaves in

response to another system or sub-system. It’s all

responses are essentially contingent upon

environment. Henry L. Toshi and W.C. Hammer6

said that a contingency approach is an approach where

the behaviour of one subunit is dependent on its

environmental relationship to other units or subunits

that have control over the consequences desired by

that subunit. Hence, the system and contingency

approach has relevance in real life situation because of

the under noted implications.

Organization-environment relationship is

indispensable to exist in any society. Not a single

action is universal. All activities related to action vary

from situation to situation as human component is the

key of all resources.

Organization is integrated with the environment. Any

6 Henry L. Toshi and W. C. Hammer, Organizational Behaviour and

Management: A Contingency Approach, Chicago: St. Clair Press, 1974.

behavioural change in the environment will have

implications over the organizational action.

Action of management is contingent upon action

outside the system or subsystem. HRM is a subsystem

of organization as a system. So, it is linked to other

subsystems of the organization. However, when we

recognize at the level of subsystems, each sub-system

is to be recognized as system.

Human Resource Management Era (1980

onwards):

Huge number of deployed working forces started

working together since the era of Factory System

begun with the applications of factory system

principles into action. Human Resource

Management started to think of a sub-system of

management which will take care of recruiting,

selecting, developing, and welfare of the deployed

human resources. For that purpose, industrial relations

department came into existence in most of the large

organizational entities.

However with the passage of time the complexities of

managing human resources scientifically cropped up.

In due course of management action a specialized

department naming ‘personnel department’ took birth

into the organizational entities for managing personnel

effectively. With the growing complexities of steep

competition in the global market place the

organizational entities started to create brand image

competing on human resource and India is not at all

exception to that principle of competition.

In the field of managing human resource, people are

not being treated merely as physiological assets but

socio-economic-techno-political psychological beings

as a prime source of organizational effectiveness and

globally the organization entities have started to

change the name of personnel management to ‘human

resource management’ which significantly reflect the

contemporary view of management of people.

Significantly, American Society for Personnel

Administration (ASPA) has changed its name to the

Society for Human Resource Management (SHRM) in

1990. Since then the academic community have

started to use the name HRM instead of personnel

management. The role of teachers in developing

human resource from very beginning was aptly felt by

our second president ‘Sarvepally RadhaKrishnan’.

The UNESCO has also accepted that view.

In the context of development of human resource there

are several stages of evolution of HRM in India that

can be grouped in the table given below for easy

understanding and recapitulation of the process of

human resource development. After the emergence of

the concept of scientific management propounded by

F. W. Taylor and the concept of Modern Management

by Henry Fayol the ethical change in the development

of human resource was started to initiate research in

management theories.

Knowledge Management Era (2000 onwards):

Knowledge is either embodied in individuals or

embedded in organizations as processes or

practices. Knowledge management (KM) comprises

a range of strategies and practices used in an

organization to identify, create, represent, distribute,

and enable adoption of insights and

experiences of human being. KM research

includes information and media, computer science,

public health, and public policy. Many large

companies and non-profit organizations have

resources dedicated to internal KM efforts, often as a

part of their business strategy, information

technology, or human resource

management departments (Addicott,

McGivern & Ferlie 2006).

Several consulting companies also exist that provide

strategy and advice regarding KM to these

organizations. KM efforts typically focus on

organizational objectives such as improved

performance, competitive advantage,

innovation, the sharing of lessons learned, integration

and continuous improvement of the

organization. KM efforts overlap with and may be

distinguished organizational learning from that by a

greater focus on the management of knowledge as a

strategic asset and a focus on encouraging the sharing

of knowledge. It is seen as an enabler of

organizational learning and a more concrete

mechanism than the previous abstract research.

Though professionalism of HRM as a field of study

has become of recent origin, history of management of

people in the organisation particularly in the state

administration is quite old. The principles of minimum

wage rates and incentive plans were considered in the

Babylonian Code of Hammurabi around 1800 B.C.

Around 1650 B.C. the Chinese introduced the

principle of division of labour and formulated the

principles relating to the labour turnover. In India,

based on the principles given by Kautilya, a detailed

framework for managing people in the form of job

descriptions, job qualifications, selection procedure,

training, incentive plans and punishment, performance

evaluation, etc. was introduced in 320 B.C.

Stages of Evolution of HRM in India

PERIODS

FACTORS 1920-

1940

1940-1970 1970-

1990

1990-2000 2000

ONWARDS

DEVELOP

MENT

BEGINNI

NG

STRUGGLI

NG FOR

RECOGNITI

ON

INTRODU

CTION OF

SOPHISTI

CATED

TECHNIQ

UES

PROMISING CHALLENGI

NG

OUTLOOK LEGALIS

TIC

TECHNICAL

AND

LEGALISTIC

IMPERSO

NAL AND

PROFESSI

ONAL

PHILOSOPH

ICAL

PROFESSIO

NAL

EMPHASIS STATUT

ORY

WELFAR

E

PATERNALI

SM

FRINGE

BENEFITS

AND

SOCIAL

SECURITY

HUMAN

VALUES,

PRODUCTIV

ITY

THROUGH

HUMAN

FORCES

RETENTIO

N,

REPATRIATI

ON,

RESURREC

TION

STATUS CLERICA

L

ADMINIST

RATIVE

MANAGE

MENT

EXECUTIVE EXECUTIVE

HRM NOT

FOUND

FELT

IMPORTAN

CE

STARTED

TO FEEL

SIGNIFICA

NCE

ALONG

WITH

PERSONN

STARTED

TO

IMPLEMENT

PRINCIPLES

OF HRM AS

A DISTINCT

FULL

FLEDGED

APPLICATI

ONS OF

PRINCIPLES

OF HRM

AS

Having studied all these evolutionary processes we

have observed that HRM has some

features/characteristics.

Features/characteristics of Human Resources

Management:

A part of management discipline: It is an accepted

social science with a theoretical foundation that serves

as the basis for a specialized branch of study and

research.

It acknowledges employees as non-trade-able assets:

It acknowledges human resource as a unique resource

which is to be organized, appreciated and treated

differently not like other resources. HR contributes a

great deal for achieving organisational goals. Total

value-creation depends on the contributions made by

the HR as a whole.

It facilitates the development of human resource:

HRM always boosts up knowledge, efficiency,

potentiality, capability, skill and personality of HR for

reciprocal benefits.

It acts as a process: HRM is a process involving an

identifiable flow of information through interrelated

stages of events directed towards cherishing of

organisational objectives. HRM entails of four basic

EL

MANAGE

MENT

DISCIPLINE DISTINCTL

Y

IDENTIFIED

BRANCH

processes of management – planning, organizing,

directing and controlling of HR through selection,

recruitment, development, retention and maintenance

of HR to achieve organizational objectives.

It focuses on collective growth: HRM considers all

employees in a family under the same roof of the

organization and stress on the importance of gaining

commitment to the organization’s mission and values.

It is pervasive in nature: All principles of HRM are

applicable at all organization at all levels and to all

management functions such as production

management, purchase & sales management, financial

management, research management, in corporate

policies.

It acts a continuous process: HRM continues to render

all relevant functions regularly laying importance on

the human relations on every aspect of management in

an organization.

It is concerned with people: HRM deals with present

deployed human forces and their potentials. It takes

the responsibility for bringing best HR at all levels of

management – top management, middle management,

bottom management, supervisory, operatives and

supportive levels.

Directed towards achievement of objectives: HRM is

entrusted with all responsibilities in directing HR in

cherishing organizational objectives effectively. The

accomplishment of organizational goals depends on

the quality of human resource and the mode of

utilization of deployed human resource in getting jobs

rendered.

Universal existence: HRM is not only meaningful to

business organization but also effective to all

organized activities. HRM is concerned with the

quality dimension of HR in management. Since every

organization is involved with people, acquiring their

services, developing their skills, motivating people to

higher levels of accomplishment and ensuring their

commitment to the organization in achieving

organizational objectives. This is absolutely true in all

types of organization – government, business,

education, health, recreation, social etc.

It is performance oriented: HRM always endeavours

to achieve higher levels of performances to meet new

challenges. All performances are appropriately

rewarded.

It acts on business-oriented philosophy: HRM is top

management-driven and execute all functions keeping

in mind business-oriented philosophy for achieving

competitive advantage.

It develops competitive advantages: In all countries

HRM stress on developing competitive advantage in

all respect of producing goods and services and India

is not at all exception to that principle. After

globalization, the markets became very competitive

and business has been compelled to accept service-

oriented philosophy. In this respect, HRM is

considered critical for any corporate entity to leverage

HR effectively.

It focuses on brand building through specialized

knowledge capital: Corporate entities are not at all

competitive depending on its physical as well financial

resources alone but business philosophy has become

critical to accept challenges for brand building through

the power of knowledge capital.

In order to understand ‘HRM as a system’ we need

to recognize the under noted features of HRM as a

system.

HRM acts as a social system unlike biological or

mechanical systems having all features of social

system. HRM has many sub-systems which are

integrated to form an organizational entity.

HRM is a unique open system. It interacts with

environment. It collects all required inputs from

environment and processes them to produce output

and to deliver output back to the environment. Hence,

HRM acts as a mediator of an input-output system.

HRM has to decide everything depending upon

environmental factors.

Adaptive: HRM belongs to an open system of

organization. It needs to be adaptive of continuously

changing environment to survive. HRM continuously

adjusts to the needs of ever changing global needs

through the change in the attitudes of the human

resources. The fundamental role of HRM is

considered with regard to its adaptability to

environment. HRM intends to win over the changes.

Dynamic: HRM is a system of many sub-systems is

dynamic. It attempts to bring equilibrium between the

external environment and internal environment of the

input-output system of an organization. HRM takes up

proactive views regarding all changes catching up

over the global villages.

Probabilistic: HRM is always probabilistic and not

deterministic like all other sciences. A deterministic

model always sets its program of actions with its

predetermined results so as to arrive at the outcome of

an action almost accurately. In the case of

probabilistic model nothing can be deterministic with

respect to its outcome which can be assigned with

probability and not with certainty. HRM has to

perform in the face of many dynamic variables.

Multilevel and multidimensional: HRM is based on

the system approach. The system approach adopts the

features of multilevel and multidimensional aspects of

all variables based on both micro and macro

approaches. At macro level, it applies to the supra-

system (business system as a whole) and at micro

level it applies to an organization having same

characteristics of all systems and sub-systems of an

organization.

Multivariable: HRM acts with multivariable

simultaneously and there is no simple cause-effect

relationship, rather an event may be the result of so

many variables which themselves interconnected,

interdependent. HRM deals with the complexities of

such interrelatedness and interdependence. Thus,

HRM becomes a complex system.

An Integrated Approach: As HRM is a system

approach it adopts integrated view in performing all

actions. It recognizes the reason for an event in its

wider context considering the total variables affecting

the event. HRM attempts to integrate the

multidimensional variables to find out the reasons

behind a phenomenon. Management of one subsystem

of an organization should be taken with respect to

others because other subsystems should not be focused

into the subsystem only but in a much wider context.

Subsystems in HRM

Every system is built up with multi level subsystems

which are interconnected and inter-organized. Every

subsystem has definite objectives, roles, processes,

modes of conduct. HRM becomes a system containing

of many subsystems as depicted in the under noted

figure.

HRM though a new nomenclature as new branch of

study evolves passing through different eras. This has

evolved out of different terms such as personnel

management, personnel administration, staff

management, manpower management, labour relation

management, industrial relation management and very

recently some experts coined new term knowledge

management. Frequently, personnel management and

HRM are being used synonymously. Because of

evolving characteristics of HRM, it lacks uniformity

from the stand points of conceptual and definitional

framework.

HRM subsystems and their linkages constitute a whole

Staffing

Subsyst

em

Develop

ment

Subsyste

m

Appraisa

l

Subsyste

m Motivati

onal

Subsyste

m

HRM System

Compensa

tion

Subsystem

Integration

Subsystem

Mainten

ance

Subsyste

m

Industrial

Relation

Subsystem

complex system that contributes positively towards

accomplishment of objectives of the organization as a

whole.

If a particular subsystem does not act properly it

produces some negative impact over other subsystems

just like a defective component of a living system

spoils other components and renders the system

ineffective. So, there must be equilibrium among the

subsystems and the system as a whole. HRM

maintains that equilibrium in real life situation in an

organization.

Michael J. Jucius stated that personnel administration

is the field of management which has to do with

planning, organizing, directing and controlling various

operative functions of procuring, developing,

maintaining, and utilising labour force such that the

(a) objectives of the organization are attained

economically and effectively; (b) objectives of all

levels of personnel are served to the highest possible

degree; and (c) objectives of the community are duly

considered and served.

Jucius’s views are quite elaborate concentrating on

the personnel administration towards labour force.

Flippo has stated that personnel management is the

planning, organizing, directing and controlling of

procurement, development, compensation, integration,

maintenance, and separation of HR to the end that

individual, organizational, and social objectives are

accomplished.

Wendell L. French has expressed that personnel

management is the recruitment, selection,

development, and utilization of, accommodation to,

human resources by organizations.

The human resources of an organization consist of all

individuals regardless of their role who are engaged in

any of the organization’s activities.

The National Institute of Personnel Management

(India) has stated that Personnel Management, Labour

Management, or Staff Management means quite

simply the task of dealing with human relationships

within an organisation.

Academically, the three aspects of personnel

management are: (i) the welfare aspect concerned with

working conditions and amenities such as canteens,

crèches, housing, personal problems of workers,

schools, and recreation; (ii) the labour or personnel

aspect concerned with recruitment, placement of

employees, remuneration, promotion, incentives,

productivity, etc.; (iii) the industrial relations aspect

concerned with trade union negotiation, settlement of

industrial disputes, joint consultation, and collective

bargaining.

All these aspects are concerned with human element

in an industry. Considering all views regarding

personnel management, both HRM and personnel

management have some similarities and some

differences. Having all differences between personnel

management and human resource management

modern business world forms human resource

management professionals those who can see the

insights of rapid changes taking place in the

globalized scenario. All rapid changes have emerged

from globalized competition that keen competition

creates high attrition rate of employees.

So, we need to conceptualize and to differentiate

between the concepts of personnel management and

HRM as follows.

Personnel Management (PM) Human Resource

Management (HRM)

PM is reactive approach to

perform the same of set of

functions within the organization.

It responds to the administrative

needs of an organization.

HRM is proactive

approach to perform

managerial,

operative, and

supportive functions

strategically

integrated with the

organizational

objectives. It is not

only concerned with

the present needs but

also anticipates the

needs of the years to

come ahead and acts

accordingly.

PM concentrates on departments

within the organization itself

having narrower view.

HRM deals with the

human resources at

broader spectrum

beyond the

department but

considering all

departments as a

whole in the

organization.

PM is a routine, maintenance

oriented administrative function.

HRM gives emphasis

on continuous

development of

human resources at

work.

PM follows the traditionally

accepted principles in

management.

HRM follows the most

updated principles of

TQM e.g., ‘kaizen’.

PM treats personnel function as

the exclusive responsibility of the

personnel department.

HRM regards the

functions of all

managers as a team

in the organization.

Michael J. Jucius said that PM acts

as a personnel administration in

the field of management.

HRM is distinctly

identified a field of

study and research.

Robert Owen said that PM tends

to be parochial and focus on the

line managers only.

HRM is proactive and

tends to achieve goals

of the organization at

large.

PM is concerned with the

execution of departmental orders

and systems applied to individuals

routine wise collectively.

HRM embraces

individual flexibility to

be fit with the

changing goals of the

organization.

PM is regarded as independent

routine function and does not give

importance to the strategic needs

of an organization.

HRM is regarded as a

system containing of

many subsystems

within an

organization. So, it

considers all other

linkages and

interfaces with all

other parts of an

organization.

PM recognizes narrow view of its

scope and objectives. It pays

attention in improving the

efficiency of personnel in isolation

without giving focus on the

strategic goals of the organization.

HRM recognizes

broader view of its

scope and objectives.

It does activities as a

sub-system of an

organization to make

people efficient

inculcating

organizational culture

to utilize efficiencies

in making brand.

PM motivates people by offering

economic rewards through

traditional jobs design like job

simplification for better

performance.

HRM gives

importance on the

satisfaction of higher

needs in motivating

people accepting

challenges, creativity

etc.

PM recognizes job satisfaction

and morale being the cause of

better performance based on the

principle “happy work forces are

productive forces.”

HRM recognizes

higher motivation and

morale in other way

round based on the

principle “better

performances

become the sources

of satisfaction and

high morale.”

PM is supply-driven i.e. it is

directed mainly towards the

HRM is demand-

supply driven i.e., it

deployed human forces of the

organization itself.

does not start from

the human forces of

the organization but

from the need of the

organization for

human forces. It

attempts to foresee

the future needs of an

organization keeping

track on all global

changes catching up.

PM deals with the regular

administration of the personnel.

HRM is more

concerned with the

continuous

development and

competencies of

human resources.

PM is inflexible to accept all

challenges and opportunities for

improvement except salary,

wages and rewards for

employees.

HRM accepts all

challenges and

opportunities for

development of

creativity and self-

actualization.

PM utilizes employees for

organizational benefits.

HRM strategically

utilize human forces

for the mutual

benefits.

PM involves planning, organizing,

directing, and controlling of

recruitment, training and

development, maintenance of

employees within an organization.

HRM is a series of

integrated decisions

that form the

employment

relationship and the

quality that

contributes to the

ability of an

organization.

PM executes those functions

relating to employees which are

directed by the top level

management.

HRM attempts to

render all relevant

functions necessary

for developing

corporate culture

within the deployed

human resource.

PM is not at all business- oriented

philosophy and its strategic

functions relate to the staff

function in an organization.

Michael Armstrong

stated that HRM is

business oriented

philosophy.

Karen Legge stated that PM is

concerned with the staffs and

non-managers within an

organization.

Karen Legge stated

that HRM aims at total

management of HR.

Karen Legge stated that PM

attempts to influence line

management.

Karen Legge stated

that HRM attempts to

integrate all line and

staff management

activities.

Karen Legge stated that PM is

detached from corporate culture.

Karen Legge said that

HRM is totally involved

with corporate culture.

PM is an independent routine

administrative function having

no regard to the organizational

HRM acts as a system

of an organization and

attaches importance

with all sub-systems in

strategies. an organization.

PM emphasizes on economic

rewards and traditional job-

design.

HRM does not

emphasize on

economic rewards and

traditional job-design

but give emphasis on

qualitative

performance.

PM considers job satisfaction and

morale as cause of improved

performance. It works on the

premise that a happy worker is a

productive worker.

HRM is based on

premise that better

performance is a

source of creative

energy and source of

satisfaction for

achieving high morale.

From the above it is apparently clear that there is a

problem in the use of nomenclature as personnel

management or human resource management. But the

differences between the outlook of PM and HRM is

significantly exist based on perspectives. Unless the

outlook, attitude and thinking do not change on the

part of the management, merely changing of

nomenclature is a futile exercise. Perspectives of

HRM is beyond doubt is noble and greater for national

development at large.

Functions of HRM in a corporate body like Larsen

and Toubro Limited is depicted below.

HRM System in Larsen & Toubro Limited

Universal HRM functions

Manpower

planning

Selection

and

placement

Reinforcement

and

advancement

Data storage

and processing

Critical

Attributes

Analysis

Feedback and

Counseling

Performance

Appraisal

Potential Appraisal

Industrial

Relations

Training

Organization

and

Development

Career

planning

and

development

Planni

ng

Organizi

ng

Directi

ng Controlli

ng

Managerial functions

Operative functions

Supportive functions

HR

Acquisiti

on

HR

Planning

Recruitm

ent

Selectio

n

Placeme

nt

Inductio

n

HR

Develop

ment

HRD

system

Training

Manage

ment

Develop

ment

Organiza

tion

Develop

ment

Appraisal

and

Compens

ation

Performa

nce

appraisal

Base

compens

ation

Incentives

Benefits

Integration

&

Maintenan

ce

Integration

of HR

Motivation

Empowerm

ent

Participatio

n

Communic

ation

mobility

safety and

Health

Stress

manageme

nt

HR information

system

HR records

HR research

HR audit

HR valuation

Industrial

Relations

IR System

Discipline

Grievance

Redressal

Maintenance

of disputes

Definition of HRM: HRM refers to the

practices, policies, procedures and process,

which the organization needs to carry out

keeping an eye to the human relation

approaches. HRM broadly includes recruiting,

selecting, training, rewarding, appraising and

motivating its man power. HRM involves all

managerial personnel and regards human

beings as the most important single asset of the

organization. It is proactive in its relationship

with people. It enhances performance.

HRM meets employees’ needs and societal well-

being. Ivancevich and Glueck said that

Personnel/Human resource management is the

function performed in organisations that

facilitates the most effective use of people

(employees) to achieve organizational and

individual goals.

Michael Armstrong has said that HRM as a

strategic and coherent approach to the

management of an organization’s most valued

assets, the people working there who

individually and collectively contributes to the

achievement of its goals.

Leon C. Megginson said that the term HR refers

to the total knowledge, skills, creative abilities,

talents and aptitudes of an organizational

workforce, as well as the values, attitudes and

beliefs of the individuals involved.

Byars and Rue opined that HRM encompasses

those activities designed to provide for and

coordinate the human resources of the

organization.

Milkovich and Boudreau said that HRM is a

series of integrated decisions that form the

employment relationship; their quality contributes

to augment the ability of the organization and the

employees to achieve their objectives.

MANAGE THE HUMAN BEINGS

TACTFULLY is management of human

resources. HRM is thus essentially a business

oriented philosophy concerning the management

of people by line managers in order to achieve the

competitive advantage. Competitive advantage is

human forces.

Based on the definitions of HRM given by the

pioneer thinkers of management we have

observed certain characteristics of HRM as noted

below.

HRM acknowledges deployed human resource

as non-tradable permanent asset of any

organizational entity. Human resource is a

different type of asset which must not be treated

as all other assets in the organization. HR

contributes huge to the organization towards

cherishing goals of the organization.

HRM always initiates programmes of human

resource development by developing the

potentialities, skills, capabilities adopting

techniques. HR deployed in the organization

functions always apply their knowledge, skill,

creativities in contributing towards goals by

reciprocal understandings.

HRM lays emphasis on the individual

contributions and contributions made by

employees collectively as a group. HRM focuses

on the collective development of the deployed

human resources in the organization so that the

organizational mission and values percolate

amongst the all.

HRM ensures the development of competitive

advantage with the collective development of the

pool of deployed human resources in the

organization. In the era of globalization, the

markets have become fiercely competitive and

business activities have been forced to provide

best quality services to the end users of the

products. HRM always organize a good quality of

human resource in order to sharpen the

competitive edge over the other competitors.

From the above discussion we can suggest now

HRM system which includes HRM, payroll

management, recruitment management, training

management, insurance management,

performance management, organization change

management, policies & forms publishing,

organization survey management, employee

suggestion management, news letter/opinion polls

& events, employee self-service and manager

self-service (ESS & MSS).

“Our people are our most important asset” is a

phrase you see often in today’s annual reports.

Businesses are paying more attention to the

contributions made by their workers and it’s

paying off on the bottom line.

People-related costs now constitute the majority

of total corporate expenditures, and leading firms

have embraced the need to better manage their

human capital and build a more effective

workforce. HRM delivers a comprehensive

platform and robust functionality that helps your

organization execute all four HCM strategies:

• Comply: Managing core HR data and

processes, payroll, benefits, and

legislative/regulatory compliance.

• Automate: Saving cost and time with

comprehensive, workflow-driven employee and

manager self-service.

• Measure: Providing metrics and analytical tools

to stakeholders to deliver information and

determine the value of HR program investments.

• Align: Offering flexible programs designed to

increase workforce value through a broad range

of development, performance management, and

learning applications.

Human Resource Management Software

A Human Resource Management System

(HRMS) is an Enterprise Resource Planning

(ERP) software application that specifically deals

with personnel issues.

These systems are often integrated with other

business applications such as finance. Over the

years managing an organization’s human

resources has become more and more

complicated. This key functional group must

track employee data including education, job

history, skills, and personal information.

For decades it has been virtually impossible for

medium and large organizations to manage the

wealth of human resources data effectively and

efficiently without using computers.

In the past HRMS ran on large, centralized

mainframe computers. Now many of these

systems are available on microcomputers. Let’s

look at some of their typical components.

Aim of HRM

The main aim of HRM is to develop an

understanding of how management functions can

affect the performance of a business. The

performance of a business depends on quality of

goods and services, productivity, supply chain

management which are entirely related to quality

of human resources deployed in an organization.

Human resources are one of the most important

features of many businesses - especially in an

economy where there is an increasing shift

towards service-based industries. Human

resources account for a large proportion of many

businesses' costs and it is the people that

invariably drive a business.

Management of these resources therefore is an

integral part of business success. Let's look at the

range of factors you will have to consider in the

management of human resources.

Overall performance of any business depends on

the attitudes of human resources deployed in an

organization. We will look at some of these areas

and attempt to identify how effective

management of these factors can help a business

to improve its performance.

Background

First of all, we need to identify how we might

measure that performance. This can be done

through a number of ways:

→Profit measurement through appropriate

accounting;

→Revenues recognition applying accounting

prudence;

→Accounting measures - Return on Capital

Employed (ROCE), profit margin

→Shareholders’ value = (the share price x the

number of shares issued) → also known as the

company’s value or worth through market

capitalization;

→Growth - in sales, size, etc.

→Market share → by capturing the segmented of

different markets by loyalty and brand values;

→Share price → by means of market

capitalization and valuation of intangibles assets;

One of the difficulties may be in pinpointing just

what contribution the human resources in a

business makes to any of the above measures, but

there is no doubt that a business that does not

involve management of HR correctly will have to

experience a number of problems. Poor

motivation leads to poor performance. This may

manifest itself in HRM.

The success of a business rests to a large degree

on the quality of the workforce - successful

management of this crucial resource is critical.

Negative performance is caused by ─

→Lower productivity levels

→Poor quality products and services

→High levels of complaints from customers

→Loss of customers with subsequently lower

revenues

→Higher costs

→Higher staff turnover

→Poor industrial relations

In addition, if human resources are managed

ineffectively, then:

→Teams may not function appropriately;

→Individuals may be placed in positions that do

not maximize or utilize their skills;

→The culture of the business is not shared;

→Communication and decision making can be

affected and mistakes occur;

All of these affect the relationship between the

business and its customers.

Having got some background information, let's do

some research on the key points raised above.

Human beings are by nature gregarious or living

in group life is one of the oldest most enduring

characteristics of human culture.

We observed that there is a natural inclination for

living or working together in social groupings

such as family, clan, community, groups by

friendship having common feelings in structural

relationships which is recognized as organization.

Organization in a society may be defined and

classified in many forms viz., cultural

organization, corporate organization, non-

corporation organization, government

organization, non-government organization etc.

But whatever may be the form of an organization

- organizational feeling in civilized society has

become an essence of living.

Our society is basically organizational with big or

small or complex organizations dominating in

every sphere of human dealings in almost all

nations over the global existence. In the

contemporary society, organizational culture is

inevitable and has become the most crucial factor

affecting the quality of work life.

Therefore, dependence on the organizational

culture and managing an organization is the

corollary of quality of human life. Those who are

custodians and responsible for managing an

organization must ensure that it is objectively and

effectively achieving the objectives for which it

has been recognized in the society.

In order to ensure effective management of an

organization, it ought to be recognized as a

system. A system is an assemblage of different

components connected or interrelated so as to

constitute a complex unity-a total composed of

components or sub-parts in an orderly

arrangement in accordance with well defined

objectives. Organization works in a society as a

system in different environments-economic, legal,

constitutional, technological, political, socio-

cultural and competitive environment.

Organization systematically operates in the socio-

economic-techno-political environment as an

input-output system. It collects required inputs

(i.e., in various forms of resources) from its

environment in order to process them to produce

outputs, and exports these outputs back to the

environment.

Various organizational resources have distinctly

identified features and they contribute in a certain

way to the operation of an organization as an

input-output system. The input-output system is a

unique concept by means of which organizational

social responsibility of production and supply

perpetuates. The depicted figure exhibits lucid

input-output system of an organization.

Collecting

inputs from

social

environment

Conversio

n process

within

the

Producing

outputs within

the organization

Exporting

goods and

services to

social

environment

Organization as input-output system

The contributions made by different inputs (e.g.,

land, labour, capital, and entrepreneur) in an

organization are usually remunerated in different

modes of returns (viz., rent, wages, interest, and

profit). Total organizational resources are broadly

categorized into two forms - financial resources

and human resources. The financial resources are

termed as financial capital and the human

resources are human capital. Appropriate returns

on the deployment of both the capital is essential

for efficient operation of an organization.

However, appropriate return on capital employed

depends on the work culture of human resources.

Appropriate deployment of work culture of

human resources towards the achievement of

organizational goals through boosting up

productivities ensures perpetual sustainability of

the input-output system.

Using

financial

resources as

well as

human

resources

By human

resources

By human resources

Perpetual survival of an organizational entity on

this planet functionally depends on the effective

use of these intervening factors for acquiring

various inputs and to run the conversion process

as well. Effective use of organizational resources

is essential for achieving the set goals.

In this book our focus is on the human resource

management in short HRM is the key of all power

for accomplishing competitive advantages over

the competitors.

Leon C. Megginson has defined human

resources, from the national point of view, are

knowledge, skills, creative abilities, talents, and

attitudes obtained in the population; whereas from

the viewpoint of the individual enterprise, they

represent the total of the inherent abilities,

acquired knowledge and skills as exemplified in

the talents and aptitudes of its employees.

Michael J. Jucious has called human resources

as human factors which refer to a whole

consisting of interrelated, interdependent, and

interacting physiological, psychological,

sociological and ethical components.

Sumantra Ghosal, an Indian management guru,

has stated human resources as human capital

consisting of three types of capital-intellectual

capital, social capital, and emotional capital.

Ghosal’s statement is absolutely significant so far

as the competitive advantages of an organization

are concerned.

About The Author

Umasankar did his M.Phil. (in 1995) and Ph.D.

(in 2002). He passed M.Com. (in 1979) from the

University of Calcutta. He did his LL.B (in 1989)

from the University of Calcutta. His teaching

experience started since 26th

November 1982 as a

lecturer in commerce on being recommended by

the West Bengal College Service Commission in

1982. His wide ranging experience includes over

thirty two years continuously in teaching under

the University of Calcutta. He topped in the

M.Phil Examination. He completed his PhD

within the stipulated period (being registered as a

research scholar on 03-04-2000 and submitted his

complete thesis on 03-04-2002 to the University

of Calcutta. The University of Calcutta awarded

him the Ph.D degree in Commerce on 27th

November, 2002). He got promoted to the post of

a Reader in Commerce on 27-11-2002 and was

promoted to the post of an Associate Professor in

the Department of Commerce on and from 01st

January 2006. He has submitted his proposal with

a view to obtaining registration for the D.Litt. in

Commerce 21st February 2013 to the University

of Calcutta.