Human Resource Management

An auto-parts plant in Pune can buy a new machine and have it running within weeks. Finding, training and keeping the people who run it well takes far longer, and fails more often. That slower job is human resource management.

At the Pune plant, an illustration. It acquires twelve machine operators through an industrial training institute and a referral drive. It develops them with a month of training on the new machine. It motivates them with a shift allowance and public recognition for zero-defect weeks. It retains them with a clear path to supervisor.

HRM aims to maximise performance, ensure employee welfare and align people with the organisation's strategy. Its objectives fall into three groups.

The same three-way split appears in Edwin Flippo's classic definition of personnel management, which ends: “to the end that individual, organisational and societal objectives are accomplished.”

Don't confuse HRM with the HR department. Every manager who hires, coaches, appraises or disciplines is doing HRM. The HR department designs the systems and supports managers; it cannot do their people work for them.

Where it breaks. The objectives can pull against each other. Long overtime raises output but hurts work-life balance; cutting pay costs helps the budget but strains welfare and retention. HRM has to choose, and the definitions do not say how.

For exams. Learn one definition well, the four verbs (acquire, develop, motivate, retain) and the three groups of objectives with an example of each.

Another classification. Many textbooks, often crediting Werther and Davis, list four objectives: societal, organisational, functional and personal. Societal means being responsible to society's needs. Organisational means contributing to the firm's effectiveness, since HR is a means and not an end. Functional means keeping the HR department's contribution at the level the organisation needs; a department that is more or less sophisticated than that wastes resources. Personal means helping employees reach their goals, so far as these also raise their contribution. A 30-person workshop, as an illustration, gains little from a full analytics team.

A modern HR team talks about analytics and engagement. A nineteenth-century factory had a foreman with a book of fines. The change came in stages, and each stage left behind something HR still does.

The eight stages fall into three broad shifts: from controlling workers, to caring about them as people, to treating them as part of strategy.

What each stage left behind. Taylor's The Principles of Scientific Management (1911) left work measurement and standard methods. Elton Mayo's reading of the Hawthorne studies at Western Electric (1924–1932) left the idea that morale and the work group affect output. The personnel era left the HR department, with its hiring, training and labour relations. Strategic HRM adds data and a seat in business planning.

Don't confuse the human relations stage with HRM. The human relations movement of the 1920s and 1930s was about social needs and morale. HRM came decades later and is broader: it covers planning, development, reward and strategy as one system.

Where it breaks. The stages are a teaching device, not a strict timeline. Many small firms still run HR at the personnel stage, and scientific management's methods are alive in every call centre that times its calls.

For exams. Expect to match a stage with its period, person or focus: Taylor with efficiency, Mayo with morale, the 2000s with analytics and strategic alignment.

Control, efficiency, human relations, personnel, HRM, strategic HR.

The owner of a growing kirana chain opens her fifth store and finds she spends half her week on staff. She is hiring, training, settling pay, calming a quarrel and arranging care for an injured helper. Each of those is one function of HRM.

HRM is carried out through eight functions. Together they follow an employee from before hiring to the next generation of leaders.

Don't confuse operative functions with managerial functions. In Edwin Flippo's classic split, the managerial functions of HR are planning, organising, directing and controlling. The operative functions are procurement, development, compensation, integration, maintenance and separation. The eight functions above are operative ones in modern names.

Where it breaks. The functions overlap: appraisal feeds both reward and training. In a small firm one person does all eight, and some, like payroll, are often outsourced.

For exams. Expect "which function does this activity belong to?" Performance appraisal is evaluate; compensation is reward; safety and welfare is protect; succession planning is prepare.

The six operative functions, in a line each. Procurement covers planning, recruitment, selection, induction and placement. Development covers training, development, career planning and counselling. Compensation covers deciding and administering pay. Integration reconciles the interests of employees and the organisation. Maintenance covers working conditions, retention and communication with staff. Separation covers exits through resignation, termination, lay-off, retirement, ill health or death.

A packaging unit in Nashik finds that a supervisor and a machine operator have stopped speaking, and the supervisor wants the operator dismissed. The owner asks the HR manager to "handle it". That one request calls for several different roles.

HRM can be described at two levels: what the HR function does for the organisation, and what the HR manager does day to day.

Three roles of the HR function.

Policy and procedure are different things. A personnel policy is a general guide to decisions, such as "fill senior posts from within where possible". A personnel procedure sets out the steps for applying it: who hears of the vacancy, who interviews, how long applicants wait. Policies cover areas such as organisation structure, social responsibility, terms of employment, pay, career and promotion, training and industrial relations. Procedures cover the steps in planning, recruitment, selection, appraisal, pay, training, industrial relations, and health and safety.

Seven roles of the HR manager.

In the Nashik case the HR manager is the mediator when she brings supervisor and operator to one table. She is the counsellor if the operator is struggling at home. She is the change agent if the quarrel shows that the shift system needs redesign.

Don't confuse these lists with other role lists. Dave Ulrich's four roles (strategic partner, administrative expert, employee champion, change agent) describe the HR function in business terms. The seven roles above describe the people-facing duties of the manager. Mintzberg's managerial roles, in Principles of management, apply to every manager, not only to HR.

Where it breaks. The roles can pull against each other. A counsellor needs employees' trust and confidence. A spokesperson speaks for the company. An HR manager seen as management's voice may find that employees stop confiding. In a small firm one person plays all seven roles at once.

For exams. Learn the three roles of the function (advisory, functional, service) with a one-line meaning each, then the seven roles of the HR manager. Be ready to separate a policy from a procedure.

Two firms both say they "do HR". One keeps neat files and pays on time. The other asks which skills it will need to win in five years, and hires and trains for them now. They are following different approaches.

The ten approaches below run roughly from the oldest view (people as records to administer) to the newest (people as a source of advantage, managed with evidence).

Three that answer the same question differently. Is there one right way to manage people? Best practices says yes, some practices work almost everywhere. Contingency (also called best fit) says no, it depends on the firm's situation and strategy. The resource-based view, from Jay Barney (1991), says advantage comes from resources that are valuable, rare, hard to imitate and hard to substitute. A skilled, loyal workforce can be such a resource, because a rival cannot buy it overnight.

HRM against personnel management.

Don't confuse HRM with organisational behaviour. Organisational behaviour (OB) studies why people act as they do at work: motivation, perception, groups. HRM uses that knowledge to design hiring, pay and training. OB explains; HRM acts.

Where it breaks. Critics such as Karen Legge argued that the contrast between HRM and personnel management lies more in the language than in practice. Many "HR" departments still mostly run payroll and compliance. Best practices and best fit each have supporting studies, and neither has won the argument.

For exams. Match each approach to its core idea, especially contingency against best practices and the resource-based view. Learn the HRM–personnel table row by row.

HRM asks “How do we manage people?”; organisational behaviour asks “Why do people behave the way they do?”

The owner of a Surat diamond-polishing unit says "our people are our greatest asset". Her workers say every rupee of cost is squeezed out of them first. Both are describing the same firm, and perspectives on HRM are the lenses that explain how both can be true.

Normative. The hard and soft models, the Michigan and Harvard models, are set out in Approaches to HRM. The critical perspective reacts against them. It points to a gap between rhetoric and reality: an organisation may speak the soft language of development while it practises hard control of cost. In one study of eight organisations, Truss and colleagues (1997) found no pure example of either model, and found the same gap.

Behavioural. This view grows out of contingency thinking. A firm that wants to innovate needs creativity, cooperation, a long-term outlook and some willingness to take risks. HR practices are then chosen to produce and reward those behaviours, as in the Schuler and Jackson matching of strategy to behaviour in Strategic HRM. It looks at the behaviour a role needs more than at an employee's skills.

Systems. The firm takes in inputs, transforms them and delivers outputs, inside an environment.

Seen this way, HRM has three tasks. Competence management makes sure the workforce has the skills the firm needs as input. Behaviour management uses appraisal, pay and similar tools so that people work in line with the strategy. The third task is managing the firm's interactions with its environment, such as the labour market and the law.

From intention to result. The "standard causal model" runs in one chain:

Later work asks whether the practices reach the employee as planned. Wright and Nishii (2007) separate intended practices (what HR designs), actual practices (what line managers carry out) and perceived practices (what employees experience). As an illustration, a firm promises five training days per head. Managers release staff only when work is slack, so the actual figure is two. Employees conclude that training goes to favourites. Their perception, not the policy, then shapes their commitment.

Don't confuse hard with Harvard. The Michigan model is the classic hard one, with people as a resource fitted to strategy. The Harvard model is the classic soft one, built on stakeholders and commitment. Some study notes swap the two.

Where it breaks. The perspectives overlap and do not compete as schools. The critical finding rests on a few case studies from one period. And a chain drawn as five boxes hides the line manager, who often decides what really happens.

For exams. Name the four perspectives and give the core idea of each. Link the normative one to hard and soft HRM with the models the right way round. Know the three tasks of HRM in the systems view.

A textile mill in Coimbatore decides to automate one section and so needs fewer weavers and more technicians. The decision comes from outside the HR department, yet HR must retrain some people and find new work for others. Forces inside and outside the firm shape what HR is asked to do.

Six more recent trends. Globalisation, workforce diversity and changing skill requirements are covered in International HRM, Workforce diversity and Talent management and skill development. The other trends in the usual list are below.

Don't confuse continuous improvement with re-engineering. Continuous improvement is steady, small and permanent, like a bakery that refines one step of its process every month. Re-engineering is a radical redesign of how the work is done, like the same bakery replacing its whole ordering-to-delivery flow.

Where it breaks. Trends such as downsizing and re-engineering peaked in the 1990s, and the lists in older books reflect that time. Cutting heads often leaves the remaining staff anxious and less willing to give extra effort. Remote and hybrid work, the gig economy and the use of data and AI tools in HR are the newer versions of the same questions: who works where, on what terms, and who decides on what evidence.

In practice. Scan the influences before setting HR goals. Ask which internal strategy is about to change and which outside force is shifting, and plan the people response to both.

For exams. Sort a situation into internal or external, and match each trend to its HR task. Keep continuous improvement (incremental) apart from re-engineering (radical).