Chapter One An Overview of Human Resource Management 1.1. Definition and Nature of Human Resource Management Organisations use different resources such as human resource, material resource, financial resource, informational resource, and others. The human resource among this is the most important resource that derives the effective utilization of all the remaining resources. If the human resources of an organization are neglected of managed the organisation is unlikely to do well in fact may fail. Human Resource Management (HRM) is concerned with the process of planning, organising, coordinating, directing and controlling the activities of human resource in an organization. It is concerned with obtaining, developing, and utilizing the right type of people within the right quality and right quantity from the right source at the right time and right cost in order to achieve organizational objectives. HRM is concerned with the human side of an organisation and employees relation with their work and work environment. Its purpose is to ensure that the employees of the organisation are used in such a way that the employer obtains the greatest possible benefit and psychological award from their work and employees obtain the maximum possible development from their work and their organization. To look into human resource management more closely, it helps to go through the various definitions describing its meaning as indicated below: i. Human Resource management deals with the design of formal systems in an organization to ensure the effective and efficient use of human talent to accomplish organizational goals. In an organization, the management of human resources means that they must be recruited, compensated, trained, and developed. ii. Human resource management (HRM), centres on the policies, practices, and systems that influence employees’ behaviour, attitudes, and performance. Many companies refer to HRM as “people practices.”
iii. Human resource management refers to the total sum of all the inherent abilities required knowledge and skills represented by the aptitudes, attitudes, and talents of organisational work force. iv. Human resource management is the process of achieving organizational objectives by acquiring, developing, retaining, and properly using the human resource in an organisation. v. Human resource is the effective utilisation of human resource to achieve organisational objectives. Nature of Human Resource Management The nature of HRM is clear from the following points: 1. Human focus: HRM is concerned with the management of people possessing capabilities in organisational settings. It is individual oriented. 2. Pervasive: HRM is a pervasive function of management. It is performed by all levels of management. 3. Continuous: HRM is a continuous. It is not a one-time activity. It is concerned with present as well as future. 4. Dynamic: HRM is a dynamic function. It is greatly affected by the changes in the environment. It is action-oriented. 5. System: HRM is a system consisting of interrelated, acquisition, development, motivation, and maintenance subsystems. It utilizes the potential of the workforce to improve their productive contribution. If these are what HRM, what then is a HR manager? What is HR Manger? A manager is an individual working for an organization who: o Practices management by performing planning, organising, directing and controlling functions. o Makes decisions o Solves organizational problems, and o Is responsible for the work of at least one other person reporting to him. HR Manager is a person who handles employment, training, and development, compensation and benefits admin, and employee relations functions. HR Manager act in an advisory capacity, working with other managers regarding human resource matters. The human resource manager is responsible for coordinating the management of human resources to help the organization achieve its objectives. 1.2. Importance of Human Resource Management The uniqueness of human resource in organisations requires a separate and independent treatment and study of HRM.
Some of the reasons for giving emphasis to the study of human resource management include the following: i. Human Behaviour is complex People provide the greatest challenge in organizations and relationship between people is delicate with highly uncertain performance. Unlike other resources, human resource is the most complex resource that needs strong emphasis and special attention. Workers are easily disappointed and this leads to significant damage in performance and objective of the organization. ii. Cost This day’s manpower is becoming increasingly costly. The percentage component of manpower expenditure is increasing among the cost functions and organizational budgets. Costs such as salaries, benefits and services are increasing form time to time. Unlike other costs, the cost of human resource is difficult to reduce once it is provide to workers. Therefore careful study of human resource management study will help to control human resource costs.

  1. Human Resource is Scarce It is difficult to have the right type of people with the appropriate skill and experience when needed right away. The smooth operation and performance of many organisations is disrupted because of lack of the right people when needed. The scarcity of right type of people is even acute in developing countries than developed countries for various reasons including:
  1. Lack of trained and experienced workers
  2. Loss of few trained and experienced people to different developed countries (Brain drain)
  3. Miss use and mismanagement of the few available trained and skilled employees.
  4. Improper placement and assignment of workers.

1.3. Evolution and Development of Human Resource Management The origin human resource management is probably unknown. One can say HRM is as old as the human society itself. Some of the ancient greatest achievements such as the wall of China and Babylon, the pyramid of Egypt, the obelistk of Axum, the Djegol wall of Harar and others are witnesses where these achievements were made practical through some sort of management of human resource and the practice has changed from time to time in different societies. Development of HRM in Different Societies i. Primitive society During the primitive society “Natural division of labour” was based on criteria like age, sex, race and so on and the leadership were based on natural division of labour. The elders were usually taking the role of administration and the youth were administered. The relationship between the administrators and the administered was based on mutual concern with no antagonistic contradictions. ii. Slave society Administrative relationship during this period was between the slaves and the slave owners. Slave owners had absolute authority on the slaves and slaves were not considered as human beings and human resource. They were rather considered as tools or animals that were hunted, captured, bought, and sold in the market and killed. There were strong antagonistic contradictions between “workers”(slaves) and employers (salve owners). iii. Feudal society In the feudal society land was basic economic resource and the society was divided into two. The land lords and peasants. The peasants earned their living by working on the land of the lords. The land lords were administering the peasants (‘workers’) who were obliged to pay several types of taxes to the land lords in exchange of farming on the land. The taxes were too harsh which left the peasants between life and death. This unhealthy relationship between the land lords and peasants led to antagonistic relationships with no proper human resource concept. iv. Capitalist society This society emerged with the industrial revolution in about 1750. It marked a shift from hand or manual to the use of machinery because of the invention of steam engine. The industrial revolution which began in the mid eighteenth century in England was characterized by the development of machinery, the linkage of power to machines and the

establishment of factories employed many workers. Extensive specialisation of labour where individual workers performed very narrow tasks was introduces leading to human resource specialization. The capitalist society was divided in to two with respect to HR and administration as owners of capital and labour. a. The early stage of capitalist society At the beginning the owners of factories were managing employees of their organisation and their primary objective was to have maximum profit. They gave much emphasis to mechanization and profit than to human resource wellbeing. They concentrated on reducing HR costs by employing the following methods. i. Poor and unpleasant working conditions ii. Long working hours
iii. Minimum payment iv. Employment of children v. Physical punishment etc. Such harsh treatment led to antagonistic contradictions and this phase of capitalism caused the creation of labour unions. b. Later stage of capitalism This stage is marked by industrial revolution and emergence of theories, principles and guidelines of administration. The owners now could not effectively administer or supervise their workers. This was mainly because the owners were becoming more skilful and had better knowledge of the job than the owners themselves. This made the owner to delegate the task of administration to better skilled and knowledgeable workers selected from the workforce.
This marked the separation of capital in to ownership and administration. The workers which had been delegated the authority of administration did not administer the organizations as the owners did because they had dual responsibility to the owners and to the workers. The workers started to come up with theories, administrative principles and guidelines. 1.4. Purposes and Objectives of Human Resource Management The main purpose of HRM is to provide efficient and effective workforce which in other words is to have right people with the right talent, knowledge and experience that are able to contribute towards the achievement of objectives. Human resource has different purposes to different stakeholders. These include: a. Purpose of HRM to Owners To owners of an organization HRM has to play the purpose of assisting the achievement of objectives. To business organizations HRM should contribute in achieving the profit and productivity objectives. In non-business organisations too HRM has a purpose in achieving client satisfaction and other objectives. b. Purpose of HRM to Employees Employees of a given organization require the HRM to assist them personal goals such as:

  1. Adequate income

  2. Job security

  3. Pleasant working conditions iv. Room for growth and development

  4. Better quality of work life etc.

  5. Purpose of HRM to the Society The society requires HRM to contribute to the product quality and to high societal values including fair competition, healthy environment, economic and social development etc.

  6. Purpose of HRM to the Law Government requires HRM to comply with the laws and regulations of the state which may include:  Avoiding discrimination
     Allowing equal employment opportunities  Fair treatment of workers  Application of the minimum pay provisions etc. 1.5. The Philosophy of Human Resource Management

 Mutual goal: the organization and individuals depend on each other.  Mutual respect: HRM believes that individuals need to be respected. “Give respect and take respect”.  Mutual rewards: HRM believes in the mutual reward system. Both individual and organisations need to be rewarded.  Mutual Responsibilities: the individuals and the organizations are responsible mutually. 1.6. Roles of Line Managers and Human Resource Professionals
All managers are, in a sense, HR managers, since they all get involved in activities like recruiting, interviewing, selecting, and training.
Human resource management is the subsystem of the total management system. It is primarily concerned with management of people, individuals or groups at work as well as their inter-relationship. Human resource management as an organizational function in most of the cases is viewed as a staff function. Staff functions provide advisory, control or support services to the line functions Line functions are those portions of the organization directly concerned with operations resulting in products or services. A. HR professional’s role, human resource professionals typically assume four areas of responsibility i. Establish human resource management procedures and methods. ii. Monitor/evaluate human resource practices(control human resource practices) iii. Service role iv. Advise/assist managers on human resource management related matters B. Line manager’s role, line managers’ role is directing employee’s day-to-daytasks.

  1. In general, line managers: o Responsible for effective use of people in organization. o Need to understand human behavior o Need to be knowledgeable about systems and processes that help build a committed workforce, and o Need to be aware of constraints ii. The basic roles of line managers are the following: o Implementing human resource management practices o Providing human resource professionals with needed input.

1.7. Personnel Management Vs Human Resource Management From the 1960s up to the mid-1980s, personal management was the term most commonly used to describe the specialist occupation concerned with managing people. However, in the last twenty years, the title”HRM”, an import form the USA, has become more frequently used. HRM differs from personnel management both in scope and orientation. HRM views people as an important source or asset to be used for the benefit of organizations, employees and the society. It is emerging as a distinct philosophy of management aiming at policies that promote mutuality. Though a distinct philosophy, HRM cannot be treated in isolation. It is being integrated into the overall strategic management of business.
It is a systems approach to management of capabilities of people. It is concerned with interrelationships of acquisition, development, motivation and maintenance functions. It regards people as a resource and emphasizes development and utilization of human potential. It is regarded as a concern of all managers. On the other hand, personnel management it is a traditional approach to management of people. It focuses on personnel administration, employee welfare and labour relations. It is more discipline and control oriented to perform maintenance function. It is regarded as a staff function in the organisation structure. Personnel management has a limited scope and inverted orientation. It viewed labour as a tool, the behaviour of which could be manipulated for the benefit of the organization and replaced when it was worn out. The personnel function was treated as routine activity meant to hire new employees and to maintain personnel records. It was never considered a part of the strategic management of businesses. Historically, PM preceded HRM. The other difference worth mentioning is that personnel management has a strong functional focus. That is, personnel managers were primarily concerned with the administration of specific employee related functions such as hiring, training, wage setting, and disciplinary action. It was never considered as a part of the strategic management of business.

1.8. Environmental Challenges of Human Resource Management Almost all the activities and functions of human resource administration are influenced by numerous environmental factors. Broadly categorized, there are internal and external environmental factors that affect the human resource activities. The effects of these factors may be positive or negative depending on the circumstances.
Internal environmental factors are those that influence the HRM from within the organisation itself and they are relatively well under the control of the management of the organisation. External factors on the other hand, are factors provide opportunities and threats to the HRM functions and activities of an organisation. The following table shows some of the factors that affect HRM. Human Resource: Environmental Factors A. Internal Factors o Policies and strategies of the organisation o Nature of the work o Nature and attitude of the work group o Leadership styles and philosophies o Organisational style. Etc. B. External Factors o Government rules and regulations o Labour unions o Economic conditions o Diversity of the work force o Geographic location of organisations o Labour market conditions