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Book Summary of Essential of HRM for MBA

HRM is a process of attaining, developing, and retaining employees in an organisation.
HRM aims at developing skills and knowledge of employees along with maintaining an effective work culture and environment.
The evolution of HRM can be dated back to the industrial revolution. Since then HRM has evolved in a number of ways.
Though the primary objective of HRM is to ensure the availability of the right skills at the right place, but they are broadly categorised into four types, namely societal objectives, organisational objectives, functional objectives, and personal objectives.
The HRM has a broader scope in the working life of an employee. As per the American Society for Training and Development (ASTD), the scope of HRM can be classified into nine different areas namely human resource planning, job design, selection and staffing training and development, organisational development, compensation and benefits, employee assistance, union-labour relations, personnel research and information system.
An organisation is affected by various internal and external business factors. These factors pose various challenges for HRM in an organisation in terms of change management, employee acquisition and retention, employee empowerment, and workforce diversity.
Personnel management is a traditional approach to people management while HRM is a new approach to people management.
SHRM can be defined as a framework prepared by an organisation to follow a particular direction in order to accomplish organisational goals and objectives.
Planning is the first and foremost function of any organisation without which all organisational activities would become meaningless.
HRP is also called manpower planning as it involves putting the right people at the right job at the right time so that organisational goals and objectives can be met within the stipulated time.
Effective HRP process helps organisations to identify vacant positions and the skills and expertise required and to attract people to apply for those positions.
The main objective of HRP is to meet human resource requirements in an organisation so that organisational activities can be carried out smoothly.
HRP is an integrated, systematic process where human resource objectives are aligned with organisational goals and objectives.
It is of paramount importance for the HR personnel to consider all internal and external business factors before planning human resource requirements.
In an organisation, the demand for people is influenced by various factors, such as the type of organisational structure, organisational budget, nature of business, technology used, effective of business strategy, etc.
As organisations operate in an ever-changing environment, HR forecasts of organisations should be flexible so that changes in the environment can be easily adapted.
HRP is not only confined to predicting future human resource requirements of an organisation rather it also helps in finding out future action plans for all departments of the organisation.
There are a number of challenges associated with HRP, such as achievement of short and long-term organisational objectives; selection of an appropriate demand forecasting method; and degrees of variation in the thought process of HR planners.
A job may be defined as the collection of different tasks, duties and responsibilities to be performed by an individual in order to meet organisational goals and objectives.
Job analysis is an important part of the HR function and helps in obtaining accurate, reliable, and latest information about the job. Analysing a job is a systematic process that involves a number of steps like determining the purpose of job analysis, conducting job analysis, etc.
Information required for the job analysis process is broadly divided into three categories namely job content, job context, and job requirement.
The main sources of data collection for the job analysis process are employees, supervisors, and managers. Different methods can be deployed for collecting job analysis data, such as interviews, questionnaire, observation and participant’s diary/logs.
Job description is a written statement that defines the roles, responsibilities, and requirements of a specific job.
Job specification, also referred to as employee specification, is defined as the statement that summarises the basic skills and attributes that should be present in a person to perform a job.
Job design can be defined as a process of specifying and arranging work activities of individuals or groups in an organisational setting.
There are a number of approaches used by organisations to design jobs namely job rotation, job enlargement, job enrichment and job specification.
The process of finding and attracting talented applicants for a particular job position in an organisation is called recruitment.
The recruitment process differs across different organisations depending on their size, business activities, and practices.
Recruitment is influenced by various internal factors, such as, recruitment policy of the organisation, the size of business, growth and expansion plans of the organisation, and recruitment cost; and external factors like labour demand and supply; political, social, and legal environment; level of competition; etc.
There are various internal and external sources of recruitment, namely promotions, transfers, job posting, employee referrals, management consultants, public advertisements, etc.
In order to ensure the right candidate gets recruited for the right job, the HR personnel follow a systematic process of recruitment.
Selection is a process of choosing candidates who have the required knowledge and skills to do a particular job.
The process of selection is different from one organisation to the other depending on the nature of work, jobs involved, etc.
The term interview can be defined as a conversation between two or more people wherein a series of questions are asked from one person in order to collect information about the person.
The person who asks questions is called the interviewer while the person who responds to the questions is called the interviewee.
Outsourcing has enabled business enterprises to acquire all types of physical and intellectual resources from around the world to carry out their operations.
Induction is a formal process of introducing new employees to the organisation and making them confortable to adapt to the working atmosphere.
Induction may also be conducted for existing employees who are promoted and transferred.
The need for induction can be understood from the perspective of both the organisation and employees.
The steps in the process of induction include collecting employees’ information, defining the audience, providing feedback, etc.
An effective orientation program helps employees to overcome hesitation, informs them about their job roles, and develops team spirit among them.
An orientation program is broadly classified into general or specific and traditional or modern.
The steps in the process of orientation include determination of program’s objectives, selection of the mode of delivery, feedback, etc.
The features of an effective orientation program include clear objectives, well-defined audience, accurate information, and appropriate methodology.
There can be various problems in the orientation program, such as data overload, boredom and rigidity, lack of time and preparation, risk of failure and counter-effects, etc.
Organisations need to have a competent workforce in order to improve its productivity, better serve customers, maintain an effective work culture, manage diversity, and so on.
Evaluating competencies of employees enable organisations to determine the areas where employees need to improve and outline problems they face while performing their jobs.
Competency mapping enables both the organisation and employees to identify the areas of improvement of employees’ performance.
A competency model is a framework that highlights the knowledge, skills, and attitudes people need to possess to improve their job performance.
Every organisation develops its unique competency model depending on its requirements. While developing a competency model, an organisation should ensure that competencies to be considered in the model must match with the organisation’s needs, rules, regulations, policies, nature of the job, size of business, etc.
All key HRM functions, such as recruitment and selection, training and development, and performance management, rely on competency models.
In assessment centres, candidates (who apply for higher positions) are given real-life exercises.
Assessment centres may include individual or group activities, real-life simulation games, a series of tests and interviews, which helps in evaluating whether an applicant would be able to perform a particular job successfully.
In simulations, candidates are asked to act out a play, take part in debates and discussions, and solve real-life situations.
A test can be defined as a task or a series of tasks used to identify an individual’s cognitive ability, integrity, knowledge of the job, personality and physical ability.
Interviews are formal meetings in person where qualifications, knowledge, and skills of an applicant are assessed by the hirer.
An assessment centre is a process of acquiring new talent in an organisation, while a development centre is all about transforming the existing talent, identifying potential, and establishing individual objectives related to development needs.
Training is an organised process of imparting skills and knowledge to employees with an aim of improving their productivity.
Training and education are complementary to each other. An organisation selects employees on the basis of their education. However, while imparting training, it is presumed that employees have a certain level of education.
There are different factors that create a need for training in an organisation, such induction of new employees, performance improvement, and employee morale.
Top management, participants and the trainer are the important stakeholders of a training program.
The process of training involves various steps, such as reviewing organisational objectives, assessing training needs, and evaluating the training program.
There are different types of training imparted in organisations. Some of them include induction training, apprenticeship training, training for promotion, etc.
Methods of training are broadly classified into two categories onthe-job training and off-the-job training.
Development is a long-term process that aims at improving interpersonal and leadership skills of individuals from a future perspective.
Though training is a part of development, both the processes are different from each other in their scope, validity, applicability, etc.
HRD is a framework used by organisations to help employees develop their knowledge, skills, and abilities so that they can perform their jobs efficiently.
HRD includes various activities, such as training and development, career planning, coaching and mentoring, performance management, etc.
HRD is a continuous process that aims to improve overall productivity through investment in human resource, optimum utilisation of human resource, and participation of human resource.
In organisations, the need for HRD arises at three levels, viz. organisational level, work level, and personal level.
The main objectives of HRD are to develop the competency levels of employees, motivate employees towards building a successful career, help employees to contribute largely to the growth of the organisation, etc.
HRD has scope in various HRM functions, such as training and development, career planning, and performance appraisal. In addition, it serves as an input for various decisions related to placements, promotions, transfers, etc.
In an organisation, an HRD program is carried out through various functions, such as training and development, organisational development and career development.
The HRD process involves a number of phases, i.e. needs assessment, design, implementation, and evaluation.
The different HRD systems in organisations include career, work, development, self-renewal and culture systems.
The effectiveness of HRD is reflected through the improvement in the job performance of employees. An HRD program is said to be effective if it enables employees to perform their jobs effectively.
A career is a sequence of activities taken up by an individual throughout his/her work life in terms of formal education, practical training, and job experience. This leads to changes in an individual’s life making his/her life better.
Career is divided into different stages, namely exploratory stage, establishment stage, maintenance stage, and decline stage. Each of these stages has different relevance and significance in one’s career.
There are certain competencies and values developed during the early life of an individual. These values and competencies motivate the individual towards a particular career; and thus they are referred to as career anchors.
Different career anchors are general managerial, technical/functional, security/stability, entrepreneurial creativity, service/dedication to a cause, pure challenge, autonomy/independence, and lifestyle.
In order to have a good career, individuals must identify their objectives, strengths, and weaknesses so that they can select the most suitable occupation or profession. This process of self-assessment and career option selection is referred to as career planning.
Skills and abilities, values and interests, and salary expectations are the factors that influence the career planning of an individual.
The process of career planning comprises five steps namely performing self-assessment, identifying career choices and preferences, aligning needs and opportunities, formulating an action plan, and evaluating the process.
Just like career planning, an organisation prepares a replacement plan for its key positions. The process of preparing such a plan is called succession planning. It prepares organisations to fill the vacancies of their key positions.
The process is divided into five steps namely identifying the positions, identifying the talent pool, developing succession strategies, evaluating the plan, and implementing succession strategies.
Performance management is a process that comprises a set of activities performed to ensure that organisational goals are met successfully.
As a forward-looking approach, performance management is primarily concerned with developing people in such a way that the sustained growth of an organisation can be ensured.
Performance appraisal is a process of analysing the past performance and future potential of employees.
The main purpose of performance appraisal is to evaluate the performance of employees and acknowledge their contribution in achieving organisational goals.
The steps involved in the performance appraisal process include establishing performance standards, communicating the standards, determining personnel responsible for conducting performance appraisal, measuring the performance, communicating the results of appraisal to the concerned employees, and taking corrective actions.
The methods of performance appraisal can be broadly grouped into two categories, past-oriented methods and future-oriented methods.
Past-oriented methods are based on a trait-oriented approach wherein the performance of employees is evaluated on the basis of established standards of traits or qualities of employees, such as personality, attitude, initiative, ability to judge, versatility, leadership, commitment, domain knowledge, and punctuality.
Some of the important past-oriented methods include confidential report, essay method, critical incidents method, and checklist method.
Some of the important future-oriented methods include human resource accounting method, assessment centre method, management by objectives (MBO) method, and 360-degree appraisal method.
Performance appraisal helps in various activities, such as human resource planning (HRP), recruitment and selection, personnel decisions, training and development programs, feedback and self-development, employee motivation, career planning and development, and compensation and reward.
Some main problems that are associated with performance appraisal include design and implementation problems, biasness, resistance, and incompatible work environment.
In the global scenario, performance appraisal depends a lot on both inter-cultural and intra-cultural differences and interpretation of the term ‘performance’ by employees working in various countries.
Potential appraisal is a holistic approach to study the qualities of an employee in terms of personality, character and intellect.
The various techniques that can be used for potential appraisal include self-appraisal, psychometric tests, management games, leadership exercises, peer appraisal, superior appraisal, and MBO.
Compensation can be defined as a pay package that employees receive in exchange of services rendered by them to an organisation. It includes salary, wages, and direct and indirect rewards and benefits.
Compensation helps an organisation in various ways, such as facilitating recruitment and selection, retaining employees, and eliminating pay discrimination.
Executive compensation can be defined as the combination of monetary and non-monetary benefits given to employees working at upper level management of an organisation, such as president, vice presidents, chief executive officers (CEOs), chief financial officers (CFOs), and directors.
For the adequate management of compensation, a segment of HRM, also known as compensation administration is required. Compensation administration is the management of compensation costs incurred by an organisation.
International compensation is a combination of monetary and non-monetary rewards that are offered to expatriates for their performance. It is often kept high to attract competent and skilled people from different countries.
Organisations offer non-monetary compensation to employees in addition to their regular wages or salaries, which are also known as fringe benefits. Organisations also have to pay taxes in lieu of the fringe benefits provided to their employees. Such taxes are known as fringe benefit taxes (FBT).
Rewards are payment made to employees in return of their contribution used by organisations to boost their motivation. These are broadly classified into two categories; namely intrinsic rewards and extrinsic rewards.
Reward systems are developed in organisations to attract candidates, retain their existing talent, boost their morale, improve overall organisational productivity, etc.
Recognition is a measure adopted by organisations to appreciate the efforts and performance of employees. There are three types of recognition programs used in organisations, namely structured recognition program, informal recognition program, and symbolic recognition program.
HR audit is a systematic process of examining the policies, procedures, practices, structure, strategies, employee documents, etc. with respect to an organisation’s HRM function.
HR audit focuses on identifying and analysing HR issues; suggesting action plans for resolving those issues; and ensuring compliance with HRM guidelines in an organisation.
HR audit can lack uniformity as auditors tend to follow different auditing standards and guidelines.
Human Resource Accounting (HRA) is defined as a system of identifying, collecting and reporting data on investments in human assets.
HRA helps organisations in performing various HR functions, such as recruitment and selection and training and development.
HRA methods are used for the valuation of human assets.
Human Resource Information System (HRIS) is a system designed to provide necessary information for effective management of human resource.
HRIS enable organisations to maintain employee database and retrieve it as and when required.
The advent of globalisation and liberalisation has led to an increase in the number of employment opportunities, which, in turn, has broadened the scope of HR functions.
HRIS plays an important role in collecting, storing, and recording employees’ information in an organisation.

Important keywords glossary for Essential of HRM

Abstract reasoning: One’s ability to analyse information and work out on new concepts and abstract ideas without having prior knowledge.
Action research: A process of using various evaluative, objective and analytical techniques to solve a problem and is generally used in research studies.
Attrition: An organisation, it is referred to as the rate at which employees leave an organisation due to various reasons.
Bargaining power: An ability of a person, group, or organisation to make negotiations in order to achieve favourable deals for themselves.
Book of accounts: The cash-books, ledgers, etc. that comprise accounts of an organisation.
Budgetary control: A process of using monitoring and performance standards for controlling the income and expenditure of an organisation.
By-products: The secondary products manufactured during the synthesis of some other products.
Career development: A life-long learning and development process that helps to plan and manage an individual’s work career.
Career planning: A process wherein individuals making plan regarding their choice of career and future growth.
Career shift: A change in one’s car career.
Code of conduct: A set of rules and regulations that defines the behaviour expected from employees to be followed in the organisation.
Compensation: Monetary and non-monetary benefits given to employees in exchange of services provided by them.
Competency profiling: A method of identifying the skills, competencies, and behaviour of an employee needed to perform a specific task.
Compliance: The act of complying or following specific guidelines, rules and laws.
Conflicts of interest: A clash between the personal and professional interests of an individual.
Core competency: The unique characteristics of a person or specific features of a business that distinguishes itself from others.
Creative imagination: An ability of an individual to present an existing thing in an unconventional and new manner.
Cultural diversity: Differences in the cultural backgrounds of employees in an organisation.
Diversity: The uniqueness of a person in terms of his/her age, race, cultural background, capabilities, etc.
Dry promotion: A type of reward wherein an employee is promoted to a higher level without being provided any monetary benefits.
Emotional quotient: An individual’s intelligence to understand and use his/her emotions positively at a workplace in order to obtain productive results.
Employee Turnover: A rate at which employees leave an organisation or the organisation replaces an employee with another employee for various reasons.
Expatriate: Individuals residing in a country other than their parent country either temporarily or working purpose.
Flow of communication: The flow of information between employees, their seniors and the management.
HR audit: A systematic process of examining policies, procedures, practices, documentation and systems with regards to an organisation’s HR functions.
Human resource management: A process of selecting, developing, motivating and maintaining human resource of an organisation.
Industrial benchmarking: The process of setting standards for best practices, products, services, and processes within a particular industry for evaluating the performance or level of quality in an organisation.
Industrial relations: Relationships of an organisation with its internal and external stakeholders.
Industrial revolution: An era between the 18th to 19th centuries that brought a transitional shift in the manufacturing processes of organisations.
Interns: The students who undergo post-educational training with organisations that maintain contracts with institutions.
Interview panel: A group of interviewers who interview the candidate for a job vacancy.
Job profile: The description of a particular job in an organisation in terms of roles, responsibilities, and activities of a job.
Job structure: The general layout of a particular job in an organisation.
Labour market: A place where workers and employees come and interact with each other.
Labour-intensive country: A country where organisations require a large amount of labour for the production of their goods and services.
Layoffs: A situation where employee(s) of an organisation are relieved of their duties, either temporarily or permanently.
Lead time: The time duration between a start of a process and the end of the process in an organisation.
Learning cost: A direct or indirect cost incurred on training new employees.
Management by objectives: A management model that focuses on improving the performance of an organisation by clearly defining the goals and objectives to be mutually attained by both management and employees.
Manpower surplus: A situation where there are more people than available jobs.
Mentoring: The on-the-job training of new employees under a senior or an experienced employee.
Multinational corporations: Organisations that own or control facilities or other assets in one or more countries other than its home country.
Negotiation skills: Skills used by people to come to a settlement while avoiding arguments.
Occupational discrepancy: A lack of skills and abilities required to perform a job.
Organisational development: A systematic approach to improve the performance and effectiveness of organisations.
Outsourcing: A cost-saving method where organisations give out contracts for their business to a third-party member.
Peer group: A group of people of the same age sharing the same interests.
Promotion: A movement of an employee to a higher rank from the current position in an organisational hierarchy.
Quantifiable performance criteria: Quantitative indicators that can be measured in terms of facts and numbers
Questionnaires: A set of questions with multiple choice answers, used for the purpose of a survey or statistical study.
Reference checks: A process of authenticating the information provided by a candidate. This information can be related to educational background, personal details, work experience, etc.
Reporting authority: A person in an organisation to whom employees are answerable regarding their jobs.
Retrenchment: The termination of employees by an organisation to cut down on costs.
Shift-based working: A working culture of organisations that are operational for 24 hours a day. In such organisations, employees work in the shifts of 8 to 9 hours.
Stability: The state of being stable such as career stability, personal stability, etc.
Stipends: A form of salary given to apprentices when they take practical training in an organisation.
Succession strategies: Strategies that organisations formulate to carry out their succession plan successfully.
Supervision: An action where a group of people or a set of activities are monitored by a responsible and authorised person.
Tax equalisation: A process of ensuring that the tax paid by an assignee on an international assignment becomes equal to the tax would have been at his parent nation.
Team building activities: Activities that intend to improve the morale and performance of a team as well as individual members.
Time and motion studies: The analysis of the efficiency with which an organisation’s operations are carried out.
Voluntary retirement: A situation where employee(s) of an organisation retire earlier than their normal retirement time.

Syllabus for Essential of HRM

Introduction to Human Resource Management: Human Resource Management (HRM)- Meaning and Definition, Evolution, Objectives and Scope of HRM, Structure of the HRM Department, Functions of HRM, Challenges of HRM, Personnel Management, Differences between HRM & PM, Strategic Management and HRM.

Human Resource Planning: Human Resource Planning- Need, Objectives, Process of Human Resource Planning, Techniques of HR Demand Forecasting- Qualitative Methods, Quantitative Methods, Factors affecting HR Demand Forecasting, Benefits & Challenges of Human Resource Planning.

Job Analysis and Job Design: Job Analysis: Definition, Scope ,Process of Job Analysis, Information Collection for Job Analysis, Methods, Limitations and Effectiveness of Job Analysis, Job Description – Need, Objectives, Features, Job Specification – Need, Objectives, Features, Job Design- Nature, Process, Effectiveness of Job Design, Contemporary issues in Job Design, Job enrichment, Job enlargement, Job rotation.

Recruitment and Selection: Recruitment- Meaning & Definition, Purposes & Importance, Factors governing recruitment, Sources, Methods of Recruitment, Selection, Differences between Recruitment and Selection, Process of Selection, Merits and Demerits of the Interview Method, Steps for effective interviewing, Selection in India, Selection from a Global perspective, Outsourcing, Outsourcing HR in India.

Induction and Orientation: Induction- Need, Process, Merits and Demerits of Induction, Orientation-Purpose, Types, Process of Orientation Program Development, Effectiveness of Orientation Program, Problems of Orientation.

Competency Mapping and Assessment Centre: Competency Mapping, Developing Competency Models, Uses of Competency Models, Future Trends in Competency Modelling, Assessment Centres, History of Assessment Centres, Measurement Tools, Difference between Assessment Centre and Development Centre.

Training and Development: Concept of Training, Training and Education, Need & Importance of Training in Organizations, Stakeholders in Training, Process of Training, Needs assessment, International training issues, How to make training effective, Types of Training, Cross-cultural training, Team training, Orientation training, Training and Learning organizations, Concept of Development, Need of Development in Organizations, Difference between training and development, Coaching and Mentoring, Difference between coaching and mentoring, Process of Coaching and Mentoring, Implementation of Coaching and Mentoring in a firm.

Human Resource Development: HRD- Meaning, Need, Objectives, Scope, Functions, Process of HRD, Types of HRD Systems, Effectiveness of HRD.

Career Planning and Succession Planning: Career Planning, What is career?, Career stages, Career choices and preferences, Career Anchors, Career Planning- Objectives, Process, Merits and Demerits , Succession Planning- Objectives, Process, Merits and Demerits.

Performance Management: Performance Management- Nature, Significance , Performance Management Systems in India, Performance Appraisal- Goals, Process, Methods of Performance Appraisal- Past Oriented & Future Oriented methods, 360 degree Feedback, Multi-rater Assessment, Feedback systems or the performance appraisal meeting, Benefits of Performance Appraisal, Problems of Performance Appraisal, International performance appraisal, Potential Appraisal- Purpose, Techniques.

Compensation and Rewards: Compensation- Need, Uses, Components of compensation, Industry compensation, Executive compensation, Compensation administration, International compensation, Fringe Benefits and Fringe Benefit Tax (FBT), Reward Management- Need for Rewards, Goals of Reward Management, Intrinsic vs. extrinsic rewards, Reward Systems- Types, Effectiveness of Reward Systems.

HR Audit and Accounting: HR Audit- Need, Objectives, Role, Significance, Process of HR Audit, Benefits and Limitations of HR Audit, HR Accounting- Need, Objectives, Scope, Methods of HR Accounting, Benefits and Limitations of HR Accounting, HR Information Systems (HRIS)- Need, Objectives, Scope, Components, Types of HRIS, Application of HRIS in HR Management, Benefits and Limitations of HRIS.

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