Concept of HRM, Nature, Scope, Functions, Models of HRM

In common parlance, human resources means the people. However, different management experts have defined human resources differently. For example, Michael J. Jucius has defined human resources as “a whole consisting of inter-related, inter-dependent and interacting physiological, psychological, sociological and ethical components”.

According to Leon C. Megginson “From the national point of view human resources are knowledge, skills, creative abilities, talents, and attitudes obtained in the population; whereas from the view-point of the individual enterprise, they represent the total of the inherent abilities, acquired knowledge and skills as exemplified in the talents and aptitude of its employees”.

In simple words, HRM is a process of making the efficient and effective use of human resources so that the set goals are achieved. Let us also consider some important definitions of HRM.

The National Institute of Personnel Management (NIPM) of India has defined human resource/personnel management as “that part of management which is concerned with people at work and with their relationship within an enterprise. Its aim is to bring together and develop into an effective organisation of the men and women who make up an enterprise and having regard for the well-being of the individuals and of working groups, to enable them to make their best contribution to its success”.

According to Decenzo and Robbins “HRM is concerned with the people dimension in management. Since every organisation is made up of people, acquiring their services, developing their skills, motivating them to higher levels of performance and ensuring that they continue to maintain their commitment to the organisation are essential to achieving organisational objectives. This is true, regardless of the type of organisation-government, business, education, health, recreation, or social action”.

Thus, HRM can be defined as a process of procuring, developing and maintaining competent human resources in the organisation so that the goals of an organisation are achieved in an effective and efficient manner. In short, HRM is an art of managing people at work in such a manner that they give their best to the organisation for achieving its set goals.

  • The first definition of HRM is that it is the process of managing people in organizations in a structured and thorough manner. This covers the fields of staffing (hiring people), retention of people, pay and perks setting and management, performance management, change management and taking care of exits from the company to round off the activities. This is the traditional definition of HRM which leads some experts to define it as a modern version of the Personnel Management function that was used earlier.
  • Personnel management is essentially “workforce” cantered whereas human resource management is “resource” cantered. The key difference is HRM in recent times is about fulfilling management objectives of providing and deploying people and a greater emphasis on planning, monitoring and control.


The primary objective of HRM is to ensure the availability of right people for right jobs so as the organisational goals are achieved effectively.

This primary objective can further be divided into the following sub-objectives:

  1. To help the organisation to attain its goals effectively and efficiently by providing competent and motivated employees.
  2. To utilize the available human resources effectively.
  3. To increase to the fullest the employee’s job satisfaction and self-actualisation.
  4. To develop and maintain the quality of work life (QWL) which makes employment in the organisation a desirable personal and social situation.
  5. To help maintain ethical policies and behaviour inside and outside the organisation.
  6. To establish and maintain cordial relations between employees and management.
  7. To reconcile individual/group goals with organisational goals.

Werther and Davis have classified the objectives of HRM into four categories as shown in table 1.2.


Table 1.2: HRM Objectives and Functions:


The scope of HRM is, indeed, very vast and wide. It includes all activities starting from manpower planning till employee leaves the organization. Accordingly, the scope of HRM consists of acquisition, development, maintenance/retention, and control of human resources in the organization (see figure 1.1). The same forms the subject matter of HRM. As the subsequent pages unfold, all these are discussed, in detail, in seriatim.


The National Institute of personnel Management, Calcutta has specified the scope of HRM as follows:

1. The Labour or Personnel Aspect

This is concerned with manpower planning, recruitment, selection, placement, transfer, promotion, training and development, lay-off and retrenchment, remuneration, incentives, productivity, etc.

2. Welfare Aspect

It deals with working conditions, and amenities such as canteen, creches, rest and lunch rooms, housing, transport, medical assistance, education, health and safety, recreation facilities, etc.

3. Industrial Relations Aspects

This covers union-management relations, joint consultation, collective bargaining, grievance and disciplinary actions, settlement of disputes, etc.

Functions of HRM

We have already defined HRM. The definition of HRM is based on what managers do. The functions performed by managers are common to all organizations. For the convenience of study, the function performed by the resource management can broadly be classified into two categories, viz.

(1) Managerial functions, and

(2) Operative functions

These are discussed in turn.

(1) Managerial Functions


Planning is a predetermined course of actions. It is a process of determining the organizational goals and formulation of policies and programmed for achieving them. Thus planning is future oriented concerned with clearly charting out the desired direction of business activities in future. Forecasting is one of the important elements in the planning process. Other functions of managers depend on planning function.


Organising is a process by which the structure and allocation of jobs are determined. Thus organising involves giving each subordinate a specific task establishing departments, delegating authority to subordinates, establishing channels of authority and communication, coordinating the work of subordinates, and so on.



TOs is a process by which managers select, train, promote and retire their subordinates This involves deciding what type of people should be hired, recruiting prospective employees, selecting employees, setting performance standard, compensating employees, evaluating performance, counseling employees, training and developing employees.


Directing is the process of activating group efforts to achieve the desired goals. It includes activities like getting subordinates to get the job done, maintaining morale motivating subordinates etc. for achieving the goals of the organization.


It is the process of setting standards for performance, checking to see how actual performance compares with these set standards, and taking corrective actions as needed.

(2) Operative Functions

The operative, also called, service functions are those which are relevant to specific department. These functions vary from department to department depending on the nature of the department Viewed from this standpoint, the operative functions of HRM relate to ensuring right people for right jobs at right times. These functions include procurement, development, compensation, and maintenance functions of HRM.

A brief description of these follows:


It involves procuring the right kind of people in appropriate number to be placed in the organisation. It consists of activities such as manpower planning, recruitment, selection placement and induction or orientation of new employees.


This function involves activities meant to improve the knowledge, skills aptitudes and values of employees so as to enable them to perform their jobs in a better manner in future. These functions may comprise training to employees, executive training to develop managers, organisation development to strike a better fit between organisational climate/culture and employees.


Compensation function involves determination of wages and salaries matching with contribution made by employees to organisational goals. In other words, this function ensures equitable and fair remuneration for employees in the organisation. It consists of activities such as job evaluation, wage and salary administration, bonus, incentives, etc.


It is concerned with protecting and promoting employees while at work. For this purpose virus benefits such as housing, medical, educational, transport facilities, etc. are provided to the employees. Several social security measures such as provident fund, pension, gratuity, group insurance, etc. are also arranged.

It is important to note that the managerial and operative functions of HRM are performed in conjunction with each other in an organisation, be large or small organisations. Having discussed the scope and functions of HRM, now it seems pertinent to delineate the HRM scenario in India.


The  defining   features of HRM   is popularly   known   as models.   These   models    provide    analytical    framework for  studying   HRM.     They   provide    characterization   of HRM   that  establishes   variables   and  relationship    to  be researched. Four  most  common   models   are :

  1. The Fombrun   Model
  2. The Harvard Model
  3. The Guest  Model  and
  4. The Warwick  Model

All these models serve the following purposes:

  • They provide an analytical framework for studying HRM for example, situational factors, stakeholders, strategic choice levels, competence etc.
  • They validate certain HRM practices and provide distinctiveness to HRM practices.
  • They provide a characterization of HRM that establishes variables and relationship to be researched.
  • They help to discover and understand the world for explaining the nature and significance of key HR practices.


This   is  the  model of  HRM. It  emphasizes    four functions   of  management   and   their   interrelatedness­ Selection,  Appraisal,   Development      and Rewards. This  model  is incomplete as it  focuses  on  only  four  functions of HRM and  ignore all other   environmental    and contingency    factors.  But, this model  is simple    and  can  serve  as a heuristic  framework  for explaining   the  nature   and  significance   of HR activities.




This    model    consists    six  critical  components of HRM   namely    stake holders interests,     situational     factors,    HRM  policy choices,  HR  out  comes, long  term  consequences and a feedback loop through.




This  model  was developed   by David Guest in 1997. This model emphasizes on the assumption   that  HR manager has specific strategies to begin with, which demand certain practices and when executed will result in outcomes. These  out  comes  include  behavioral   performance    related   and  financial rewards. The model emphasizes the logical sequence of six components : HR strategy, HR practices, HR outcomes, Behavioral outcomes, Performance results and financial consequences.

guest model



This model was developed by two researchers, Hendry and Pettigrew of University of Warwick (hence the name Warwick model). Like other human resource management models, the Warwick proposition centers around five elements-

  • Outer context (macro environmental forces)
  • Inner context (firm specific or micro environmental forces)
  • Business strategy content
  • HRM context
  • HRM content

The   strength    of  this   model   is  that   it  identifies   and classifies important environment influences on HRM. This model takes cognizance of business strategy and HR practices, the external and internal content, in which these activities take place and process by which such changes take place including transactions between changes in both external content and internal content.



  • Philosophy: Expressed in statements defining business values and culture. It expresses how to treat and value people.
  • Policies: Expressed as shared values and guidelines. Policies establish guidelines for action on people related business issues and HR programs.
  • Programs: Articulated as human resource strategy. These coordinate efforts to facilitate change to address major people related business issues.
  • Practices: For leadership managerial and operational role practices motivate needed role behaviors.

Processes: For the formulation and implementation of other activities these define how activities a

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