Functions and Importance of HRM

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.


(a) Planning

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.

(b) Organizing

Organizing is a process by which the structure and allocation of jobs are determined. Thus organizing 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.

(c) Staffing

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.

(d) Directing/Leading

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.

(e) Controlling

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

(a) Procurement

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

(b) Development

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, organization development to strike a better fit between organisational climate/culture and employees.

(c) Compensation

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 organization. It consists of activities such as job evaluation, wage and salary administration, bonus, incentives, etc.

(d) Maintenance

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 organization, be large or small organizations. Having discussed the scope and functions of HRM, now it seems pertinent to delineate the HRM scenario in India.

Importance of Human Resource Management

Human resources are the valuable assets of the corporate bodies. They are their strength. To face the new challenges on the fronts of knowledge, technology and changing trends in global economy needs effective human resource management. Significance of HRM can be seen in three contexts: organisational, social and professional.

(i) Organization Significance

HRM is of vital importance to the individual organization as a means for achieving their objectives.

It contributes to the achievement of organisational objectives in the following ways:

(i) Good human resource practice can help in attracting and retaining the best people in the organization.

(ii) Developing the necessary skills and right attitudes among the employees through training, development, performance appraisal, etc.

(iii) Securing willing cooperation of employees through motivation, participation, grievance handling, etc.

(iv) Effective utilization of available human resources.

(v) Ensuring that enterprise will have in future a team of competent and dedicated employees.

(ii) Social Significance

Social significance of HRM lies in the need satisfaction of personnel in the organization. Since these personnel are drawn from the society, their effectiveness contributes to the welfare of the society. Society, as a whole, is the major beneficiary of good human resource practice.

(i) Employment opportunities multiply.

(ii) Eliminating waste of human resources through conservation of physical and mental health.

(iii) Scare talents are put to best use. Companies that pay and treat people well always race ahead of others and deliver excellent results.

(iii) Professional Significance

Professional significance of HRM lies in developing people and providing healthy environment for effective utilization of their capabilities.

This can be done by:

(i) Developing people on continuous basis to meet challenge of their job.

(ii) Promoting team-work and team-spirit among employees.

(iii) Offering excellent growth opportunities to people who have the potential to rise.

(iv) Providing environment and incentives for developing and utilizing creativity

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