53  Human Resource Management: Concept and Functions

53.1 Meaning of HRM

Human Resource Management (HRM) is the strategic and coherent approach to the management of an organisation’s most valued assets — the people who individually and collectively contribute to the achievement of its objectives (aswathappa2020?; decenzo2022?).

Three working ideas:

  • HRM is strategic — aligned with organisational goals.
  • It is people-centric — treats employees as assets, not costs.
  • It is integrative — coordinates planning, acquiring, developing, rewarding and retaining talent.
TipThree Authoritative Definitions
Source Definition
Edwin Flippo “HRM is planning, organising, directing and controlling of the procurement, development, compensation, integration, maintenance and reproduction of human resources to the end that individual, organisational and societal objectives are accomplished.”
Michael Armstrong HRM is the “strategic and coherent approach to the management of an organisation’s most valued assets — the people”.
Storey HRM is a “distinctive approach to employment management which seeks to achieve competitive advantage through the strategic deployment of a highly committed and capable workforce.”

53.2 Personnel Management vs HRM

TipPersonnel Management vs HRM
Dimension Personnel Management HRM
Approach Reactive, transactional Proactive, strategic
Focus Compliance and welfare Performance and development
View of people Cost centre Strategic asset
Time frame Short-term Long-term
Decisions Routine, rule-based Integrated with strategy
Communication Top-down Two-way
Initiator HR specialist alone Line + HR partnership

53.3 Nature of HRM

TipSix Features of HRM
Feature Working content
Pervasive Present in every kind of organisation
Continuous Ongoing — recruit-train-retain cycle
People-centric Centred on employees as assets
Multi-disciplinary Draws on psychology, sociology, economics, law
Action-oriented Solves real workforce problems
Future-oriented Develops capability for tomorrow

53.4 Scope of HRM

The Indian Institute of Personnel Management (IIPM) classified the scope of HRM into three:

TipThree Aspects of HRM Scope
Aspect Working content
Personnel aspect Manpower planning, recruitment, selection, training, performance, compensation
Welfare aspect Working conditions, amenities, canteens, housing, transport
Industrial-relations aspect Union-management relations, collective bargaining, dispute resolution

53.5 Functions of HRM

Edwin Flippo’s classic decomposition gives managerial and operative functions (flippo1984?):

TipFunctions of HRM (Flippo)
Group Functions
Managerial functions Planning, Organising, Directing, Controlling
Operative functions Procurement, Development, Compensation, Integration, Maintenance, Separation

53.5.1 Operative functions in detail

TipSix Operative Functions of HRM
Function Activities
Procurement Job analysis, manpower planning, recruitment, selection, placement, induction
Development Training, management development, career planning, performance appraisal
Compensation Job evaluation, wage and salary administration, incentives, benefits
Integration Motivation, morale, communication, participation, grievance handling
Maintenance Health, safety, welfare, social security, employee services
Separation Retirement, resignation, retrenchment, lay-off, exit interviews

53.6 Objectives of HRM

TipFour Levels of HRM Objectives
Level Objective
Societal Be socially and ethically responsible
Organisational Acquire, develop and utilise people for organisational goals
Functional Match HR’s contribution to the firm’s needs
Personal Help employees achieve personal goals

53.7 HRM Process

flowchart LR
  HRP[HR Planning] --> JA[Job Analysis,<br/>Description, Specification]
  JA --> R[Recruitment]
  R --> S[Selection]
  S --> P[Placement &<br/>Induction]
  P --> T[Training &<br/>Development]
  T --> PA[Performance<br/>Appraisal]
  PA --> CC[Compensation &<br/>Career Development]
  CC --> R2[Retention,<br/>Welfare,<br/>Industrial Relations]
  R2 --> SE[Separation]
  style HRP fill:#FFEBEE,stroke:#C62828
  style SE fill:#E8F5E9,stroke:#2E7D32

53.8 Strategic HRM

Strategic HRM (SHRM) goes beyond operational HRM by aligning HR strategy with business strategy. The Harvard Framework (Beer et al. 1984) and the Michigan Model (Fombrun et al. 1984) are the foundational frameworks.

TipHRM vs SHRM
Dimension HRM SHRM
Focus Operational Strategic
Time frame Short-to-medium Long-term
Alignment with business strategy Loose Tight
Role of HR Specialist function Strategic partner
Measurement HR-specific metrics Business outcomes — productivity, quality, innovation

53.10 Indian HR Statutes — A Brief Note

Indian labour law has been consolidated into four labour codes (2019–20):

TipFour Indian Labour Codes
Code Replaces
Code on Wages, 2019 Payment of Wages Act, Minimum Wages Act, Bonus Act, Equal Remuneration Act
Industrial Relations Code, 2020 Trade Unions Act, Industrial Employment (Standing Orders) Act, Industrial Disputes Act
Code on Social Security, 2020 EPF Act, ESI Act, Gratuity Act, Maternity Benefit Act, etc.
Occupational Safety, Health and Working Conditions Code, 2020 Factories Act, Mines Act, Contract Labour Act, etc.

53.11 Exam-Pattern MCQs

NoteEight-question set

Q1. Which of the following is not an operative function of HRM in Flippo’s classification?

A. Procurement B. Development C. Planning D. Compensation

Answer: C. Planning is a managerial function; the operative functions are Procurement, Development, Compensation, Integration, Maintenance, Separation.

Q2. Match each operative function with its activity:

Function Activity
(i) Procurement (a) Wage and salary administration
(ii) Development (b) Recruitment and selection
(iii) Compensation (c) Health, safety, welfare
(iv) Maintenance (d) Training and management development

A. (i)-(b), (ii)-(d), (iii)-(a), (iv)-(c) B. (i)-(a), (ii)-(b), (iii)-(c), (iv)-(d) C. (i)-(c), (ii)-(a), (iii)-(d), (iv)-(b) D. (i)-(d), (ii)-(c), (iii)-(b), (iv)-(a)

Answer: A.

Q3. Which of the following best distinguishes Personnel Management from HRM?

A. PM is strategic, HRM is operational B. PM treats people as a cost, HRM treats them as a strategic asset C. PM is a modern approach, HRM is older D. PM is mandatory, HRM is voluntary

Answer: B. PM is rule-based and reactive; HRM is strategic and treats people as a competitive asset.

Q4. Match each level of HRM objective with its content:

Level Content
(i) Societal (a) Acquire, develop, utilise people for org goals
(ii) Organisational (b) Be socially and ethically responsible
(iii) Functional (c) Help employees achieve personal goals
(iv) Personal (d) Match HR’s contribution to the firm’s needs

A. (i)-(b), (ii)-(a), (iii)-(d), (iv)-(c) B. (i)-(a), (ii)-(b), (iii)-(c), (iv)-(d) C. (i)-(c), (ii)-(d), (iii)-(b), (iv)-(a) D. (i)-(d), (ii)-(c), (iii)-(a), (iv)-(b)

Answer: A.

Q5. Which of the following is the modern strategic counterpart of HRM?

A. PMS (Personnel Management System) B. SHRM (Strategic Human Resource Management) C. CSR (Corporate Social Responsibility) D. ESG (Environmental, Social, Governance)

Answer: B. SHRM aligns HR strategy with business strategy.

Q6. The four Indian labour codes (2019–20) include all of the following except:

A. Code on Wages, 2019 B. Industrial Relations Code, 2020 C. Code on Social Security, 2020 D. Banking Regulation Code, 2020

Answer: D. The fourth code is the Occupational Safety, Health and Working Conditions Code 2020.

Q7. Arrange the following HR-process steps in correct order:

  1. Selection
  2. Recruitment
  3. Job analysis
  4. Training and development

A. (iii), (ii), (i), (iv) B. (i), (ii), (iii), (iv) C. (iv), (iii), (ii), (i) D. (ii), (iii), (i), (iv)

Answer: A. Job analysis → Recruitment → Selection → Training & development.

Q8. Match each modern HR trend with its content:

Trend Content
(i) Talent management (a) Data-driven HR decisions
(ii) HR analytics (b) Strategic acquisition, development and retention of high-potential employees
(iii) DEI (c) Self-employed workers via online platforms
(iv) Gig work (d) Diversity, Equity, Inclusion

A. (i)-(b), (ii)-(a), (iii)-(d), (iv)-(c) B. (i)-(a), (ii)-(b), (iii)-(c), (iv)-(d) C. (i)-(c), (ii)-(d), (iii)-(b), (iv)-(a) D. (i)-(d), (ii)-(c), (iii)-(a), (iv)-(b)

Answer: A.

ImportantQuick recall
  • HRM — strategic, coherent approach to managing people as the firm’s most valued assets.
  • Edwin Flippo’s definition: planning, organising, directing, controlling of procurement, development, compensation, integration, maintenance, separation.
  • Personnel Management → HRM: reactive → strategic; cost → asset; short-term → long-term.
  • Three aspects (IIPM): personnel, welfare, industrial relations.
  • Flippo’s functions: Managerial (Planning, Organising, Directing, Controlling) + Operative (Procurement, Development, Compensation, Integration, Maintenance, Separation).
  • Objectives at four levels: societal, organisational, functional, personal.
  • HR process: HRP → Job analysis → Recruitment → Selection → Placement → Training → Appraisal → Compensation → Retention → Separation.
  • SHRM — Harvard (Beer et al. 1984) and Michigan (Fombrun et al. 1984) frameworks.
  • Modern trends: talent management, engagement, HR analytics, DEI, hybrid work, gig, employer branding.
  • Four Indian Labour Codes (2019–20): Wages, Industrial Relations, Social Security, OSH-WC.