CHAPTER - 4

FACTORS INFLUENCING HRM AND HRD

A INTRODUCTION

B FACTORS INFLUENCING HRM

C UNDERSTANDING IIIE IMPORTANT FACTORS OF

HRM

• HUMAN RESOURCES SYSTEM AS A CENTRAL SUB­

SYSTEM

• POLICY AS A FACTOR INFLUENCING HRM & HRD

• DEHUMANIZING ORGANIZATIONS

• THE UNINDUSTRIALIZED INDIAN SOCIETY

• ORGANIZATIONAL PRAGMATISM

• NEW KNOWLEDGE

• HUMAN PROCESSES - A NEW EMPHASIS

• ORGANIZATION AS A MULTI-LEVEL HUMAN SYSTEM

• ORGANIZATIONAL CULTURE

. ENVIRONMENTAL INFLUENCE

• PHILOSOPHY OF PARTICIPATIVE MANAGEMENT

ORGANIZATIONAL PHILOSOPHY ANT PREPAREDNESS

 CHAPTER-4

FACTORS INFLUENCING HRM AND HRD

A. INTRODUCTION
Management of an organization in modem economies is not only complex and
sophisticated but it is also a vital factor influencing the economic growth of the country.
Its efficiency determines the property and well being of the people of the nation.
“Perhaps today there is no other latest activity which is as important and dynamic as
management - the oldest of arts and newest of profession. One of the fundamental areas
of management is the management of human resources. Thus, “in the management of
four M’s - Money, Materials, Machines and Men - it is obvious that, considering the
nature of man, the management of men is not only fundamental but also dynamic and
challenging.

Management of human resources, as a concept, has changed markedly during the

last three decades. Earlier, there was a change from the “scientific management” to the
“human relations” approach, and at present, the trend is towards the “behavioral science”
approach, which involves an interdisciplinary, scientific study of human behavior. It
provides a sound platform for studying the management of human resources at work and
has become a very significant, influencing factor. Modem organizational setting is
characterized by constant change relating to environmental factors and human resources.

In the context of the economic changes and business priorities, a perceptible change in
human resource management is taking place across various organizations. Case studies of
success through efficient people management are being reported increasingly. These cases
themselves are indicative of the changing acceptance level of HRM. Business India (March
1994) had listed HR functionaries as a prime target group forjobs in the coming years. According
to the report, realizing the importance of sound HRM strategies, organizations are increasingly
going in for strengthening their Human Resource Management functions. Other reports in
business magazines also indicate that, when realignment in business strategies are contemplated,

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HR issues are also being considered with increasing importance. Practicing HR functionaries by
enlarge agree that the relative worth of an HRM specialist has increased in the job market,
Specifically, as Yoder observes, the changes affecting employment relationships in these
two dimensions reveal the following trends:

• Increased complexity of organization and employment communication

and a distinction between owners, managers and workers;

• Decreased number of employers and self-employed, and enlarged size of

work force;

• Enhanced need for training in view of increased requirements of

specialized skills;

• Public interventions and legal complications in employer-employee

relationships;
• Enhanced training and development of managers and professionalisation
of management education;

• Possibility of employment explosion in view of the ever-increasing size of

work force;
• Rising formal level of education of rank-and-file employees who are
becoming increasingly critical of management malpractices and errors;
• Rank-and-file employees’ rapidly growing demands in different
employment situations;
• Increased applications of behavioral science by enterprising manager; and
• Recognition of close relationship between profits and earnings and ability
to manage human resources.

Indeed, these trends manifest in themselves the problem areas as identified by

managers in organizational settings. The problem areas manpower planning, manpower
policy, staffing-manning, organization-structures and processes, administration-choices
of style, commitment-incentivation, training-development, research-innovation, and
review, audit and control.

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B. FACTORS INFLUENCING HRM
The expression, Human Resource Management (HRM) is relatively a recent
concept for all aspects of managing people in an organization. It represents a broad based
understanding of the problems of people and, their management in view of the
development of behavioral science knowledge. A formal beginning of HRM functions in
India was made in 1929,when the Government of India set up ‘Royal Commission on
Labor’. Two years later the Commission submitted its report recommending the
appointment of labor Officers' to look after the employment and dismissal of workers as
well as their working conditions. The scope of the functions of Labor Officers was
widened during the Second World War, when housing, medical and recreational facilities
were added to their existing responsibilities.

C. UNDERSTANDING THE IMPORTANT FACTORS OF HRM

Although the change may provide solutions to some problems, it may create
several new ones. There is an urgent need to understand these problems, anticipate them
and to find out solutions for them. The responsibility to find out the solutions to these
problems lies with every manager who has to be prepared to deal with different changes
effectively through educational and developmental programmes. Obviously, every
manager is responsible for the management of human resources, with the advice and help
of the manager who has to get things done through others. Significantly, his task relates
to leading, mobilizing and directing the efforts of people without which he can at the
most be a technician but not a manager. Thus, every manager has to develop and
maintain his competence in managing human resources, which have assumed utmost
significance in modem organizations.

1. HUMAN RESOURCES SYSTEM AS A CENTRAL SUB SYSTEM

Human resources system in an organization is not only a unique sub-system but
also a principal and central sub-system and it operates upon and controls all other sub­
systems (as shown in Figure-1.) Whatever, in the environment affects the organization
like economic, social, cultural, legal, political, historic, competitors, consumers etc., as a
whole also affects the HR system? The resource system receives inputs from the

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organization in the form of objectives and it results in individual and organizational
performance that may be viewed as individual and organizational output. Both the HR
system and the entire organizations operate under the same cultural, economic, social,
legal, political and other constraints. Hence, the greater the effectiveness and productivity
of human resource, the more will be the effective functioning of an organization. Peter F.
Drucker has rightly observed the significance of personnel as; managers are fond of
repeating the truism that the only real difference between one organization and the other
is the performance of people. In essence the survival, development and performance of an
organization - although not solely but heavily - depend on the quality of personnel.

Figure-4.1

Human Resource Sub-Svstems in an Orsanization

2. POLICY AS A FACTOR INFLUENCING HRM & HRD

It is very much evident that the ‘policy’ is an integral part of organizational
management process. According to prevailing thinking, policies fit into the framework of
strategic management of organizations. Strategic Management according to Higgins
(1979) is “the process of managing the pursuit of the accomplishment of organizational

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mission coincident with managing the relationship of the organization and its
environment (pp8). Bayers (1991) defines strategic management as “those decisions that
define the organization’s mission and objectives, determine the most effective utilization
of its resources, and peek to assure the effectiveness of the organization in its
environment.

This concept of management, which was borrowed from the military services
(Bayers 1991), has gained popularity among organizations. The approach requires
planning for a company’s long-term future that includes setting up of available
objectives, determination of the basic approaches to be used in pursuing these objectives
and the means to be used in obtaining the necessary resources to be employed (Drucker
1977). This, according to Higgins (1979) has to be followed by an implementation phase,
which requires development of appropriate organizational policy, which in turn will
ensure that the master strategy is properly formulated and properly implemented
throughout the organization. In Hosmer’s (1982) opinion, policies are the critical link,
facilitating translation of the strategy into the results. In the absence of such translation,
the strategic plan “will remain an unachieved expression of intentions and hopes.” pp 91.
Koontz indicates that the organizational policies give direction to the organization’s
growth by providing the framework for facilitating the operational planning in all areas of
management. Gulick (1977) opines that the policies developed by organizations make the
growth plan a reality. According to Talwar (1972) policies describe what the
organizations can do. When? Where? And how?

3. DEHUMANIZING ORGANIZATIONS
Until the advent of industrial revolution the only large organizations were state
administration, state armies and religious orders. Small family based units conducted all
other economic activities. But today, it is almost impossible to imagine life without
medium and large size organizations employing from a few hundreds to lakhs of
employees, in every sector of human life. By now there are well-established arguments
for economies of small scale as well as the need for large scale, multi-layered
coordination to convert human dreams into realities. The scientific, technological and

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material progress justifies the relevance of organizations for human existence and
progress.
The outputs of organizations always serve some human purpose but the physical
and psychological effect of working in these organizations is often not very healthy. Phil
Herbst expresses this duality as shown in Figure 2.

Figure- 4.2

TECHNOLOGICAL SOCIAL STRUCTURE PSYCHOSOMATIC

SYSTEM .................... p, OF THE WORK DISORDERS;
SYSTEM ---------►INTER-PERSONAL
\ AND INTERGROUP
| CONFLICT

PRODUCT QUALITY AND QUANTITY

Physical and mental health as well as the values, attitudes and behavior of people
are the implicit human outputs of a work organization. Herbst captures it in the
statement. The product of work is people. Any efficiently run organization of moderate
size will, of necessity, develop certain bureaucratic features. These are fragmentation of
work, rules and procedures, as well as multiple layers of hierarchy. The dehumanizing
effects of such bureaucratic features have been written about for a long time.

In addition, as size and age of organizations increase they become more and more
bureaucratic and unresponsive. They can become unadaptive to the external environment
and unresponsive to the changing needs of the people working therein. Such a state can
sooner or later lead to organizational decline, which is rarely without human misery. It is
all the more tragic because a majority of those who suffer would not have been given any
scope or opportunity to stem the rot.

In spite of such dehumanizing side effects of working organizations it is still

impossible to think of doing without them. Moreover organizations also provide
meaning and purpose to people. Hence there are continuous endeavor’s to mitigate the

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negative effects through innovations in the design of organizations. It is hoped that
efforts in HRD are aimed at such innovations.

Ffeure 4.3

BUREAUCRACY ANTICIPATED
CONSEQUENCES
Hierarchy of authority
Rules and procedures Efficiency
Specialization and division of
labor
Employment of qualified UNANTICIPATED
personnel CONSEQUENCES
Alienation of employees
Formal communication ► Alienation of employees
Detailed job descriptions Apathy
Impersonality Red tape
Rigidity
Lack of coordination
Inefficiency
Work to rule
Resistance to change

The Anticipated and Unanticipated Consequences of the Bureaucratic Form

4. THE UNINDUSTRIALIZED INDIAN SOCIETY

Except for a few zealots who advocate a back-to-nature movement or a retum-to-
villages philosophy, there is a general consensus that industrialization is good for the
socio-economic development of India. Given the size of the country, need for
technological development for human welfare, and the necessity of becoming cost
effective in global competition makes it imperative to utilize the organizational form,
however mixed the blessings be for those who work therein.

In spite of the accepted imperative for industrialization and large scale organized
activities the progress on these fronts is still far from desirable. Human productivity, in
India is far below than that of the industrialized countries in the West as well as in the
East. Some of this low productivity may be attributed to historical factors but focusing
on the present the main factors would be the attitudes and behavior of entrepreneurs,

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managers, workers, administrators, and political representatives. These are the crucial
human resources, which need to be reoriented and developed to achieve national
development. It would be worthwhile to identify some of the prevalent social
characteristics and patterns that contribute to the non-productive behavior of Indians in
organizations - mining, manufacturing, service, administrative or political. These are:

1. Indian society culturally and ethnically is a plural society. There exist

sharply defined and mutually antagonistic religions. Though formally
India is a secular democratic nation most of the people carry parochial and
communal identities about themselves and others. These mental images
are carried into the work organizations that affect work relationships
adversely.

2. Even Indian politics is beset with parochial, and fragmented political

parties. Work organizations become potential instruments for achieving
political objectives even to the detriment of organizational effectiveness.
They are used to generate illegal funds for political purposes, and multiple
unions come into being to gain political leverage with the vote bank of
workers and their families. Illegal activities affect the morale of
conscientious people and inter-union rivalries create unnecessary conflicts,
which affect productivity.

3. Very wide differences exist between the socio-economic and educational

background of workers and managers. Such wide differences give rise to
problems of communication because the language and imagery used are
different. It makes it difficult for them to understand and empathize with
each other’s motives and expectations. The very low level of formal
education of workers, and their life style tends to make them ineligible for
, reaching supervisory and Managers positions. This creates a wide gap
between their future perspectives for themselves. All these differences
add to a very unequal and usually strained relationship between managers
and workers.

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4. With the materialistic advancement in more developed countries and the
widespread awareness about it, the materialistic aspirations of Indians
seem to be rising at a faster rate than the actual economic development of
the country. The increasing gap is leading to greater wistfulness and
frustrations. A majority of Indians working in organizations tend to have
unrealistic expectations regarding material benefits from the organizations.
Their non-fulfillment - howsoever impossible it may be - leads to
dissatisfaction, frustration and alienation.

5. For whatever reasons a majority of Indians seem to be very strongly

family centered. Family is the primary group to which every human being
belongs first. But in India it also amounts to having an exploitative
attitude towards the work organization for the benefit of the family. There
is a tendency to give the least in terms of time and effort and take the most
in terms of facilities and benefits for the family. It is different from
American individualism where an individual’s work achievement matters
to him. It is also in contrast with the Japanese ideal of being adopted by
the work organization and the family accepting the commitments to the
work organization.

6. Most Indians seem to have very little faith in modem social institutions,
such as, government, parliament, political parties and service
organizations in terms of their intention and role in achieving socio­
economic development. They tend to out rightly reject the possibility of
change for national good. A large number of them abstain from the basic
democratic process of exercising their right of franchise in public
elections. This finds an analogue in their lack of faith that work
organizations can be changed for the better and that they can actively
contribute to it. This lack of faith in constmctive social process also gets
reflected in their cynicism towards espoused purposes and goals, and their
tendency to disown their own contribution to the dysfunctional of social

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 institutions. They express their cynicism simultaneously with their own
deliberate actions to reinforce the same social patterns.

All these tendencies in the Indian context of work organizations make them
inefficient as well as relegate the organizations to a low secondary place in the minds of
those who work there. The challenge for development professionals is to change the state
of things towards an industrial or even a more human post-industrial culture in work
organization. Work organizations being the forerunner in the process of industrialization
of the society can initiate this process rather than wait for the socio-political culture of the
existing society to change.

5. ORGANIZATIONAL PRAGMATISM
To humanize organizations and the social imperative of accelerating the process
of industrialization, a third set of factors has come into existence to draw fresh attention
to the human resources development in organizations. These stem from the fast changing
organizational environments and organizational necessities to adopt and innovate in
response to these changes. Some of the factors are:
• Increasing Competition: Recently with changes in national policies, most
of the business organizations face increasing competition in the market
place. It requires higher efficiencies as well as better human resources to
meet the challenge. Such competition also makes it difficult to recruit the
right kind of people.
• Pressures for Growth: One of the best antidotes to organizational decline
and death is continuous growth and expansion. But growth in size
inevitably leads to increased complexity of operation. Managers of these
larger organizations need a higher level of Managers skills. Special efforts
have also to be made to keep the organizations operating as an integrated
unit. Large organizations also require more sophisticated systems for
optimum utilization of its large human resources pool.
• Rapid Technological Change: The fast pace of changes in technology is a
major pressure on organizations these days. Change in technology
demands frequent changes in organizational structure and systems as well

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 as change in the required skills. All these changes create conflicts, stress,
obsolescence of skills, and the need to innovate solutions related to these
problems.
• Dearth of Suitable Manpower: Due to a lack of sufficient
industrialization, increasing competition and changing technologies, many
organizations face the problem of getting suitably trained and skilled
people at various levels. This makes it necessary for the organization to
develop its own human resources.
• Changing Needs ofPeople: Due to various sociological changes the needs
and aspirations of employees change from time to time. These needs are
related to work, benefits, career growth etc. Organizations need to
develop ever-new responses to these changing needs through more
suitable human resource management policies and systems.

6. NEW KNOWLEDGE
It may be said that good intentions have existed for long in the minds of
organizational leaders, managers and other well meaning Indians. There is obviously no
point in repeating them unless something new can be done about the dehumanizing
effects of organizations and the unindustrialized culture seeping into the work
organization through the open boundaries all the time. Well, apart from the creative sets
of rare individuals, sustained development of the human race has been possible because
of continuously accumulating scientific knowledge and technology. In this regard
physical and material sciences have been the first to develop. Life sciences have
followed and gained from the former. The sciences, which focus on the human being as a
psychological and social entity, have been the last to arrive. Due to some drastic
differences between matter and men and due to ethical problems in applying the
experimental method in human affairs, the progress of these sciences and technologies
has been very slow. But for the last 100 years or so the knowledge has been slowly
accumulating. It has also been over half a century of conscious attempts of applying *
knowledge to solve psychosocial problems.

Ill
 The sciences dealing with the psychosocial aspect of human existence fall under
the gamut of social sciences. The main disciplines encompassed are psychology,
sociology, anthropology, economics and political science and there are some subsidiary
branches of knowledge encompassed, such as, social psychology and organizational
behavior and there are innumerable applied disciplines such as industrial psychology,
clinical psychology, educational psychology, clinical sociology, industrial sociology,
social therapy, psycho-therapy, applied anthropology, labor welfare, human engineering,
business economics, game theory etc. etc.

The broad scope of the major disciplines, which are making significant
contribution towards human resources management and development, are as follows:
a) Psychology. Here the focus is on studying an individual, his needs,
aptitudes, motivations, aspirations, behavior etc and the consequences of
all these for him. The attempt is to understand differences amongst
individuals. It goes on to study the normal and abnormal states of
individual psyche. It also studies the processes of learning, growth and
unlearning. All the accumulated knowledge in psychology had led to
extensive applications in psychotherapy, counseling, recruitment and
selection as well as training.
b) Sociology: Here the focus shifts from individuals to aggregates of human
beings. Sociologists study groups, communities, societies as well as
crowds, mobs, and social movements etc. Industrial sociologists study the
processes of industrialization as well as industrial units. Clinical
sociologists attempt to apply sociological knowledge to improve groups,
communities, societies, etc.
c) Social Psychology. This is a compound of sociology and psychology.
The focus is on interpersonal relations, group and intergroup dynamics,
group effectiveness, social roles and the impact of all these on the
, individuals involved. This knowledge is being applied to family relations
and family therapy, team building, conflict resolution, designing jobs and
roles, improving training technologies etc.

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 d) Anthropology: In this discipline the focus is on culture, the norms, the
values, symbols, myths and legends, rituals arid ceremonies. It began by
studying isolated tribes but is now focusing on the intercultural dynamics
amongst multicultural groups. Even organizational cultures are being
studied.
e) Political Science: Under this discipline the issues of social power and the
alternatives for social governance are studied. Most of the knowledge is
related to governance of societies, nation or state policy and the role of
citizenry, but it provides useful analogues for the governance of
organizations.
f) Economics: The emphasis here has been mainly on the material aspects of
human societies and behavior of industrial firms under the assumption that
human beings are rational. It has been helpful in improving the efficiency
of organizations in material terms but fails to suggest ideas for dealing
with the unintended human consequences of apparently rational actions as
well as the motivated human actions camouflaged under the garb of
rationality.
g) Organizational Behavior: This is the latest and most significant discipline
in the context of human resources development in organizations. Not
more than 50 years old, it absorbs from all the above listed feeder
disciplines for the service of understanding and improving organizations.
It encompasses the study of behavior of individuals and groups in
organizations as well as behavior of organizations as social, political and
cultural entities. This discipline is found more often in management
institutions and has given rise to applied areas of organizational design
and organization development.

Human resources management is an applied area, which utilizes the knowledge

and technology from all these disciplines and particularly from organizational behavior,,
design and development. Education component of HRM is future oriented for identifiable
job positions. Since return on investment from education is unclear or unascertainable,
very few organizations are prepared to invest on employee education programmes unless

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future needs or manpower plan of the organization substantiates the possibility of
redeployment of employees after completion of education programme. Many
organizations allow their employees to go on study leave for pursuing institutional studies
on areas like, Management, Accounting and Finance, Quality, Engineering or even for
Research, which are having relevance to organizational needs. Employees are allowed to
draw their pay and get reimbursement of actual cost for study during this period and such
leave is not debited against employees’ leave account.

7. HUMAN PROCESSES - A NEW EMPHASIS

All new knowledge emerging from pure and applied social sciences forms the
feeder-stock for new practices and innovations in human resources development. In
addition there is a new emphasis emerging out of this knowledge about human condition.
This is being increasingly labeled as the ‘process’ dimension. “Process can be defined as
the underlying human and behavioral dimension of an organization, and various groups
and individuals which constitute the organization”.

In the absence of sufficient knowledge about the dynamics of human

relationships, groups and organizations, the preponderant concerns in creating and
operating organizations have been on overall objectives, tasks, technical processes and
the bureaucratic structure and systems. But some of the most complex problems have
emerged in the areas of organizational leadership, lack of commitment in employees,
distortion of organizational goals because of individual’s self-interest, interpersonal
conflicts, inter-group conflicts, resistance to change, lack of flexibility, under-utilization
of employees potential, loss of human ability to innovate and adapt etc. All these
problems are not fully amenable to structural solutions. These problems coupled with
new knowledge about the processes of human interaction amongst human beings and
with physical reality make the understanding of these human processes an essential
prerequisite for responding to the issues and challenges of HRM.
)

Pareek identifies nine of these important human processes, from micro level (the
individual) to the macro level (the society). These are:
1) Existential processes in the person.

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 2) Emphatic processes between two persons.
3) Role coping processes.
4) Group building processes.
5) Intergroup collaborative processes.
6) Organizational decision-making processes.
7) Influence processes at organization-environment interface.
8) Processes of social awareness in the community.
9) Value shaping processes in the society.

Attention to such human processes is of crucial importance in organizations

because processes strongly influence people’s attitudes, values, behaviors and
performance. Depending on the nature of these interactive processes people may derive
meaning out of work or feel alienated, different individuals and units may collaborate or
give rise to counter-productive conflicts, and create a better or a worse place for future
generations to live in. These processes would be essential for designing and creating
more human organizations as well as for industrialization without importing the ill effects
of industrialization inadvertently. To create and sustain positive processes would require
appropriate attitudes, skills and continuous efforts at learning. Because of the
accumulated knowledge and techniques it is now possible to learn the required skills.
These would form an essential prerequisite for a practitioner of human resources
development.

8. ORGANIZATION AS A MULTI-LEVEL HUMAN SYSTEM

As the boundaries and foci of various social sciences indicate, an organization can
be seen as a human system consisting of various types and sizes of human sub-systems.
The smallest level of human sub-system is the individual, in relation to himself and in
relation to his role in the organization. The next level is that of two persons system such
as superior -subordinate and individual-peer sub-systems. Then come the three or more
person’s groupings such as a work-group, a committee, a task force, or a small
department. Sometimes it is useful to understand and improve inter group relations and
their joint effectiveness. Such a two or three group situation may be seen as a distinct
level of human system. Finally, the important level is of treating the whole organization
as a human system, deriving from the theories of organizational behavior and
management.

In this perspective the task of human resources development can be seen as the
simultaneous development of various human sub-systems in congruence with the
development of an organization as the overall human system existing in a purposeful
relationship with its environment. There has been considerable development in the
knowledge based on innovative methods and techniques to develop each level of the
human system.

9. ORGANIZATIONAL CULTURE
The idea of organizational culture (sometimes called corporate culture) has
become a dominant buzzword in management literature since the early eighties. The
term has entered the daily vocabulary of the practicing executives too. The annual
speeches of chief executives these days are replete with references to the culture of the
organization.

The idea organizational culture reiterates the concept of an organization as a

‘human institution’. The term is used to refer to the intangible aspects of an
organization’s life, such as, organizational members’ meanings, beliefs, values and
norms. Though organizational sociologists like Selzenick and Etzionai has raised the
issue of culture as a critical determinant of organizational effectiveness as early as in the
fifties, their voices were hardly audible in the midst of the advocates or tangible ‘hard’
areas like technology, finance and structure. However, the early eighties witnessed a
revival of interest in the intangible ‘soft’ subjective side of the organization. The book,
“In Search of Excellence, the Lessons from America’s best run Companies”, by Peters
and Waterman, (1982) triggered off a number of studies of organizational culture in
different parts of the world and there is now a growing awareness among organizational
scientists and management consultants that the culture of organization has as much
influence on corporate effectiveness as the formal structure of jobs, authority, technical
and financial procedures.

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 “Organizational culture is the widely shared beliefs, values and norms among the
organization members, which determine their behavior and actions”. In other words
organizational culture refers to the pattern of beliefs, values, myths, assumptions and
norms that are fundamental to the behavior of people in an organization. This unique
configuration of beliefs, values and norms, which is equivalent to the ‘personality’ of an
organization, influences the decisions and behaviors of people at all levels in the
organization. The organizational culture prevailing in an organization may or may not be
conducive to the attainment of organizational goals. If conducive, it is called ‘strong’
culture and if not, then it is a ‘weak’ culture. For example, ‘developing the poor’ is one
of the prime goals for the banks today but if the shared system of beliefs and values
among the members is not favorable to this objective, that is, if most of the employees in
a bank feel that banks should not be given the task of developing the poor, the culture of
the bank can be called a ‘weak’ culture. In other words, culture can be an ‘asset’ or a
‘liability’ for a given organization depending on whether it is favorable or not to the
achievement of organizational goals.

Cultural Base for HRM & HRD Systems

These systems are not founded on a cultural base of appropriate beliefs and values
of the people involved. During the last decade, many HRD systems have been evolved.
The attempts at perfecting these systems were mainly confined to the technology and
rationale of the system; the intangible aspects underlying the system comprising beliefs
and values have not received sufficient attention.

Many a time, HRD systems are introduced as though they are mechanical systems
without giving adequate attention to the subjective side of the system. The top
management and HRD functionaries conceive systems, which are, no doubt, viable,
cogent and rational, but introduce them through mostly head office circulars. These
circulars communicate the rationale of the system to the line managers, implicitly
assuming that human beings are rational and logical in their thinking and behavior all the
time. The other side of the human beings - sentiments, feelings, idiosyncrasies, beliefs
and values, is not paid any attention. All these have resulted in a situation where our
HRD systems are invariably lacking a strong cultural base.

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 The absence of the organizational culture base for HRD will be discernible if we
examine some of the people-related beliefs and values among field executives and
managers of our banks.

10. ENVIRONMENTAL INFLUENCE

HR Manager can’t perform his job in a vacuum as a number of environmental
factors affect the HRM. In fact, these factors influence the organization through human
resources.
Figure-4.4

The term environment in human resources management has reference to the

totality of all factors, which influence both the organization and HRM sub-system. The

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influence of environment on HRM is shown in Figure-4. The environment furnishes the
macro context and the organization is the micro unit. The external environment is
comprised of those factors, which affect an organization’s human resources from outside
the organization. Important among them are economic, social, political, Government and
legal, technological, manpower in the country, tradition and culture, customers, other
organizations and trade unions in other organizations. Each of these external factors
separately or in combination can influence the HRM function of any organization.
Further changes in these factors make the HR manager’s job a challenging one. The
internal environment also affects the job of an HR manager.

11. PHILOSOPHY OF PARTICIPATIVE MANAGEMENT

The basic philosophy of participative management is that once the people are
committed to the goals of the organization, they will exercise self-direction and self-
control in the service of the objectives to which they are committed and their
commitment to objectives is a function of the rewards associated with their achievements
and therefore external control and the threat of punishment are not the only means for
bringing about efforts towards organizational objectives. In order to create proper
conditions for people to seek and accept responsibility, conscious efforts are required to
involve them at all levels - intellectual, emotional and physical - in the decision making
process. When there is employees’ participation in the management process at all a level,
it is expected to bring about improved employees’ morale leading to increased
productivity. With this end in view, various techniques of participative management
have been tried - employees suggestion scheme, work and floor committees, house
journals, representation on the board, etc., with varied results. Without going deep into
the success or failure of these techniques, it is sufficient to say, that the desired effects of
these techniques are determined to a large extent by the degree of participation allowed to
the employees in terms of: (a) who initiates ideas; (b) how completely a subordinate
carries out each phase of decision making - diagnosing, finding alternatives, estimating
consequences and making the choice; and (c) how much weight an executive attaches to
the ideas he receives. The more there is in each of these factors, the higher will be the
degree of participation and so the sense of commitment. What happens, quite often, is
that these methods and techniques are introduced for fancy and formality without the

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willingness of the managers and executives to share responsibility and authority. Such
pseudo-participation has always ended up as a farce.

Hierarchy oriented belief and value systems present yet another impediment to the
HRD activities. Belief in the worth and capabilities of individuals belonging to the lower
levels in the hierarchy are alien to many of us.

Employee Attitude
Improvement in systems by itself is unlikely to produce effective results.
Ultimately what matters are the people who operate the systems? This is true of all
systems. A promotion system designed for the purpose of imparting greater objectivity in
promotions would remain on paper, unless the executives who are to take decisions also
decide to be objective while taking decisions. In the absence of such commitment, they
can certainly manipulate the system to serve their own ends. Conversely the industry is
replete with instances of employees providing speedy service to the customers despite the
most complicated procedures. The following incident, which was reported to have taken
place in one branch office of a public sector bank, would illustrate this point.

In that bank, the procedure for issue of drafts demanded a minimum of the
following eight steps:
1) The applicant first goes to the draft clerk for collecting application.
2) He fills in the application and gets the initials of the draft clerk, in token of
verification of commission.
3) He pays the amount of draft plus commission at the ‘receipt counter’ in
the cash department.
4) The cashier brands the voucher with ‘cash received’ stamp, enters it in his
scroll and sends it to the head cashier.
5) The head cashier authenticates the entry, enters the voucher in the
, passbook and sends it to the draft clerk.
6) The draft clerk prepares the draft and the protective advice, enters it in the
register and sends it to the signing official.
7) The official signs the draft and sends it back to the draft clerk.

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 8) The draft clerk hands over the draft to the applicant after obtaining his
signature on the reverse of the draft application.

A clerk who was recently appointed and posted to the drafts desk carried out a
minor innovation in the system, which drastically reduced the time for issue of the draft.
As soon as the applicant tendered the application for verification of the commission, the
clerk entered the particulars in a small rough notebook, prepared the draft and advice on
the basis of these particulars and completed the entries in the register. When the voucher
came from the cash department he merely attached the voucher to the draft and sent it to
the signing official for signature. This was a minor but very practical innovation to
expedite the issue of the draft within the framework of the existing system. He was quick
to identify the flexibility afforded by the system and manipulated it to the customer’s
advantage. The only risk he ran was that the applicant might at the eleventh hour change
his mind and not tenders the cash for the issue of the draft. This would have necessitated
his cancellation of the instrument already prepared. Such a contingency in practice arose
once or twice during a week, but this small loss outweighed the customer’s satisfaction
that was generated. The reduction in time was perhaps no more than 25 per cent but
when the customers saw the employee taking this initiative their satisfaction was
relatively higher. This and similar instances lead one to the inevitable conclusion that the
crucial factor in customer service is the attitude of the employees. First, the employees
should have a basic commitment to the goal of speedy customer service. Secondly, given
the commitment they are much more likely to come up with innovative ideas for
modification of the systems, than a group of systems people working at the central office
of the bank.

In a public sector bank a study was recently conducted to ascertain the training
needs of the employees. The study involved interviews with a large group of branch
managers to ascertain their assessment of the training needs of employees. Most of the
branch managers who were interviewed felt the major problem they, were facing at the
branches centered around the values and attitudes of the employees to work and to the
clientele. Job knowledge training in their view was neither crucial nor important. They
felt that the branch banking afforded more than adequate opportunities for employees to

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learn the job and their expectations from the training system was that ‘somehow’ the
training should bring about changes in the employees’ values and attitudes. This finding
led to a searching question as to how a training system can respond to this important felt
need of the industry.

Change of Values and Attitudes

Quite some time back a branch of the bank, during the course of an intensive
deposit mobilization decided to form a small group of four employees to go out and
canvass for deposits. To this bank, going out and canvassing for deposits was something
new as the bank was satisfactorily thriving on ‘walk-in’ business. To the small group of
employees the process was as novel as it was thrilling. A large number of accounts were
opened as a result of this intensive deposit mobilization drive and there was all round
satisfaction about the results achieved. The drive was over, the small group was
disbanded and the employees were allotted regular duties. However, the branch manager
was quick to perceive a change in the behavior of these employees. Whenever any of the
customers introduced by them came to the branch for encashment of a cheque, they used
to display an anxiety to see that the customer was serviced promptly. They would
personally take the cheque to the passing official and then on to the cash department and
see that the customer received his cash within the shortest possible time. They became
quite sensitive to customer criticism of delay. While in the initial stages, the concern was
restricted only to the customers whom they had introduced to the bank, over a period of
time it became a general concern for customer service and they started approaching the
branch managers with various suggestions for realignment of systems and procedures to
improve the general standard of service in the branch. If this experience is any
indication, continuous contacts with customers can bring about a change in the
employees’ attitudes.

Psychologists generally agree that the basic life style of an individual gets
determined in his first six years of existence. In the formative years, the child picks up
clues from the environment with which it continually interacts and these early
experiences help the child to build up its value systems, which rarely, if ever undergo a
change. This is true also of a new entrant to the organization. He is often equated to a

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child coming out of the womb thrown into a new and strange environment. In his
formative years in the organization he is working for clues, which would shape his
attitudes. He is willing and susceptible to be moulded by the impact of the organizational
culture and his early experiences in the organization by and large shape his future
attitudes. His attitudes get crystallized over a period of time and modification of these
attitudes later in the career is difficult, if not impossible.

If we accept the above premise, the point of intervention will naturally have to be
the entry point of an employee in an organization. At present most of the new entrants in
the bank start their work at ‘dispatch’ where they remain for quite some time before they
are moved from one desk to another? Very rarely the employees develop a feeling that
they are working in a business organization marketing some services. Their entire
orientation is rather one of ‘accounting’ and they tend to look at the organization as an
accounting organization. Research findings show that if a new entrant is entrusted with a
challenging and specific task at the entry point the chances of his setting for himself
challenging goals later in his career in the organization are brighter. This is
understandable as in the existing system of allotment of work to a new entrant the
creative and innovative abilities of the individual are so strongly curbed that there is little
chance of such abilities surfacing later on in his career. The new strategy of induction
will thus not only help the employee build appropriate value systems but will also
develop highly achievement-oriented employees on whom the future growth of the
organization can rest safely.

Employee Participation
It is the process by which a change can be brought about in the attitude of
employees towards customer service. This would no doubt lead to certain commitment to
the overall goals. But how can we sustain this commitment? As has been observed, this
commitment gets immediately manifested in the enthusiasm in offering a number of
suggestions for modifications in the systems and procedures. If this enthusiasm is not
properly channelized, frustration would set in quickly and the employees are likely to get
back to their previous patterns of behavior. Modified behavior can be sustained only
when it is backed up by some positive reinforcement. The employees’ expectations for

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involvement will have to be met with appropriate responses from the organization. This
leads to the question of ‘employee’s participation’, which has been lately receiving
considerable attention.

‘Employees participation’ is indeed a romantic concept. While the advocates of

the participation system are carried away by the sheer romanticism, practicing managers
tend to shy away from the concept, largely due to the uncertainties as to what the concept
actually implies. The concept has many ramifications and its focus of participation in
design of work systems. That new work systems and procedures will have to be designed
with the twin objectives of expeditious customer service and greater employee
satisfaction is no longer denied. We can go about it in two ways. One is to work out
systems and procedures at regional or head offices and transplant the system at the branch
level. Another alternative is for the employees themselves to evolve work systems,
which according to them would best serve their own psychological needs and customers’
demands. The latter alternative has a built-in advantage of not only tapping that vast
human potential in the organization but also generating and sustaining a commitment to
certain desired objectives. This issue was discussed recently at a workshop organized by
the NIBM and the following action plan received wide endorsement:

1) A few large or medium-sized branches should initially be identified where

the experiment of ‘participation in designing work systems’ could be
carried out.
2) A group of facilitators from the central office should visit these branches,
study the workflow and graphically illustrate it by means of a chart.
3) A meeting of all employees at the branch should be called wherein the
employees should be encouraged to study the work-flow and suggest
modifications in the work-system, which would satisfy the employees’
psychological needs and result in greater operational efficiency leading to
better customer service.
4) The suggestions would be examined from the point of view of a bank’s
internal security needs, discussed further with the employees, if need be
and conclusions arrived at.

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 5) A small voluntary group of employees would be formed at the branches to
implement the hew work-system, and to continuously monitor and review
the changes.
6) The voluntary groups at different branches could meet periodically to
share their experiences and work out strategies for multiplication.
7) A group reward system could be instituted for branches, which come out
with maximum innovative suggestions.

Work on these lines are reported to be carried out in one or two banks with a good
measure of success. A wider application of this plan may bring about a greater
involvement of employees and commitment to customer service than what mere
institutional training can achieve.

Training in Staff Management

The training system has to recognize a serious dilemma through which the branch
managers are passing. In the fifties the branch managers witnessed a strong directive
style of leadership based on reward and punishment. The then branch managers not only
had the authority to meet out punishment but also had the authority to reward the
employees. The style was indeed effective and produced results. In the sixties and the
early seventies the branch manager’s authority was steadily corroded by the emergence of
two factors. One was the growth of uncooperative trade unionism, which applied brakes
on the exercise of discretionary punitive powers of branch managers over the staff. The
other was the growth in the size of the organizations leading to centralization of the
reward system on the justifiable ground of objectivity. In the new situation that had
emerged, when the weapons, which they had seen so successfully, being used for
controlling the staff, were taken away from the branch managers they suddenly found
themselves helpless and unable to cope with the problems. There was a general
bemoaning on the lack of authority and a clamor that the weapons be restored to them.
Alternative ways of dealing with the situation with equal effectiveness were not clear to
them.

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 In fact, the culture has become so deep-rooted that many branch managers firmly
believe that ‘control over people’ is the only effective way of getting work done. One
often hears managers saying, “What makes Officers staff work is that they know I can
write their confidential reports. They are therefore careful not to displease me. The
award staff have no such qualms, because they know what I say does not matter to their
career”. What is generally forgotten is that the composition of the work force has
considerably changed since the fifties and the values, attitudes, aspirations and
motivation of the younger and more qualified work force, which is found in the banking
industry today, presents a vastly different picture. When situations change the style of
leadership has also to change.

The training system’s response to this has been to project a new theory based on
‘participative style of leadership’ and adoption of ‘human relations’ approach. That the
branch managers would reject these approaches as theoretical is quite obvious as these
are sharply at variance with their own experiences in the fifties. What is relevant today is
not the propagation of a style of leadership but the exploration with the branch managers
of different styles of leadership in different situations. In fact, there is no single effective
leadership style. What is needed is flexibility in style - an ability to adapt oneself to
demands of different situations. When there is chaos and confusion and the group is
groping to find direction, a directional style of leadership may be effective. When one
deals with more matured staff, and the goals are relatively clear participative style may
yield more lasting results. The training system’s major responsibility would be to
effectively communicate this message to a large body of branch managers.

Staff management has over a period of time assumed a negative connotation. It is

generally equated to a fire fighting operation and conflicts have to be managed and
resolved. This is identified as the theme of staff management. The training system has
generally fallen into this trap of responding to the oft-repeated demands of the branch
managers - ‘How do I handle a difficult situation?” ‘What do you suggest I should do
when faced with a recalcitrant employee? etc. The positive aspect of generating a
congenial environment in which the employees’ work cohesively towards a common goal
to which they all jointly subscribe has generally been underplayed. If the survey findings

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on smaller offices have any relevance, the training system’s objective would have to be to
train the branch managers towards building such positive and constructive relationships.
This is a great challenge but with the tools and techniques now available to the training
system this is by no means an impossible task.

Training concerns people already employed with the organization and whose jobs
are so defined that we are able to identify what should be the desired job behaviors. The
focus on training programmes should be such, so as to enable the individual to perform
more effectively in his present job position. Training is needed when a person is hired
without the requisite skills, attitudes, or knowledge or after putting the person on the job,
we are able to identify his deficiencies that are possible to rectify through training. Even
in cases, where an employee may be performing very well, change in procedures,
materials, processes may stimulate the need for further training. Total Quality
Management (TQM), Small Group Activities (SGA) or Quality Circles (QC) concepts are
now calling for new areas of training for employees to make them functionally more
effective in their structured jobs.

The education of training is done in direct relation to the job. At the end of the
training, it is expected that there should be some identifiable changes in job behavior.
Where no such changes in job behavior could be identified, we expect there may be one
or more of the following problems: ineffective training programme, lack of linkage
between the training programme and the job or negative reinforcements in the work
situation.

12. ORGANIZATIONAL PHILOSOPHY AND PREPAREDNESS

Top management commitment: Quality circles constitute a management philosophy

characterized by belief in people and their development, open communication,
management by objectives, promoting self-esteem and a sense of achievement among
people. The implications of this management philosophy are that the top management
should be genuinely concerned about human resources development and the quality of
work life, that it should be willing to listen and follow through an employees’ suggestions

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that decision making should be decentralized and the corresponding authority and power
should be shared; that it should be willing to invest time and money on employee
development and training; that it should encourage people to try and experiment new
ideas, methods and procedures, and that it should set a standard of excellence for
organizational performance and the performance of employees. Developing a trusting
climate between employees and the management is a very essential prerequisite for the
success of quality circles. A diagnostic study into the prevailing management philosophy
will have to be made and whatever changes that are necessary in an organizational
structure and style will have to be brought about to strengthen the above qualities.

Middle management perception / apprehension - getting their acceptance: The

managers and executives at middle management will have to be adequately prepared and
properly oriented towards the philosophy of quality circles. It is possible that these
managers and executives may have apprehension or fears or wrong notions that quality
circles would expose their deficiencies, would dilute their authority and importance and
would enable supervisors to find fault with them for not finding solutions to problems
earlier. Once they have this fear, it is likely that they would kill the quality circles in a
subtle way. Thus, it is very necessary on the part of the top management to see that the
middle management executives and managers in various departments are properly
advised and mentally prepared to accept quality circle’s philosophy through adequate and
appropriate exposures. What is to be realized by them is that successful working of
quality circles would not only bring credit to their work areas but also afford them free
time for important work.

CONCLUSION
The functions of HRM are progressively molded by the rapidly increasing
knowledge of social sciences, changing profile of the work force, globalization,
competition and social justice. The HRM approach has to be flexible, innovative and
constantly responding to the challenges of the environment. It, has, therefore, to be
responsive to the human hopes and aspirations and situational changes both within and
outside the organization.

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