Concept & Boundaries of

Human Resource System

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Human Assets

Most Imp of all assets.

Expectations of People fast changing.
Cant be taken for granted any more
Term HR Two Concepts

1. People are a resource great asset to orgn.

This resource to be treated as HUMAN RESOURCE not
merely PEOPLE or PERSONNEL Resource.
Resource to be recognized & appreciated to be
treated differently than other material resources
UNLIMITED POTENTIAL

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Human Assets
2. Another concept of HR system;

More an orgn invests in HR Greater the

RETURN from the investment.
Continuous investment possibility of
substantial returns

Another aspect of Investment in HR;

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Obligation of orgns towards society

contribution towards development of people
New Value Treating People as Human Beings
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Human Assets
PERSONNEL Mgmt
Narrow view of
Human Motivation
By comforts &
salary
More emphasis on
salary & Benefits
admn to avoid dissatisfaction

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NOW
People have their
own:
NEEDS
MOTIVATIONS
EXPECTATIONS
Their contribution
much more than
any other resource

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Implications 0f HR Systems
Consists of several dimensions or

components which are unique Per-se

though related to each other need
to be treated as Unique Entities.
Elements or components are interrelated & form a net work
reinforcing each : feed back loops
from one sub-system to the other
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Implications 0f HR Systems
Conceived as an open system

interacts with other systems in the

orgn e.g. info system, budgetary
system, etc.
Is Unique with its own Dynamics,
rules procedures & operation
distinct from other systems requires
special consideration
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Personnel Function & HR

PF seen as an independent function in

the orgn, whereas HRD/HRS viewed as

a sub-system of a larger system (orgn)
all are inter-related/interdependent.
Hence designing of HRS cant be
considered in isolation.
HRS itself an organic whole with
various sub-functions
Exhibit 1.1 Page 3
PF & HRS : Comparison

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PF & HRS A Comparison

1. PF is an independent

function.
2. There are several sub
functions in it.
3. Service function.
4. Reactive stance.

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1. HRS is a sub-system of

a larger system (Orgn).

2. HRS is an organic
whole; all the parts are
interlinked.
3. Support
function/development
of enabling
capabilities.
4. Proactive stance

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PF & HRS A Comparison

5. Responsibility of Per

Deptt.
6. Confined to salary &
job admn.
7. Admn of the
Personnel

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5. Responsibility is shared

by line mgrs.
6. Mgmt of jobs & systems
in the field of Per. &
Mgmt of the process of
development of TOTAL
orgn.
Main emphasis on
Processes
7. Development of People
competencies &
process problems of the
orgn.

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PF & HRS A Comparison

8. Contribution to the

maximization of
efficiency
9. Basis of motivation
Salary & Rewards.

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8. Emphasis on process

values like Trust,

openness, exploration,
managing conflicts &
reducing Human
wastage thru high
motivation in orgn.
9. Basis of motivationjob challenges,
creativity, &
opportunities for
development.

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PF & HRS A Comparison

10.Emphasis on job
design & salary
admn.

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10.Emphasis on

developing the
orgn, its people &
their
competencies.

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Core of HRS/HRD
Developing individuals
Developing stronger dyads i.e. two person

groups employee & his boss for

increasing collaboration.
Developing stronger Teams committees,
task forces, etc for effective decision making
Developing the orgn;
Capability Building
Conducive climate
Self renewal mechanism To adjust & proact &
developing relevant processes.

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4 Partners of Development
The Person or Role
Immediate boss of the person
HRM Deptt
The Organization
Emphasis of HRM depends on emphasis on
Development
Development : Soul of HRM
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Dimensions of mgmt of HR
1. Analyzing the Role;

Task analysis
Key performance areas
Critical attributes
Job evaluation

2. Matching the Role & the Person;

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Selection/recttment
Placement
potential appraisal
Promotion
Career planning & succession planning

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Dimensions of mgmt of HR
3. Developing the persons in the role;

Performance appraisal
Feedback & counseling
Mentoring
Career development
Training

4. Developing the role for the person

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Job rotation
Job enrichment
Job design/job redesign
Role effectiveness & efficacy

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Dimensions of mgmt of HR
5. Developing Equitability;

Mgmt of salary & amenities

Mgmt of incentives & rewards
Standardizing & administering procedures

6. Developing self-renewing capability

Organizing development : enhancing capabilities,

developing values of Trust, Openness, Collaboration,
communication, etc
HRM research
Orgnl learning
Developing culture & climate

7. Coping with collective power;

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Functions of HRS
Dynamic concept with multiple functions
besides administrating pers functions.
1. Providing support to other systems
2. Development of systems & research
3. Management of HR
4. Developing of competency of various
kinds
5. Catering to the process/business needs
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Functions of HRS
1. Supportive Role: to strengthen the orgn &
support to other functions

Strengthen operating & executive levels to

undertake PF e.g. IR, Perf appraisal. R&R,
promotion, t&d, etc
Consolidating existing strengths to search &
identify such strengths e.g. atmosphere of
informality, open door policy, etc.

2. Development of Systems & research;

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in the areas of people & their problems, orgnl

dynamics, various sub-functions, etc
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Functions of HRS
3. Managerial Role;

Planning for future manpower needs

Getting the best talent available
Utilizing selected people
Retaining, motivating & integrating people
Assessing people for their contribution
Planning growth of people
Developing healthy IR
Job analysis & evaluation- critical jobs, right fit
of jobs & people
Facilitating key orgnl task processes- linkages
of HRS with Prody, quality, exports, etc

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Functions of HRS

4. Role of Developing competence

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Technical competence
Mgrl competence
Process competence e.g. dealing with various
day to day problems like conflicts, problems of
commitment & cooperation, etc
Helping competence perf review, feedback &
counseling
Coping competencies- to cope with problems
effectively lest they get frustrated useful for
orgn & healthy development of those working in
it
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Functions of HRS
5. Process Role;

Process sensitivities/ process values

Attention to orgnl health developing capability of orgn
for growth & expansion & face future challenges
Develop SELF-RENEWAL mechanism for making
continuous impact on environment;

a. Creating necessary culture & values in the orgn- present &

future

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People Development healthy development of people

Risk taking
Enhance orgnl capability
Goal orientation
Trust & openness

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Functions of HRS

Humaneness
Mutuality & collaboration

b. Diagnosis like level of motivation, team

c.

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work, communication, induction process

effectiveness, etc
Interventions based on diagnosis HR to
suggest and/or design interventions

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Structuring the System HRS

Consist of several interrelated
components/sub systems:
1. Job & Salary

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Job analysis
Job description
Job evaluation
Critical attributes of job holder

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Structuring the System HRS

Job description & Role
Job description

Role description;
description
limitations
Expectations from the
detailed description of all
aspects no specific
FOCUS on critical aspects
Focus on present job
not what in future
cant be used for perf
appraisal
Possible to select KPAsimportant aspects of jobcontribution of job to orgn

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Role holder
Prepared by Role
Occupants & his role
senders sitting
together

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Structuring the System HRS

Job Evaluation analyzing job for classification into
levels & salary grades against pre-fixed criteria
Critical Attributes Analysis Analysis of job in
terms of critical attributes/qualities useful for
selection, training, promotion, career planning, etc

Salary Admn:

Job evaluation & Perf appraisal

Equitable salary employee motivation
Variable increments linking with Perf Appraisal,
Potential appraisal & linked with Job analysis

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Structuring the System HRS

2. Planning & Admn HRSs admn consists of :

Manpower planning
Assessment
Manpower Audit- to bench mark
Recruitment & Placement based on Attributes
Promotion based on Potential Appraisal &
Career Planning critical analysis very useful
Career Development & Career Planning to help
new employees & plan with senior employees
their specific
CAREER PATHS
Information Storage & retrieval - HRIS

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Structuring the System HRS

3. HRD

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Training based on perf appraisal & potential

appraisal.
Orgn Development Diagnosis of problems of HR
& taking steps to remedy e.g. team bldg,
morale, motivation & developing healthy
VALUES.
Perf feedback & counseling
System development & research HRS to be
continuously designed, tested & reviewed and
Analyzed
360 Feedback Multi source feedback system
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Structuring the System HRS

4. Worker Affairs/Work Life Systems

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IR & Unions
Worker Welfare
Work Design
Worker Participation
Worker Development

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Changing Boundaries of the

HRS
Lifting up HR position to Director level
Recognition of People as a resource &
partners in business e.g. mid 70s in
L&T HRD Deptt redesigned
New Roles of HR functionaries:
Reorgn & Restructuring downsizing,
right sizing, upsizing, flat structuring,
outsourcing, etc
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Changing Boundaries of the

HRS
Managing mergers & acquisitions realigning &

redrafting HR policies & processes

Initiating & managing quality initiatives- quality
circles, small group activities, ISO certifications,
etc
Conducting surveys climate surveys, employee
satisfaction surveys, bench marking surveys, etc
Restructuring salary & reward systems
compensation surveys, ESOPS, Perf linked pay.
Pay for Perf

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Changing Boundaries of the

HRS
Enhanced emphasis on recttment or
placement outsourcing, etc
Introducing new technologies of trg elearning, on line education, web-based
learning , etc
Starting of corporate universities & in
house trg institutes continuous edu &
competency building
Introduction of 360 feed back
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Changing Boundaries of the

HRS

Use of ACs or DCs

Mentoring & coaching
Trg of all employees operators, workers,
etc thru multi-skilling, etc
Leadership development at all levels.
Participation in strategic thinking,
business planning, mergers,
acquisitions, etc.
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Concept & Boundaries of HRS

Recent experiences in West
Most HRS modules emphasize
business linkages of HR & how HR
impacts business goals
1. Balanced Score Card Approach (Robert
Kaplan & David Norton- 1992/93)

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Business to succeed in long run

expectations of 3 stakeholders
EMPLOYEES, CUSTOMERS &
SHAREHOLDERS need to be satisfied.
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Concept & Boundaries of HRS

Recent experiences in West
All the 3 are interrelated;
Employee attitudes & behavior influences

Customer Satisfaction & Retention.

Customer satisfaction & retention influences
shareholder satisfaction & investments.
Shareholder satisfaction affects Employee
satisfaction thru bonuses, ESOP, Other
investments on employees, etc
If, even, one of the 3 components break
down
Performance Drops

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Concept & Boundaries of HRS

Recent experiences in West
2. Strategic HR Framework (Ulrich & Lake- 1990):
Aims to leverage and/or align HR practices to build

critical orgnl capabilities that enables orgn achieve

GOALS.
Offers specific tools & paths to identify How to
Leverage its HR practices to succeed .
Sample questions asked for each of the 3 components
in aligning HR practices with business strategy ;
a) Business Strategy
What is the business strategy of the company
How to win in the market place based on customer
preferences, competition, govt policies, supplier
situation, etc

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Concept & Boundaries of HRS

Recent experiences in West
b) Orgnl Capabilities
What are the critical orgnl capabilities to
implement business strategy e.g. speed,
innovation, quality, competition, mind set, etc.
c) HR practices
How to design & deliver HR practices to build
orgnl capabilities
How to motivate & build leadership capabilities
and empower people to contribute to the fullest
extent to the development of orgnl capabilities.

3. Integrative Framework (Yeung and

Berman 1997):
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Concept & Boundaries of HRS

Recent experiences in West
Identifies 3 paths for HR practices to
contribute to business performance;

Bldg orgnl capabilities

Improving employee satisfaction
Shaping customer & shareholder satisfaction

1st Linkage Chain: HR practices are key

DRIVERS a) Bldg orgnl capabilities, b)

enhancing & shaping employee satisfaction
and c) impacting customer satisfaction.

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Concept & Boundaries of HRS

Recent experiences in West
2nd Linkage Chain: Orgnl capabilities become

key DRIVERS for- a) implementing business

strategy, b) impact customer satisfaction
and c) contribute to shareholder satisfaction.
3 Clusters of Measures of HR effectiveness
as per integrative Model
i. Internal operational HR Measures e.g. efficiency,
quality, speed, cost, etc.
ii. Internal strategic HR Measures e.g. how effective
to build orgnl capability & increase employee
satisfaction. For Example

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Concept & Boundaries of HRS

Recent experiences in West
In Eastman Kotak 3 critical orgnl
capabilities identified;

a) Leadership effectiveness (measured by 360

assessment).
b) Work force competencies (measured by % of
employees with demonstrated development
plans no of hrs devoted to development,result of development actions measured by planned action, reaction, learning, on the job
behaviour and business results
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Concept & Boundaries of HRS

Recent experiences in West
c) Performance based culture (measured
thru surveys & performance tracking).

Motorola developed Individual

Dignity Entitlement based on six

questions (Page 26)
To ensure that HR practices are adding
value thru more committed &
contented work force

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Concept & Boundaries of HRS

Recent experiences in West
iii. External strategic measures How well HR
practices increase Customer & Shareholder
satisfaction.

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Research Results Effective HR

Practices Cos adopt
1. Financial incentives for excellent performance 2.
3.
4.
5.
6.
7.
8.

culture of Meritocracy.
Work practices that Motivate employee effort &
capture benefits of know-how & skill
Rigorous selection & selectivity in recruitment.
Higher than average wages
ESOP
Extensive info sharing
Decentralization of decision making &
empowerment
Work orgn based on Self Managing Teams

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Research Results Effective HR

Practices cos adopt
9. High investment in trg & skill development
10.Having people do multiple jobs & job rotation
11. Elimination of status symbols
12.A more compressed distribution of salaries
across & within levels.
13.Promotions from within talent pipeline
14.A long term business perspective.
15.Measurement /deliverables of HR practices &
Policy implementation
16.A coherent view of employment relations
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Research EvidenceRelationship between HRS &

Performance
Survey of 150 of Forbe 500 Cos;
Strong positive correlation between HR
Progressiveness (HRP) & financial performance.

Study of 592 Fortune 1000 Cos on 6

innovative HRM practices;

More the innovative practices, More the people

oriented philosophy and MORE EFFECTIVE THE
ORGN Av return on Equity 11% higher than
those not using any of the practices

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Research EvidenceRelationship between HRS &

Performance
Firms scoring higher on HR Qlty Index

consistently out performed those firms

with lower index on 4 financial
measures:
Market/book value ratio
Prody ratio i.e. sale/employee
Market value and
Sales

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Why Orgns undergo HR

Transformation
1. Business change:

Acquisitions & mergers

New technology
Internationalization
New products & new customer requirements triggering
change

2. Corporate leaders who are Champions in

3.
4.

bringing about change

Devolution of HRM responsibilities to line mgmt.
Facilitation of other change processes to take
roots

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Conditions for HR strategy

effectiveness
1. Understanding of links between HRM and
2.
3.
4.
5.

business needs.
Diagnostic Skills to Audit
Taking stock of existing skill base in the
light of anticipated changes.
Sensitivity to changing internal situation
during major periods of change.
Political skills to mobilize internal and
external forces to change, creating
increasingly Self-reinforcing patterns of
HRM

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Conclusion
HRS should address human
processes that enhance

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Competency building (Ability).

Commitment building )Willingness).
Culture building (Ambience).
For lasting impact

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