HRM is a distinctive approach. There are different ways by which it is possible to distinguish HRM from traditional personnel management. These are given in the following:
1. The first approach is by simple retitling of Personnel Management, as many companies did by renaming their Personnel Department as HR Department.
2. The second approach is by reconceptualizing and reorganizing personnel roles in line with the conceptual framework of Harvard Business School (1985). This could be done by subsuming personnel and labour relation activities in four policy areas, like employee influence, human resource flow, reward systems and work systems, differentiating HRM from personnel management concepts like employee relations, employee resourcing and employee development, pioneered by Institute of Personnel Management, U.K. Thus, it is apparent that HRM concept categorizes employee relations (industrial relations) as a separate strategic function, which falls under the traditional personnel management function.
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3. The third approach designates HRM as a distinctively different and new approach towards management. This approach integrates HRM into strategic management and emphasizes on full utilization of human resources.
As this stage, it is necessary to develop a definition of HRM. Let us now first define the term human resources. Human resource is the total knowledge, skills, creative abilities, talents, aptitudes, values, attitudes and beliefs of the people of an organization.
There are, however, differences of opinions among many experts as some of them consider human resource is not only the people who are part of the organization, i.e., the direct employees—it includes customers (TQM concepts) and others who are having a variety of other relationships with the organization. TQM is Total Quality Management.
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It is used as a tool for organizational improvement through the development of people and processes. Integrating the concept of human resource with management, we can define HRM as an approach to identify right people for the right job.
It also includes the process of socializing such identified people to integrate them with the organization, train them for increasing their functional skill, develop them for both identified and unidentified future roles, place them in right tasks and roles, motivate them to perform well and inculcate in them a sense of belongingness.
Within the HRM, there are two major activities—the first is concerned with the recruitment, selection, placement, compensation and appraisal of the human resources (personnel functions), more commonly termed as human resource utilization (HRU) function. The other group of functions is directed towards working with the existing human resources in order to improve their efficiency and effectiveness.
Such activities are also designed to enable the existing members of the organization to assume new roles and functions. These activities are concerned with the development of the human resources.