23 Human Resource Management: Concept and Trends

23.1 What is Human Resource Management?

Human resource management (HRM) is the process of acquiring, training, appraising, and compensating employees, and of attending to their labour relations, health and safety, and fairness concerns (dessler2020?). The Indian standard, K. Aswathappa, defines HRM as “the management of people at work to achieve organisational and individual goals through better utilisation of human resources” (aswathappa2020?).

Three working definitions to keep in mind:

Three Working Definitions

Author	Definition	What it foregrounds
Edwin B. Flippo	“Planning, organising, directing, and controlling of the procurement, development, compensation, integration, maintenance and separation of human resources.”	Process
Gary Dessler	“The process of acquiring, training, appraising, and compensating employees, and of attending to their labour relations, health and safety, and fairness concerns.”	Comprehensive functions
K. Aswathappa	“The management of people at work to achieve organisational and individual goals.”	Indian standard

HRM treats people as a resource — but a special kind of resource that thinks, feels and chooses. The discipline blends economics, psychology, sociology and law.

23.1.1 Features of HRM

Six Features of HRM

Feature	What it means
Pervasive	Required in every organisation, every level
People-oriented	Centres on human beings, not machines
Action-oriented	Focused on solving people problems, not paperwork
Continuous	Not a one-shot exercise — runs through the employee lifecycle
Integrative	Aligns individual, organisational and societal goals
Development-oriented	Aims to grow employee capability, not only fill seats

23.2 Evolution of HRM

The discipline has passed through five distinct phases (aswathappa2020?).

Five Phases in the Evolution of HRM

Phase	Period	Pre-occupation	Anchor
Industrial revolution	1700s–1800s	Labour as a factor of production	F.W. Taylor — scientific management
Trade union movement	Late 1800s–1920s	Worker grievances, collective bargaining	Industrial Relations Act 1926
Social responsibility / paternalism	1900–1920s	Welfare officers, employer responsibility	Robert Owen, J.N. Tata
Scientific management & welfare era	1920s–1950s	Time-motion + welfare; Hawthorne studies	Taylor, Mayo
HR / Strategic HRM era	1980s–today	People as strategic asset; “human resource” term replaces “personnel”	Beer, Lawrence (Harvard model); Fombrun (Michigan model)

The shift from “personnel management” to “human resource management” was not just a renaming. It reflected a re-conception of people as capital to be developed rather than cost to be minimised.

23.2.1 HRM vs Personnel Management

HRM vs Personnel Management

Feature	Personnel Management	HRM
Approach	Reactive, administrative	Proactive, strategic
Focus	Compliance, control	Commitment, development
Philosophy	People as cost	People as asset
Scope	Limited to operational tasks	Broader — strategic and tactical
Decision speed	Slow, hierarchical	Faster, devolved
Communication	Indirect, formal	Direct, two-way
Reward	Job evaluation, fixed pay	Performance-linked, variable

23.3 Functions / Scope of HRM

Aswathappa groups HRM into four functional areas; Dessler uses seven. Both lists overlap. The compact view:

Four Functional Areas of HRM (Aswathappa)

Area	What it covers
Acquiring	HR planning, recruitment, selection, placement, induction
Developing	Training, development, career planning, performance appraisal
Compensating	Job evaluation, wage and salary administration, incentives, benefits, social security
Maintaining	Health, safety, welfare, employee relations, separation

flowchart LR
  A[Acquiring<br/>HR Planning · Recruitment · Selection] --> D[Developing<br/>Training · Appraisal · Career]
  D --> C[Compensating<br/>Job Eval · Pay · Benefits]
  C --> M[Maintaining<br/>Health · Safety · Welfare · Relations]
  M -. recurring cycle .-> A
  style A fill:#E3F2FD,stroke:#1565C0
  style D fill:#FFF3E0,stroke:#EF6C00
  style C fill:#FCE4EC,stroke:#AD1457
  style M fill:#E8F5E9,stroke:#1B5E20

23.4 Two Models of HRM

The 1980s produced two foundational models that still anchor textbook treatments.

Two Foundational HRM Models

Model	Authors	Core idea
Harvard model	Beer, Spector, Lawrence, Mills, Walton (1984)	Stakeholders + situational factors → HR policy choices → outcomes (commitment, congruence, competence, cost-effectiveness — the four Cs) → long-term consequences
Michigan / matching model	Fombrun, Tichy, Devanna (1984)	HR strategy must “match” business strategy. Four HR cycle elements: selection, appraisal, rewards, development

The Harvard model is more humanistic — stakeholder-balanced. The Michigan model is more strategic — fits HR to the business plan.

23.4.1 Strategic HRM

Strategic HRM (SHRM) treats people decisions as inseparable from strategic decisions (dessler2020?). Three principles:

Vertical alignment — HR practices fit the business strategy.
Horizontal alignment — HR practices fit each other (recruitment, training, pay all consistent).
Bundling — practices reinforce each other (high-performance work systems).

A useful empirical anchor is the Pfeffer 7 practices of high-performance work systems: employment security, selective hiring, self-managed teams, performance-contingent pay, extensive training, reduced status differences, sharing information (pfeffer1998?).

23.5 HRM in India — Statutory Backbone

Indian Labour Code Consolidation (2019–2020)

New Code	What it consolidates	Year
Code on Wages	Minimum Wages Act, Equal Remuneration Act, Payment of Wages Act, Payment of Bonus Act	2019
Industrial Relations Code	Trade Unions Act, Industrial Employment Standing Orders Act, Industrial Disputes Act	2020
Code on Social Security	EPF, ESI, Maternity Benefit, Gratuity, Building Workers, Unorganised Workers	2020
OSH Code	Factories Act, Mines Act, Plantation Labour Act, Contract Labour Act, and 10 others	2020

Four labour codes — passed between 2019 and 2020 — consolidate 29 central labour statutes. Their full implementation has been staggered.

Other landmark Indian HR statutes — covered in earlier topics — include the Companies Act 2013 (§135 CSR, §177(9) vigil), POSH Act 2013, RPwD Act 2016, and the Maternity Benefit (Amendment) Act 2017.

23.6 Current Trends and Emerging Themes

Eight Major Trends in Contemporary HRM

Trend	What is happening
HR analytics / People analytics	Using data to drive HR decisions — attrition prediction, hiring quality, engagement
Gig and contingent workforce	Rise of platform-based, project-based work; legal grey area
Work from anywhere / Hybrid work	Post-COVID normalisation; redesign of policies and culture
Diversity, Equity and Inclusion (DEI)	Active management of representation and inclusion (covered in topic 20)
Employee experience (EX)	Treating the employee like a customer — journey design
AI in HR	LLM-based interviewing, performance dashboards, generative HRBP assistants
Wellbeing and mental health	Beyond physical safety to mental, social, financial wellbeing
ESG and human capital reporting	Mandatory reporting of human-capital metrics; linkage to ESG ratings

The Society for Human Resource Management (SHRM) and India’s National HRD Network are the two professional bodies you may encounter in NTA stems.

23.7 Practice Questions

Q 01 Definition Easy

Which of the following is not a typical feature of HRM as articulated in modern textbooks?

APeople-oriented
BContinuous through employee lifecycle
CPervasive in every organisation
DLimited to clerical record-keeping

View solution

Correct Option: D

Clerical record-keeping is personnel administration, not HRM. HRM is action- and development-oriented.

Q 02 Personnel vs HRM Medium

A key conceptual difference between Personnel Management and HRM is that:

AHRM treats people as cost; PM treats people as asset
BHRM treats people as asset; PM treats people as cost
CPM is proactive; HRM is reactive
DThere is no difference — they are synonyms

View solution

Correct Option: B

HRM = strategic, proactive, treats people as asset. PM = reactive, administrative, treats people as cost.

Q 03 Harvard Model Medium

The "Four Cs" — commitment, congruence, competence, cost-effectiveness — appear in which HRM framework?

AMichigan / matching model
BHarvard model
CStorey's hard-soft model
DPfeffer's seven practices

View solution

Correct Option: B

Harvard model (Beer et al., 1984) — outcomes measured on commitment, congruence, competence, cost-effectiveness.

Q 04 Functions Medium

Match the functional area of HRM with an activity within it (Aswathappa):

(i)	Acquiring	(a)	Welfare, safety and health
(ii)	Developing	(b)	Job evaluation and salary administration
(iii)	Compensating	(c)	Recruitment and selection
(iv)	Maintaining	(d)	Training and performance appraisal

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

View solution

Correct Option: A

Acquiring → recruitment & selection; Developing → training & appraisal; Compensating → job evaluation & pay; Maintaining → welfare, safety, relations.

Q 05 SHRM Medium

Strategic HRM emphasises three forms of alignment. Which is not one of them?

AVertical alignment with business strategy
BHorizontal alignment of HR practices with one another
CDiagonal alignment across competitors
DBundling of mutually reinforcing practices

View solution

Correct Option: C

SHRM speaks of vertical, horizontal and bundling alignment. Diagonal alignment is not a recognised category.

Q 06 Codes Medium

India's four new labour codes (2019–2020) consolidate older statutes. Which code consolidates the Trade Unions Act, the Industrial Disputes Act, and the Industrial Employment (Standing Orders) Act?

ACode on Wages
BIndustrial Relations Code
CCode on Social Security
DOSH Code

View solution

Correct Option: B

The Industrial Relations Code, 2020 consolidates the Trade Unions Act, Industrial Disputes Act, and Industrial Employment (Standing Orders) Act.

Q 07 Pfeffer Medium

Jeffrey Pfeffer's "seven practices" of high-performance work systems include:

AEmployment security
BSelective hiring
CReduced status differences
DAll of the above

View solution

Correct Option: D

Pfeffer's seven: employment security, selective hiring, self-managed teams, performance-contingent pay, extensive training, reduced status differences, information sharing.

Q 08 Trends Easy

"People analytics" in HRM refers to:

AManual record-keeping of employee files
BThe systematic use of data and analytical tools to drive HR decisions
CA type of psychometric test
DA union-management negotiation technique

View solution

Correct Option: B

People analytics uses HR data + statistical / ML tools to predict attrition, improve hiring, design pay — replacing intuition with evidence.

Quick recall

HRM = managing people at work to achieve organisational and individual goals (Aswathappa) / acquiring, training, appraising, compensating, attending to relations (Dessler).
Five evolution phases: Industrial Revolution → Trade unions → Social responsibility → Scientific management & welfare → HRM / SHRM era.
Personnel vs HRM: PM = reactive, cost, control; HRM = proactive, asset, commitment.
Aswathappa’s four functional areas: Acquiring · Developing · Compensating · Maintaining.
Two foundational models: Harvard (Beer et al., 1984 — Four Cs) and Michigan / matching (Fombrun et al., 1984 — selection-appraisal-rewards-development).
SHRM alignments: vertical · horizontal · bundling. Pfeffer’s seven HPWS practices.
India: four new labour codes (2019–2020): Wages · IR · Social Security · OSH.
Trends: people analytics, gig work, hybrid, DEI, EX, AI in HR, wellbeing, ESG / human-capital reporting.