HUMAN RESOURCE MANAGEMENT N.O.T.E.S UNIT - 1 LESSON 2: INTRODUCTION TO HUMAN RESOURCE MANAGEMENT

UNIVERSITY OF DELHI / SCHOOL OF OPEN LEARNING 

B.Com. (Programme) / B.Com. (Hons.)

HUMAN RESOURCE MANAGEMENT

N.O.T.E.S 

UNIT - 1

LESSON 2: INTRODUCTION TO HUMAN RESOURCE MANAGEMENT

INTRODUCTION : 

- Managing a diverse workforce in a company has always been challenging.

- HR management difficulties have increased due to rapid technological advancements and frequent software changes.

- Ensuring work-life balance and managing virtual organizations are additional challenges.

- The main challenge of HRM is to effectively utilize time, money, and resources to create an efficient HR management system.

- The chapter focuses on emerging challenges in HRM, including workplace diversity, employee empowerment, downsizing, voluntary retirement schemes (VRS), and work-life balance

 DIVERSITY AT WORKPLACE : 

   Meaning of Workplace Diversity

 - Workplace diversity, which involves recruiting, training, and valuing individuals from different backgrounds, is a growing phenomenon in companies worldwide.

- Diversity encompasses various aspects, including race, ethnicity, gender, age, culture, religion, disabilities, and sexual orientation, as well as differences in regional backgrounds, education, personalities, skills, experiences, and knowledge bases.

- Organizations should strive to have diverse workforces at all levels, not just in recruitment but also in retention.

- Studies show that companies embracing diversity and inclusion statistically outperform their peers.

- Greater diversity in the workforce leads to increased profitability, value creation, and financial performance, with a positive correlation between diverse leadership and financial success.

- The benefits of workforce diversity include fresh perspectives, quick problem-solving, better decision-making, a wider talent pool, employee excellence, increased profits, new business prospects, overcoming biases, improved company culture, and fostering creativity.

Benefits of Workforce Diversity

- New perspectives: Diversity brings fresh perspectives to every aspect of the business, leading to quick problem-solving and better decision-making.

- Wider talent pool: Diverse companies attract a wider range of motivated and talented candidates, giving them a competitive edge in attracting top talent.

- Employee excellence: A diverse work environment leads to happier, more productive employees, reduced turnover, and better performance. Redressal mechanisms for diversity issues also contribute to employee satisfaction.

- Increased profits: Ethical and racial management, along with workplace diversity, reduces employee turnover and increases productivity, benefiting the organization financially.

- New business prospects: Diversity helps overcome language barriers and connects the business to native customer bases, expanding market reach and reputation.

- Fight psychological biases: Workplace diversity challenges biases, promotes appreciation for differences, and fosters a collaborative and inclusive work environment.

- Improves company culture: Diversity enhances company culture and creates a competitive edge by reflecting the beliefs and actions of employees.

- Creativity: Workplace diversity fosters innovation by bringing unique perspectives, facilitating cross-communication, and promoting varied skills and experiences within teams.

                         Overall, workplace diversity offers numerous benefits across all aspects of business operations, contributing to organizational success, profitability, employee satisfaction, and market reputation.

Need/Rationale for Workforce Diversity

- Lack of diversity in an organization leads to unsatisfactory employee experiences, alienation, and reluctance to report discrimination, negatively impacting company culture, talent pool, and productivity.

- Limited perspectives result from a lack of diversity, hindering innovation, creativity, and the ability to consider diverse perspectives in decision-making, product development, and expanding into new markets.

- Lack of diversity can lead to a lack of motivation among employees, as they may feel alienated without role models and limited opportunities for growth and success.

 

Challenges of Workforce Diversity

- Conflict among employees: Diverse backgrounds and viewpoints can lead to disagreements and conflicts that affect productivity.

- Gender preferences: Increasing the female workforce requires accommodating flexible work schedules, childcare facilities, maternity leave, and considerations for transfers.

- Cultural conflicts: Exclusion and lack of acceptance among diverse cultural groups can harm organizational performance and demotivate employees.

- Resistance to change: Some groups may resist changes brought about by diversity and innovation due to their attachment to traditional ways of working.

- Communication obstructions: Communication difficulties may arise due to diverse backgrounds and communication styles, leading to miscommunication.

- The need for training: Employees require training on interacting with diverse individuals, fostering inclusivity, and recognizing the value of diversity in the workplace.

                          Workforce diversity is essential to address the negative consequences of its absence, promote innovation and creativity, create an inclusive and motivated workforce, and overcome challenges through effective communication and training.

EMPLOYEE EMPOWERMENT : 

Meaning of Employee Empowerment

- Employee empowerment is the process of granting employees power, authority, responsibility, resources, and freedom to make decisions and solve work-related problems.

- It involves giving employees the means and ability to take action, encouraging them to utilize their full potential and become self-directed and self-controlled.

- Empowerment includes techniques such as participation in decision-making and the use of self-managed teams.

- Employee empowerment is characterized by employees taking ownership of their jobs, measuring and influencing their individual and organizational success.

- Establishing a supportive, empowered environment requires collaboration, mutual trust, risk-taking, and clear expectations and guidelines.

Need for Employee Empowerment

- The increasing pace of change, turbulent business environments, and changing customer expectations require a flexible and speedy response that traditional command and control models cannot provide.

- Organizations with new structures, influenced by downsizing and decentralization, require empowering employees to assume decentralized power and achieve coordination and control.

- Employees have higher-level needs and a desire for satisfaction, which can be met through empowerment, leading to motivation and improved performance.

- Empowerment provides opportunities for employees to develop their competencies, serving as a source of managerial talent for the organization.

Employee empowerment is necessary to adapt to changing business dynamics, meet employee needs, and foster a motivated and skilled workforce capable of making informed decisions and contributing to organizational success.

Benefits of Employee Empowerment

- Motivated employees: Empowerment leads to increased motivation as employees have control over their work and find it more engaging.

- Improved creativity: Empowered employees are more likely to be creative and committed, contributing to innovative solutions and ideas.

- Healthy organizational relationships: Empowerment fosters a culture of openness and trust, improving relationships between supervisors and employees.

- Quality production: Employee empowerment enhances the quality of goods and services produced by employees.

- Recognition of employees: Empowerment satisfies employees' need for recognition, challenging work, and responsibility.

- Reduced costs: Empowered employees make their own decisions, reducing the burden on top management, minimizing the need for middle-level managers, and reducing wasteful resource expenditure.

Disadvantages of Employee Empowerment

- Misuse of power: Some employees may misuse their authority for personal gain, leading to losses for the company.

- Additional training costs: Empowerment requires additional training, resulting in increased costs for the organization.

- Poor knowledge: Lack of clarity in processes and decision-making can lead to poor decisions and conflicts among team members.

- Breach of confidentiality: Inappropriate sharing of confidential information by employees without understanding its sensitivity can have serious consequences.

     Employee empowerment offers numerous benefits such as motivation, creativity, improved relationships, quality production, recognition, and cost reduction. However, it also carries risks of power misuse, training costs, poor decision-making, and breaches of confidentiality, which organizations need to address and mitigate.

IN-TEXT QUESTIONS

1. __________________is the process of giving employees in the organization the power, authority, responsibility, resources, and freedom to take decisions and solve work-related problems.

2. Workplace diversity creates hubs of innovation. True / False

3. Which of the following is a challenge in applying workforce diversity in the organization?

a) Creativity               b) Competitive Advantage

c) Cultural Conflicts  d) Wider talent pool

4. Employee Empowerment can be promoted by performing delegation of authority. True/ False

5. Breach of confidentiality is an advantage of employee empowerment. True/False

ANSWERS : 

1. Empowerment 

2. True. Workplace diversity creates hubs of innovation.

3. c) Cultural Conflicts

4. True. Employee empowerment can be promoted by performing delegation of authority.

5. False. Breach of confidentiality is a disadvantage, not an advantage, of employee empowerment.

DOWNSIZING : 

Definition and Purpose:

   - Downsizing is the planned elimination of positions and jobs to reduce the size of the organization.

   - It involves disposing of non-core activities to improve work efficiency.

 Reasons for Downsizing:

   - Overstaffing caused by faulty human resource planning.

   - Technological advances leading to changes in the man-machine ratio.

   - Outsourcing of business functions, resulting in surplus employees.

 Disadvantages of Downsizing:

   - Insecurity and low morale among employees, leading to high stress.

   - Erosion of the skill base as competent employees leave the organization.

   - Difficulty in implementing performance improvement practices due to job insecurity.

Overall, downsizing can have negative effects on employee morale, skills, and job security, making its implementation challenging

Types of Downsizing

 - Reducing the workforce: This involves layoffs, early retirement, and eliminating unnecessary positions.

   - Redesigning work: Tasks and responsibilities are reassigned or merged to eliminate job vacancies.

 Role of Human Resources in Downsizing

 - Exploring alternatives before downsizing, such as work-sharing or redeployment.

   - Communicating effectively to minimize the negative effects of rumors and keep employees informed.

   - Convincing trade unions and gaining their support for downsizing.

   - Assisting laid-off employees with programs for transitioning, retirement benefits, job search, etc.

 Rightsizing and Wrong Sizing:

   - Rightsizing aims to align human resources with organizational strategy and goals.

   - Wrong sizing occurs when positions are eliminated without assessing the essential tasks needed for organizational performance.

In summary, downsizing can involve reducing the workforce or redesigning work, and human resources play a crucial role in implementing downsizing effectively while minimizing negative impacts on employees. Rightsizing ensures a proper alignment of resources, while wrong sizing can result in the loss of key positions and personnel.

VOLUNTARY RETIREMENT SCHEME (VRS)

Retirement Age and VRS

Most organizations have a retirement age of 60 or 58, not considering individual capacity.

VRS allows individuals under the scheme to retire voluntarily in their 40s or 50s.

VRS in India:

VRS is commonly used in India for downsizing, reducing staff strength, and minimizing costs.

It involves a mutual agreement between the organization and employees for voluntary retirement with agreed compensation.

Adoption and Benefits:

India adopted VRS after the policy of economic liberalization, globalization, and privatization in 1991.

VRS reduces the wage bill for organizations and offers benefits for both employees and employers.

Issues in VRS

1. Identifying the Need:

   - Organizations must assess if VRS is necessary by considering surplus manpower that cannot be utilized in the future.

   - Determine the type of employees to be covered and those willing to opt for VRS.

 EXAMPLE: A manufacturing company assesses its production capacity and determines that due to automation and technological advancements, there is excess manpower that cannot be utilized effectively in the future.

2. Cost Benefit Analysis:

   - Carefully analyze the implications of VRS for the organization.

   - VRS is not a guaranteed solution and can have drawbacks.

   - If targeted employees do not opt for VRS, morale may decrease.

   - There is a risk of losing talented individuals who may be unemployable elsewhere.

EXAMPLE: A telecommunications company conducts a thorough analysis of the financial implications of implementing a voluntary retirement scheme (VRS), considering factors such as severance pay, pension obligations, and potential impact on employee morale.

3. Designing the Scheme:

   - Decide which employees to include in the scheme based on their future relevance.

   - Determine the compensation package to be offered, considering factors like years of service and retirement age.

   - Public sector norms may involve three months' salary per year of service or 45 days' salary per year of service in banks.

EXAMPLE: A government organization decides to offer VRS to employees nearing retirement age or in positions that will become obsolete due to administrative reforms. They determine a compensation package based on years of service, offering benefits such as extended health coverage and early pension options.

4. Convincing Trade Unions:

   - Gaining a trade union agreement is crucial for the success of VRS.

   - Management should explain the pros and cons of VRS and suggest alternatives for employees who opt for it.

EXAMPLE: A manufacturing union holds negotiations with the management of an automobile company regarding the implementation of a VRS. The management presents the advantages of the scheme, such as improved productivity and cost savings, while discussing alternative job opportunities for employees who opt for VRS.

5. Rehabilitating Employees:

   - Organizations can create rehabilitation packages for employees under VRS.

   - These packages may include redeployment through further training.

   - The government of India has established employee assistance centers in various cities to provide training to displaced workers.

EXAMPLE:

A banking institution provides rehabilitation packages to employees who choose VRS, including financial counseling, job placement assistance, and access to skill development programs. The bank collaborates with external training institutes to offer retraining options for employees seeking career transitions.

In summary, the main issues in VRS include identifying the need, conducting a cost-benefit analysis, designing the scheme, convincing trade unions, and offering rehabilitation options for employees.

Reasons for offering VRS

1. Recession in the Economy:

   - VRS is chosen as a cost-cutting measure during economic downturns.

   - It helps firms reduce their workforce and lower expenses.

2. Overcoming Over-staffing:

   - VRS is used to address situations where firms have hired more employees than necessary.

   - It allows organizations to reduce staff re.

3. Globalization:

   - Globalization brings intense competition, requiring firms to focus on innovation and technological advancements.

   - VRS is employed to make room for younger professionals with up-to-date skills and knowledge.

4. Change in Firm's Structure:

   - Mergers and takeovers are prevalent, and firms aim to join forces to strengthen their market presence.

   - VRS is utilized to maintain a lean and high-performing workforce in alignment with the new organizational structure.

            In summary, reasons for offering VRS include economic recession, addressing over-staffing, adapting to globalization and competition, and accommodating changes in the firm's structure through mergers and acquisitions.

Benefits of VRS

1. Rightsizing the number of employees:

   - VRS allows organizations to reduce the workforce compassionately to improve efficiency.

2. No Conflict of Interest:

   - VRS is implemented with the agreement of the government and trade unions, ensuring transparency and consent from employees.

3. Tax Benefit to Employees:

   - Employees receive their earned dues and benefits upon retirement, and VRS compensation is often tax-free up to a certain amount.

4. Second Chance for Employees:

   - Employees can use the VRS payout to start new ventures or pursue other interests.

5. Reduces Costs of the Firm:

   - VRS helps organizations reduce costs resulting from overstaffing or the need to adapt to changing technology.

Disadvantages of VRS :

1. Loss of Effective Personnel:

   - Valuable employees may choose to leave through VRS, resulting in a decline in the organization's skill set.

2. Burden on Remaining Workforce:

   - Poorly planned VRS implementation can increase the workload and responsibilities of REMAINING employees.

3. Future Uncertainty for Remaining Employees:

   - Employees who decide not to take VRS may feel uncertain about their future job security.

In summary, the benefits of VRS include rightsizing the workforce, lack of conflict of interest, tax benefits, second chances for employees, and cost reduction for the organization. However, disadvantages include the potential loss of valuable personnel, increased burden on remaining employees, and future uncertainty for those who choose not to opt for VRS.

IN-TEXT QUESTIONS

6. _______________ is also known as 'Golden Handshake'

7. Under the VRS scheme, the organization and its employees enter into a mutual agreement. True / False

8. Which of the following is an advantage of VRS:

a) Creates a burden on remaining workers b) Increases in vacancy

c) Future uncertainty for existing workers d) Reduction of costs for the firm.

9. ___________ is a restructuring process in which the organization disposes of its non-core activities.

10. Downsizing does not create a feeling of insecurity causing low morale and high stress among employees. True / False

ANSWERS  : 

6. Voluntary Retirement Scheme (VRS)

7. True. Under the VRS scheme, the organization and its employees enter into a mutual agreement.

8. d) Reduction of costs for the firm is an advantage of VRS.

9. Outsourcing 

10. False. Downsizing can create a feeling of insecurity, causing low morale and high stress among employees.

WORK-LIFE BALANCE : 

1. Definition and Concept:

   - Work-life balance is a strategy that helps employees manage personal and professional responsibilities.

   - It involves allocating time to family, health, vacations, and other activities alongside a career.

   - The term was introduced in 1986 and has gained widespread usage since then.

2. Importance and Benefits:

   - Work-life balance allows individuals to prioritize their time based on work and personal priorities.

   - It promotes relaxation, reduces stress, and enhances productivity by providing a sense of control and organization.

3. Definition by Cambridge Dictionary:

   - According to the Cambridge Dictionary, work-life balance is the comparison between the time spent on work and the time spent with family and engaging in enjoyable activities.

In summary, work-life balance is a strategy that enables individuals to effectively manage their personal and professional duties. It involves dividing time based on priorities, leading to increased relaxation, reduced stress, and improved productivity. As per the Cambridge Dictionary, work-life balance is the comparison of time spent on work versus time spent with family and engaging in enjoyable activities.

Need for Work-life balance  

1. Hectic Work Schedules:

   - Increased competition and globalization have led to higher work expectations and disrupted the balance between work and personal life.

2. High Expectations by the Employer:

   - Employers place significant stress on employees to meet goals, improve productivity, maintain quality, and manage customer relationships.

3. Rise in Personal Expectations:

   - Employees striving for organizational goals also have personal aspirations for higher pay, status, and power, creating additional pressure.

4. Unhealthy Habits:

   - Excessive work limits free time, leading to unhealthy habits such as prolonged sitting, poor eating choices, and neglect of physical well-being.

5. Rise in Stress Levels:

   - The management's focus on demanding more from employees without providing security or adequate rewards contributes to anger, stress, and frustration.

In summary, the need for work-life balance arises from hectic work schedules, high employer expectations, personal aspirations, unhealthy habits due to lack of free time, and increased stress levels caused by imbalanced work demands. Management should prioritize employee well-being and satisfaction to create a healthy and productive workforce.

Importance of Work-Life Balance:

1. Reduced Employee Turnover:

   - Companies with a healthy work culture experience lower employee turnover rates.

   - Employees prioritize mental peace and family commitments, leading them to leave jobs with high stress.

   - Adapting to employee preferences can help retain talent, especially among millennials.

2. Reduced Absenteeism:

   - Improper distribution of work and high-stress levels contribute to increased absenteeism.

   - Balancing workloads among employees helps reduce stress and absenteeism.

3. Improved Performance:

   - Work-life balance allows employees to work creatively and freely, leading to improved performance.

   - Employees feel happier and more connected to their work, enhancing their productivity.

4. Motivated Employees:

   - Work-life balance contributes to employee performance, dedication, and motivation.

   - Employees become more willing to take on challenges and overcome market difficulties.

In summary, work-life balance is crucial as it reduces employee turnover, absenteeism, and stress while improving performance and employee motivation. By prioritizing work-life balance, companies can create a healthy work culture and retain talented employees.

Strategies to Create a Work-life Balance

Steps that Can be Taken by the Employer to Promote Work-Life Balance:

1. Communicating clear policies:

   - Main working policies C employees to set expectations and avoid misunderstandings.

2. Training the managers:

   - Provide training to managers on discussing work-life balance with their teams and promoting satisfaction at work.

   - Encourage managers to prioritize employee wellness and discourage unsustainable work patterns.

3. Employee Recognition:

   - Avoid promoting a toxic workplace culture that rewards overwork.

   - Recognize and reward productivity and results achieved through smart work rather than long hours.

4. Conduct Employee surveys:

   - Use employee surveys to identify declining morale or increasing work-related stress.

   - Prioritize employee well-being, stress management, and personal lives to cultivate a happier, healthier, and more productive workforce.

5. Outsourcing:

   - Consider outsourcing to alleviate work pressure and reduce stress on existing employees.

   - Temporarily bring in additional resources to balance workload and maintain work-life balance.

By implementing these measures, employers can promote work-life balance, enhance employee well-being, productivity, job satisfaction, and create a healthier work environment.

Steps that can be taken by the Employee to a Work-Life Balance :

1. Creation of work plan:

   - Plan responsibilities and manage time effectively to allocate sufficient time for both work and personal activities.

   - Design a weekly schedule that balances professional and personal tasks.

2. Avoid energy-wasting activities:

   - Refrain from engaging in unnecessary activities that consume time and energy without contributing to work or personal life.

   - Practice effective time management to reduce stress.

3. Prioritize relaxation:

   - Take regular breaks from work and engage in relaxation activities.

   - Allow time for self-care, such as practicing yoga, meditation, maintaining a balanced diet, and exercising.

4. Set work priorities:

   - Plan and prioritize tasks to avoid last-minute rushes and unnecessary delays.

   - Effective planning helps create more time for personal tasks.

5. Control interruptions and distractions:

   - Stay focused on tasks at hand and minimize interruptions during dedicated work periods.

   - Manage distractions to maintain productivity and efficiency.

6. Schedule leisure activities:

   - Plan and schedule leisure activities, outings, and vacations with friends and family.

   - Engaging in enjoyable activities reduces stress and helps achieve a balance between personal and professional life.

By implementing these steps, employees can effectively manage their time, reduce stress, and achieve a better work-life balance, leading to improved well-being and satisfaction in both personal and professional spheres.

IN-TEXT QUESTIONS

11. __________________is a strategy that supports employees in managing their

personal and professional duties.

12. Making a list of priorities or a to-do list helps the employees in creating a

work-life balance. True / False

13. Which of the following steps can be taken by the employers to promote work-

life balance:

a) Making policies       b) Clear communication about tasks

c) Employee surveys   d) All of the above

14. Terminology of "Work-Life Balance" was introduced in 1980. True/ False

ANSWERS :

11. Work-life balance 

12. True. Making a list of priorities or a to-do list helps employees in creating a work-life balance by effectively managing their tasks and allocating time for different responsibilities.

13. d) All of the above. Employers can take steps such as making policies, clear communication about tasks, and conducting employee surveys to promote work-life balance

14. False. The terminology of "Work-Life Balance" was introduced in 1986, not 1980.

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