People in any organizations are termed as ‘Human Assets”, “Human Resources” and more recently ‘Human Capital’. Human resource is the knowledge, skills, creativity, talents, and attitudes of the employees of an organization. Human resource is the most important resource out of four basic resources of an organization such as human, physical, financial, and information resources. An organization cannot exist without human resources. Proper management of the human resources is also decisive to the success of an organization.
Human resource management (HRM) has emerged as a key function in organizations. HRM refers to the policies and practices involved in carrying out the ‘human resource’ aspects of a management position including human resource planning, job analysis, recruitment, selection, orientation, compensation, performance appraisal, training and development, and employee relations. The purpose of human resource management is to improve the productive contributions of employees to the organization.
Another contemporary term is “Talent Management” (TM). Talent management is defined as a comprehensive and integrated set of activities to ensure that an organization attracts, retains, motivates and develops the talented people it needs now and in the future. TM is not fundamentally different from HRM, as both deal with getting the right people in the right job at the right time and managing the supply, demand and development of people in an organization. Therefore, TM may be termed as a re-labeling or re-branding of HRM.
There are significant differences between personnel management and human resource management. In the era of personnel management (PM), people were viewed as machines or other factors of production. Thus, people were synonymous to costs in that time. Personnel departments used to maintain employee records, arrange picnic, plan cultural parties, schedule vacations and finding opportunities for punishments.
The unproductive and less competent employees were placed to look after personnel functions, which were detached from strategic orientations of the organizations. On the other hand, human resource management views people as the most important and potential resource of the organization that can create a sustainable competitive advantage for an organization. Unlike PM, HRM views people as assets. Now HRM is having equal status like other functional areas – marketing, sale, finance, which can contribute directly to the overall strategic management of an organization.
Human resource managers need to carry out the ‘people’ or human resource aspects of their positions including job analysis, human resource planning, recruitment, selection, orientation, compensation, performance appraisal, training and development, safety and health, grievances, and employee relations. To discharge people related functions of an organization smoothly, all departmental heads need to be conversant with the practices of HRM.
A full-fledged HR Department has several sections such as employment section, compensation and benefits section, training and development section, and employee relations section, Performance appraisal, employers branding, talent management etc. Every section should be responsible for the defined functions who directly reports to the head of the department. The head of HR discharges his/her duties with the assistance of all the employees of the department. He/she generally reports to the chief executive officer of the organization. In modern organizations, the head of HR possesses a seat in the company’s Board. An adequate number of employees, with necessary knowledge and skills, are considered as HR department’s vital strength.
One of the distinguishing features of high performance companies is to have more HR professionals than low-performance companies do to look after their employees. The employees of an HR department should have the knowledge on the following.
- HRD philosophy, policies, practices, and systems.
- Performance appraisal systems and practices.
- Potential appraisal methods.
- Career planning and development systems.
- Organizational diagnosis and learning theories.
- Training methods and systems.
- Employer branding.
- Structure and functions of organizations
- Knowledge of group dynamics
- Inter-linkages between organizational goals, plans, policies, strategies, structure, technology, systems, talent management systems and styles.
- Social science research methods
- Job analysis and performance measurement.
- Manpower planning methods
- Role playing techniques
- Human relations practices
- Roles of rewards, incentives and their impacts
- Behavioral modifications and attitude change methods.
- Functions of quality circles in T.Q.M.
- Recent developments in management systems
- Personality measurement
- Personal and managerial effectiveness.
- Creativity and problem-solving techniques
- Conflict management, time management & stress management.
The employees of HR department need to acquire the above mentioned knowledge by various means. For example, an MBA degree with major in HRM or a specialized diploma in HRM, vast work experiences, and training in home and abroad can make the employees of HR departments familiar with modern HRM policies and practices. The common functions performed in general and by different sectional managers of an ideal HR department are stated below.
- Functions of Employment Section:
This manager looks after HR planning, job analysis, recruitment, selection and placement of employees. He is assisted by employees who work under him.
Human resource planning is the process by which an organization ensures that it has right number and kinds of people, at the right place, at the right time, capable of effectively and efficiently completing those tasks that will help the organization to achieve its strategic objectives. From the definition it is clear that HR planning must support the strategies of an organization. Every strategic decision of an organization such as utilization of new technology, acquisition, business operations, and leadership strategy has significant implications for human resource planning.
Job analysis is the beginning of sound human resource management. It is purposeful and organized process for collecting information regarding jobs. Through job analysis an organization collects information about jobs performed and to be performed and uses the collected information to write job description, determine job specification and conduct job evaluation. Most of the major HRM activities such as HR planning, recruitment, selection, training and development, performance appraisal compensation and benefits are directly or indirectly influenced by job analysis and job evaluation.
Recruitment is the set of activities used to attract job candidates who have the capabilities and attitudes needed to assist the organization to accomplish its goals. It is the process of encouraging people to apply for actual or anticipated vacancies of the organization. The ultimate goals of recruitment are to attract and retain the interest of right candidates, and the projection of a positive image of the organization to those who come in contact with us. The success of recruitment depends upon our ability to create a large pool of competent applicants.
Selection is the process of choosing from among available applicants, the individuals who are most likely to successfully perform a job. It is the process of gathering all necessary information about applicants and using that information to decide which applicants to employ. Once an adequate number of qualified applicants are identified through proper recruitment, the selection process begins. Selection is one of the most important functions of HRM because wrong selection of employees hampers organizational performance enormously. Employee selection is usually influenced by the perception, biasness, favoritism, and internal and external pressures.
- Functions of Compensation and Benefits Section:
This manager looks after determination of pay structure, wage/salary, disbursement of monthly pay and different bills, management of fringe benefits (provident fund, gratuity, bonus, Leave, Car Loans, etc.) and reconciliation of necessary accountings of different kinds of payment to the employees. He is totally responsible for offering fair remuneration to the employees. He is assisted by the people who work under him.
Compensation is fundamentally about balancing human resource cost with the ability to attract and keep employees. By compensation we attempt to provide fair remuneration for the knowledge, skills, and abilities of our employees. In addition, the compensation system should support organizational objectives and strategies. Employee compensation means all forms of pay or rewards going to employees and arising from their employment. Compensation is important for both employers and employees. It is important to the employees because it is one of the main reasons for which people work. Employees living status in the society, motivation, loyalty, and productivity are also influenced by the compensation. Again, it is very important for the employers because it creates substantial cash outflow of an enterprise leading to high overhead cost.
- Functions of Training and Development Section:
This manager looks after employee orientation, training needs assessment (TNA), designing training programs/ calendar, preparation of training budget, implementation of training programs, and finally training effectiveness evaluation. He is also assisted by the employees of his section.
After employing people in the organization, it is the responsibility of the HR department to develop them. In this era of lifelong learning, human resource development is a continuous process. It is needed for both new and existing employees. In order to attain and maintain the survival and success of an organization, its managers should not only get appropriate people to resource it, but also need to train and develop their employees. Training and development is considered to be the most common practice of HRM. We will discuss more on this issue.
- Functions of Employee Relations Section:
This section looks after employee welfare activities. He organizes annual sports, cultural programs, recreational and recognition programs, farewell, grievance handling, and compliance with labor laws. He needs to maintain close network with employee associations if any. He is assisted by other employees of this section.
One of the major functions of human resource management is to maintain smooth employee relations. it is also treated as one of the oldest functions of HRM. Employee relations include, such aspects as participative management, employee wellbeing, employee development, employee protection, health, security, safety and the like.
The following HR practices (High Performance Work Systems) collectively can generate superior employee relations and performance:
- Employment security
- Extensive appropriate training
- Decentralized decision making.
- Information sharing
- Reward for performance
- Transformational leadership
- Measurement of management activities.
- Emphasis on high-quality work.
- Functions of Performance Appraisal sections:
Performance implies a combination of thing. It means doing a job effectively and efficiently, with a minimum degree of employee created disruptions. Performance appraisal is understood as the assessment of an individual’s performance in a systematic way. Performance is measured against such factors as job knowledge, quality and quantity of outputs, initiatives, leadership abilities, supervision, dependability, cooperation, judgment, versatility, health, and others. Assessment should not take into consideration the past performance alone. Potentials of the employee for future performance should also be assessed.
- Talent Management & Employer branding sections:
In the modern organizations, HR department also has ‘talent management’ (T.M) and ‘employer branding’ sections. TM section assists the Head of HR in acquiring, developing, motivating and keeping talents for the organization. Employer branding exhibits an organization’s efforts to promote, both within and beyond the organization a clear view of what makes it dissimilar and sought after as an employer. Through employer branding an organization markets itself as a great place to work to the existing and prospective employees. Talent management and employer branding will help PILIL in becoming an employer of choice. In Bangladesh, some organizations such as Grameen Phone, RobiAxiata are already practicing talent management and employer branding under their HR department.
DIMENSIONS OF HUMAN CAPITAL DEVELOPMENT
Human Capital Development (HCD) is one of the most widely discussed issues in management today. It is needed by any organization that wants to be dynamic and growth oriented. Organizations can become dynamic and grow only through the efforts and competencies of their human resource. HCD include the activities and processes undertaken to promote the intellectual, moral, cultural, social and quality development of individuals in an organization in order to help them to achieve highest human capital as resource for the organization.
Insurance/Takaful is a knowledge based industry. In an insurance/takaful organization, there is no raw material and no machinery. It is the human being; the use of which needs to be planned, coordinated and controlled. To bring efficiency and economy, every insurance organization has the need for proper system of manpower planning, recruitment, training, proper placement; performance appraisal, career development programmes for the employees.
The responsibility of the effective utilization of human resource lies with the management. In order to perform this responsibility. The top management of PILIL should be competent and concern about utilizing its most important resource, human being. Human capital development is a necessity to help the sales force and desk employees to acquire and sharpen their capabilities in order to achieve the following:
- To increase business
- To reduce expenses
- To improve morale
- To identify talents and develop them
- To create right environment in the organization.
Organizational environment is an important human dimension that influences the success of the organization. The organization should place the emphasis on quality performance, outstanding achievement and commitment to achieve objectives, mission, vision and goals of the company. Human resource in the organization should be made to realize that they are being recognized and rewarded for their good performance. Friendship should be valued more among them. The desk employees and sales people working together should have mutual trust and respect. The members should have willingness to accept leadership and the successful leaders should be rewarded.
A study was made on relationship among job design, motivation and performance of the employees in the insurance sector of Bangladesh. Conclusive lessons from the study are as follows:
- Employees contribute more in the organization, if he or she is promised with stimulating environment.
- Peaceful interaction with peers and co-workers and internal coordination help the employees in utilizing of full potential in the job.
- Fair treatment to the employees in the job, increases the productivity of the human factor in the organization.
- Preparing an environment with stimulatory factors like training, salary increase and promotional opportunities reinforce the employees to the work.
- Performance leads to appropriate compensation and compensation produces satisfaction which in turn leads to further generation of motivation in employees mental makeup.
The findings of the study revealed that job structure and design in the insurance sector of Bangladesh was not fully supportive for motivating the employees in full extent and increasing their performance. So it is essential to create a structure and environment where dissatisfying factors are improved and satisfying factors are further developed. The study had identified several problems and recommended the following:
- Insurance companies should ensure an environment where executives of all levels can play their role and utilize their full potential. It is possible through participative decision making process.
- Modernization of Information & Communication Technology should be given a high priority to increase the productivity of the employees.
- Training facilities and opportunities be widened so that skills and efficiencies of the employees can be seized at all levels.
- Equity and fairness in recruitment, promotion and other types of incentives always be maintained.
Significant differences were observed between the views of development and desk employees of insurance companies on job satisfaction attitudes. The observations are summarized as follows:
- Development employees (sales people) are comparatively more satisfied than those of desk employees in respect of the fairness in the payment practice of the insurance companies.
- Development people have comparatively higher level of chance for promotion compared to desk employees.
- Development people are more satisfied with the benefits they receive from the company.
- Development people feel that their supervisors are quite fair in supervision but desk employees do not think so.
Many of the top executives of insurance companies say, they are committed to training and developing their staff but when the going gets tough, the first item cut is the training budget. The saying is “If you think education and training are expensive, try ignorance”. This is a paradox but contains a painful truth. We shall have to come out of this old age culture and outlook. Insurance companies in order to be successful need to develop a culture that is open, communicative and participative in order that employees are encouraged to identify their own personal interests with those of the company. The successful insurance companies of the future should emphasis a developmental approach to continued knowledge and training. Knowledge has to be acquired continuously throughout the individuals’ working life because of new technologies, new products, growing competition, dynamic and changing environment. Training has to be arranged both on-the –job and off-the job as well as for acquiring skills, professional knowledge and personal development.
Apart form continued training, as a mechanism for human capital development, professional certification examinations are essential. These examinations provide a means for independent evaluation of one’s mastery of the professions specialized knowledge. It promotes the ability to analyze factual situation and to communicate conclusions and recommendation clearly and the most important, it encourages wide spread recognition of the individuals who have met the standards of the profession.
Development of an employee at work cannot be segmented into separate categories. H.C.D has to be concerned with a person as a total being insurance companies, therefore, should have a series of programs that would help the organization to achieve the goal of employee development. PILIL should provide growth experience to individuals. It includes development of an individual’s strength, enhanced capability to adjust to his environment, acquiring new skill and a broader perspective of work and society.
By HCD we broadly understand the development of competence and motivation of the Human Resources and also the development of a conducive climate in the organization. It must be realized that in every organization, its employees are the most important resource, its human capital which makes the ultimate difference. The effectiveness of HCD, therefore, should be measured in terms of development of individuals which brings with asking questions, suggesting ideas and exploring options. In the long term perspective, this improvement reflects in performance, leading to achievement of business goals.
There are various methods available for developing human capital. HCD in the organizational context is a process by which, the employees of an organization are helped in a continuous and planned way to “add” i.e. to contribute to the growth and development of the organization. This is done by:
- Acquiring and sharpening capabilities required to perform their functions;
- Developing their won inner potential for their own and organizational development purposes;
- Developing an organizational culture in which superior-sub-ordinate relationship and teamwork contribute to the professional well being, motivation and pride of employees.