CAIIB Human Resources Management Module A Unit 1 : Fundamentals of HRM

10/04/2024

CAIIB Human Resources Management Module A Unit 1 : Fundamentals of HRM (New Syllabus)

IIBF has released the New Syllabus Exam Pattern for CAIIB Exam 2023. Following the format of the current exam, CAIIB 2023 will have now four papers. The CAIIB Rural Banking includes an important topic called “ Fundamentals of HRM”. Every candidate who are appearing for the CAIIB Certification Examination 2024 must understand each unit included in the syllabus.

In this article, we are going to cover all the necessary details of CAIIB Human Resources Management Module A Unit 1 : Fundamentals of HRM, Aspirants must go through this article to better understand the topic, Fundamentals of HRM and practice using our Online Mock Test Series to strengthen their knowledge of Fundamentals of HRM. Unit 1 : Fundamentals of HRM

Fundamentals

Concepts, Policies and Practices

“HRM” is concerned with the people dimensions in management. It is a series of integrated decisions that form the employment relationships, their quality contributions to the ability of the organisations and the employees to achieve their objectives. This is true, regardless of the type of the organisation – government, business, education, health, recreational, or social action.
HRM is a management function that helps managers to attract, set expectations and develop members for an organisation. Concerned with the people dimensions in organisations, HRM refers to a set of programs, functions, and activities designed and carried out for maximum efficiency.

Objectives of HRM

Advisory Role: HRM advises management on the solutions to any problems affecting people, policies and processes in the following manner:
Employment Policies: Designs the structure and guidelines on Organisation Structure, Social Responsibility, Employment Terms & Conditions, Compensation, Career and Promotion, Training and Development and Employee Relations as well as Retirement.
Procedures: Lays down SOPs (Standard Operating Procedures) for all activities starting from manpower planning and recruitment to cessation of employment.
Functional Role: The HR functionaries interpret and help to communicate HR policies. Provides guidance to line managers, to ensure that agreed policies are implemented in letter and spirit. The HR department also acts as a mentor and guide to other functional verticals.
Service Role: This requires the HRM department to be the provider of useful information on HRM matters. This is most important in times of change when the organisation needs to make sure that it is up to date with what is happening.
Specialist Role: The demands made on the HR profession over the years has led to the growth of the Functional HR specialist who has developed expertise in one major aspect of the HR function. Thus, over a period of time there emerges functional HR specialists like IR Specialists, HR Analytics, Compensation specialist, Competency Assessment practitioner, PMS expert and the most common, the Recruitment specialist.

Managerial Functions of HRM

Planning: Planning is a pre-determined future course of action to achieve the desired results. Planning function involves – Plan and research about best employee practices, wage trends, labour market conditions and ensure right talent for right position by forecasting manpower needs for optimum efficiency.
Organizing: Organising is a process by which a group of human beings allocates the tasks among its members, identifies relationships and integrates the activities towards achieving common goal. Given this concept to organizing, the function of Organising encompasses – Allocation of resources and authority & responsibility to achieve the organizational goals and objectives.
Staffing: Organisation process results in the creation of a structure with various positions. Staffing is a process by which the various functional departments are optimally employed by cost effective Recruitment and Selection, to attract not the best employee but the best fit.
Directing: Directing is a process of leading, supervising and guiding the personnel and activities of the organisation. This function involves various tasks like laying down policies, providing guidance and motivation of employees for optimum efficiency.
Controlling: Controlling is an activity of regulating, checking and verifying whether everything is in conformity with the laid down plans and objectives. It facilitates to know whether the actual performance is in conformity with the planned one so that in the event of deviations, appropriate corrective measures can be taken.

Operational Functions of HRM

Procurement: HR Planning, Recruitment and Selection, Induction and Placement.
Development: Training, Skill Development, Career Planning and Mentoring, Counseling.
Compensation: Wage and Salary determination and administration.
Integration: Integration of human resources and its values with organization
Maintenance: Sustaining and improving working conditions, motivation, employee communication.

Developmental Functions of HRM

Retention Management: To ensure that the key talents are attached to the organisation for a reasonable period and also to ensure filling up the slots timely so as not to hamper business continuity plans.
Counselling or Advisory Management: Providing expert advice and preventive counselling for all levels of employees for maintaining a healthier work environment.
Change Management: HR is often called on to manage change whether initiated internal subsequent to some restructuring as also when mergers/acquisitions take place.
Employee Engagement: To ensure that the employees are fully engaged in their given jobs and to enhance their morale levels and loyalty levels.
Attrition/Turnover Management: To reduce the attrition rate, find the reasons for attrition/ tunover and minimise the impact of separations caused by resignations, terminations, layoffs, death, medical reasons etc.
Talent Management: To ensure that the required talents are hired, developed and retained through progressive career plans and employee-benefits schemes/plans.

Employee Policies

It is a set of rules or guidelines for the organization and employees to follow in order to achieve a specific goal. An effective policy should outline what employees must do or not do, directions, limits, principles, and guidance for decision making.
A Policy is a Plan of Action. An employee policy spells out the Vision of the Management, addresses basic needs of the employees and helps ensure a consistent treatment to all personnel by minimising favouritism and discrimination. These policies are also plans of action to resolve intra-personal, interpersonal and inter-group conflicts.
A well thought out and a well-defined policy helps manage the human resources effectively. Ideally, such policies should evolve over a period of time.

Human Resource Accounting

The Human Resources Accounting which has been introduced by a number of leading corporates internationally as also in India take into account the cost of human resources, their potential value to the company as also a replacement cost when good talent leaves.
Human Resource Accounting is defined as ‘accounting for people as an organisational resource. It involves measuring the costs incurred by organisations to recruit, select, hire, train, and develop human assets. It also involves measuring the economic value of people to the organisation’.

HRM and Management of Transformation

In the ever-changing business environment as of today, changes in the outside world have made the need to consider the environment more important than ever. The external environment of an organisation is a subject of increasing interest and challenge for today’s managers.
An accurate assessment of the future opportunities and threats is crucial to the success of any organisation. Further, effectiveness of the business organisation lies in converting the threats into opportunities. Political, Economic, Socio-cultural and Technological changes, etc., in the environment are so extensive and frequent which affect any or all activities in the organisations.
‘Organisational Change’ is the modification in any or all the internal environment of the organisation like organisation’s structure, technology, physical settings and human resources. Human Resources Management (HRM) is in a state of great upheaval and constant change

Key HRM Practices in Indian Organisations

New Insights Into HR Management

Contemporary Issues in Indian HRM

Growing internationalization of business has its impact on HRM in terms of problems of unfamiliar laws, languages, practices, competition, attitudes, management styles, work ethics and more.
Employee expectations and attitudes have also changed; traditional allurements like job security, house, and terminal benefits are less attractive today; employees now demand high cash compensation, empowerment and a high degree of freedom to operate. HR is required to redesign the profile of workers, and discover new methods of hiring, training, remunerating and motivating employees
In today’s dynamic world, even unions have understood that strikes and militancy have lost their relevance; trade union membership has fallen drastically worldwide and the future of labour movement is in danger. HR has to adopt a proactive industrial relations approach and be prepared to renegotiate bargainable rights.
The HR manager’s focus on people has to be justified and sustainable. Managers who demand decision-making, bossism, and operational freedom have to realign their roles in enhancing organisational and people capabilities.
The role of women employees in overall organisational productivity is increasing day by day. Many organisations have reserved certain percentage of women employees in the organisation in order to ensure gender equity.
It has been observed that new employees remain loyal as long as they are comfortable with compensation and have job satisfaction.

Moonlighting

It means taking up a second job or multiple other work assignments apart from one’s fulltime job. This topic comes in light, especially, in IT industries, where employees took other jobs, during after COVID-19, while working on ‘Work-from-home’ model. This is also termed as Dual Employment.
The concerns about this emerging concept are data confidentiality breaches, loss of productivity, reduced employee engagement at workplace etc. Several Tech companies fired many employees engaged in moonlighting. Many other companies have cautioned their employees and raised their concerns on this, calling it an unethical trend.

Current Research

The World Competitiveness Report has noted HR capabilities in India as comparatively weaker as against other Asian nations. One reason for this lack of professionalism could be that India has three types of firms:

Indian firms with a global outlook.
Global firms seeking to adapt to Indian context.
The home-grown private and public sector undertakings with their own outdated HR approach.

Add to this, regional variation in types of industry size, business and culture The number of unemployed school graduates, those who leave jobs at an early stage are increasing among the young. Factors behind this problem include the following:

Significant decrease in job openings.
Increase in young workers who are unable to set goals for the future.
Education, employee training and employment systems that have not adapted to economic and social structural changes.

Relationship between HRM, PM, HRD

Human Resource Development (HRD) is an approach to people management. Setting expectations before a carefully selected individual, providing development tools and assessing performance as part of the performance management system, led to a structured career and succession planning, leading to growth for the individuals as well as the organisation.
In Banks, the Staff Department which was christened as the Personnel Department continued to function till the late 80s. It was in some of the foreign banks that the designation slowly started to change to the HR department and the Manager/Officers of the Department had the nomenclature of Relationship Managers.
The departments with which a particular officer interacted became the customers of that HR Relationship Manager. Having regard to these contemporary approaches being followed in New-generation banks and foreign banks, in order to keep pace with this transformation, the Public Sector Banks and old-generation private banks have re-designated the ‘Personnel Department’ into ‘HR Department’ with simultaneous change in the designation of ‘Personnel Officers’ into ‘HR Officers’.

Role of the HRD Professional

While most HR professionals are required to perform routine activities, the HR head has to work with the management to develop a plan that would support a specific business strategy. Thus, he/she would advise the management as to how to bring about change, develop an incentive scheme that will make compensation structure most competitive in the industry and provide expert professional advice for optimal use of the human resources available.
His/Her first role would be to put in place a clear organisational structure, then develop an internal competitive environment and establish a very clear line of communication so as to result in coordination and cooperation between business units as well as the various tiers of management.

The traditional HR approach includes the following as major responsibility areas for the HR head:

Planning – includes projections and planning for the skilled matrix of manpower required for the future organisation.
Staffing – providing the competency matrix required to face future challenges
Employee development – identify cost effective and modern methods of training for skill and competency development.
Performance Management – developing an entire gamut of performance linked measures to align individual performance to the overall corporate performance.
Employee Rewards – with the pronounced emphasis on Pay for Performance, develop an incentive scheme that would reduce fixed costs while at the same time being motivating enough to induce best performance from an employee.
Maintaining Quality of Work Life and Discipline – with the impact of global workforce it is necessary to develop a linked work-life discipline for all employees in the organisation.

Responsibilities and Tasks

Human Resource Planning

Develop, monitor use and update policies in line with the Company’s strategic objective.
It is a process to forecast the requirement of Human resources. It is planning of right number of people at right place and at right time.
It ensures the continuous supply of human resources in alignment with the company’s strategic objectives.

Recruitment and selection

According to Edwin Flippo, “Recruitment is the process of searching for prospective employees and stimulating them to apply for jobs in the organization.”
Selection is the process of differentiating between applicants in order to identify and hire the most suitable candidate for the job.

Performance Management

Review performance processes and evaluate performance to ensure that the tasks performed are in line with the Company’s strategy.
Put in place measurement systems for periodic reviews and correction.

Training and Development

Design a comprehensive training plan for the organisation.
Implement the staff career development plans annually.

Compensation and Rewards

Develop and implement a competitive remuneration strategy, updated annually, based on current best incentive practices.
Design an Incentive plan to link rewards to performance.

Maintaining Quality of Work life and Discipline

Develop and implement a healthy retention strategy
Continually monitor statutory compliance
Ensure methods for creative work-life balance.

Building an Employment Brand: Responsibilities of an HR Executive

HR head wishing to convey focused messages about the attribute and values of products uses and promotes branded components (say of service conditions) whose own image reinforces the desired attributes and values. As for banks, many in the clerical cadre (especially women employees) joined because bank jobs were easy to perform and were considered fairly remunerative as well. Now, in a more competitive environment, this image also needs to undergo a major change.

Having a brand image as a good employer will help them:

Keep ahead in the talent war
Attract and induce the right kind of people the organisation is looking for
Enhance their ability to get quality resumes to choose from
Retain their existing employee pool
Subsequently see a dip in employee turnover

The HR Head in the Indian Banking Industry

Some of the developmental roles need to own and perform by HR Head, are:

Under the Talent Acquisition function of HR Head: he/she should develop a recruitment roadmap to continuously attract high-quality talent. He/She should position the organisation as an employer of choice. It should build futuristic recruitment processes and systems to create industry differentiators.
Under the Organisational Development role: HR Head should work towards championing developmental HR. Under this function, the tasks of HR encompass – designing and managing the performance management landscape, competency management, career planning, designing interventions aimed at increasing employee engagement, process improvements and job evaluations, etc.
Under role as an effective leader, HR head should act as an internal consultant in the organisation and will also interface with external experts, in order to build knowledge in new areas. He/she will determine the implementation strategies for structure and process interventions that can lead to organisational effectiveness.
Under the role as a Business Partner, the HR Head should perform the roles of strategic business partner, employee champion and change agent. He/she should lead the HR function of the organisation to establish, manage and develop HR in alignment with the organisational business strategy, within the framework of the organisation’s philosophy, objectives and policies.

New Roles of HR Managers in Banks

Counselor: Consultations to employees about personal, health, mental, physical and career problems. A friend and career advisor to employees in the time of promotions, transfers as well as lateral movements.
Mediator: Playing the role of a peacemaker during disputes, conflicts between individuals and groups and management. Display proficiency in union handling.
Problem Solver: Solving problems related to engagement of human resources and long-term organisational planning.
Change Agent: Introducing and implementing institutional changes and installing organisational development programs; most critical in PSU banks where major transformations take place due to increased use of technology.
Management of Manpower Resources: Concerned with people management at various levels– individual level and group level and organizational level.

Qualities and Traits of a Successful HR Professional

Should possess good leadership traits.
They should be known for their honesty, integrity, sincerity, fearlessness and a sense of balance and justice.
Must have the ability to understand human psychology. He/She should be humane and skilled in human relations. They should possess good and effective communication skills.
Should be of positive mindset and provide good growth opportunities to people and encourage them to take up higher positions and responsibilities and also to provide required motivation for their development.
Should have passion for anonymity. They should be broad-minded and pass on the credit to the subordinates and superiors in case of success and to own up responsibility of failures not only of self but of their subordinates.
Should have high level of intelligence and knowledge.

Ethics in Human Resource Management (HRM)

Corporate Social Responsibility (CSR) practices in human resource management include valuing human capital, providing safe and healthy workplace and congenial work-life balance; embracing diversity in human resources and continual skill development for all employees. An organisation can chose to extend ethical human resource management practices by ensuring that they only work with suppliers/customers who value the same human resource ideals.
Ethics in HRM basically deal with the affirmative moral obligations of the employer towards employees to maintain equality and equity justice. Treating employees ethically can garner long-term employee trust and loyalty, which conveys a range of distinct advantages to employers. Loyal employees gain more experience and prosper with the organisation in terms of their rich experience and expertise.

Ethical Issues in HRM Function

Compensation issues: The HR function is often presumed to justify a higher level of base salaries, or a higher percentage increase than what competitive practice calls for.
Incentive plans :- The HR Manager may be forced to design and administer top-management incentive plans, at higher rates than what the individuals deserve. As far as Banks are concerned, generally, each bank will have Board approved incentive plans and as such, the scope for arising ethical issues on this score is very minimal.
Perquisites :- Executive perquisites may sometimes raise ethical dilemma for the HR executive because their cost is often out of proportion to the value added.
Performance Appraisals :- Ethics should be the cornerstone of performance evaluation, and the overall objective of high ethical performance reviews should be to provide an honest assessment of the performance and mutually develop a plan to improve the work effectiveness. For this purpose, a well-defined Performance Appraisal System based solely on measurable traits/quantitative parameters should be evolved in respect of every cadre of employees, without scope for ethical issues on this score.
Diversity issues:- A framework of laws and regulations are evolved in India that has significantly improved workplace behavior. Most of the organisations believe in treating their employees equally irrespective of their demographic variables.
Recruitment & Promotion Issues:-‘Recruitment and Promotion’ is a potential area where ethical challenges may arise since it may have grey areas which are based on judgment of the recruiters or While organisations are vocal about anti-discrimination and anti-harassment policies, HR functionaries are more likely to face ethical dilemmas in the areas of employee hiring.
Confidentiality/Privacy:- Privacy issues pertain to protecting a person’s personal life from intrusive and unwarranted actions. Exceptions are permitted only when such issues are specifically permitted under Right to Information Act.