94. Personnel Administration: nature and importance

People are vital input for the effective functioning of an organization.  For any organization to become successful it is necessary to recognize the potential personnel, acquire them, develop and to retain the same. The term ‘Personnel’ refers to ‘Body of employees’ who fill the various positions in an organization.  Personnel administration is the collective concern towards the human resources of an organization.  Hence, personnel administration refers to administration of human beings in an organization.

The Institute of Personnel Management (UK) defines Personnel management as that part of management concerned with people at work and with their relationship within an enterprise.  The three objectives of personnel administration are i) to maintain healthy working culture ii) to enable an employee to achieve his personal goal and iii) to achieve harmonious relationship between the employees and employers by integrating personal goals of the  employees with the organizational goals.

Personnel administration is comprised of POSDCORB, an acronym coined by Luther Gullick and Urwick representing seven important functions in an organization namely, planning, organizing, staffing, directing, coordinating, reporting and budgeting.  These above functions deal with the  organized function of planning for human resource needs, recruitment, selection, development, compensation and evaluation of performance which is also defined as human resource management.

Importance of Human resource management

The human resource management process is an ongoing function that aims to supply with the right positions with right kind of people. Michael Armstrong, in ‘A handbook of human resource management practice’, describes ‘Human resource management as the strategic and coherent approach  to the management of an organization’s most valued assets- the people working there who individually and collectively contribute to the achievement of the objectives of the business’.  In the light of globalization process, India’s vast manpower has been playing a pivotal role in making the economic liberalization a success to certain extent.  Therefore, the human resource policies pertaining to recruitment, training and development of human resource skills gains importance in today’s competitive market.  The biggest challenge in the human resources practices is to attract the potential skilled performer and to retain the high performing employees in a competitive market economy that opens endless opportunities for the employees to harness their skills.

India  which is expected to contribute to 250 million to the world’s labour pool has given impetus to human resource management practices with new challenges posed by competitive private sector.  There is a heightened demand for job relevant skills, innovations and others. Accordingly, the significance of human resource is being emphasized in small and large organizations with the current emphasis on downsizing, delayering and similar institutional rearrangements. Thus the significance human resource management lies in training the employees, designing structural architecture, redesigning of the organizational process and others depending on the prediction of the new employment and developments in economy through purposeful human resource management policies and practices.

1)      What are changes that can be witnessed in the human resource management / personnel administration in the context of globalization?

2)      Do you find difference between the personnel policies of public sector and private sector? If yes, discuss.

3)      Do the human resource management practices and policies really favour the employees?

This is the second post by Dr. Anitha Prsanna M.A., Ph.D

7 thoughts on “94. Personnel Administration: nature and importance

  1. Answer 1:

    Due to phenomenon of globalization we are seeing more competition at global level, where there are virtually no or insignificant boundaries between markets of different countries or regions. The modern means of transportation technologies and information technology the business can be operated globally. We can have sourcing of material from one country, manufacturing of components at other and final product integration at various countries (ex. auto-mobile industry). Many service based industries can like financial business, software based service, customer support, and technical support etc can be conducted via internet anywhere in the world for any customer base. As part of globalization we see following new developments in the context of personnel management,

    a) Offshore Outsourcing: Due to globalization certain processes and business activities are being outsourced to other countries for efficiency, cost advantages (cheaper raw material, labour availability, transportation costs, tax considerations etc) which have given rise to interesting turn to personnel management. Management has become very complex at global level. Different cultures, policies, society structures need to be taken account in managing the personnel distributed globally in different countries. Local CEOs, HR Heads are appointed who functions autonomously. The level of coordination has become sophisticated with increasing use of technology – video conferencing, email, chatting etc.

    b) Increasing specialized consulting Jobs: Globalization has given rise to special consulting jobs in the fields of legal consulting, tax consulting, financial market consulting, business process consulting, knowledge based consulting – where even part of management and strategy making also outsourced to these companies who employs highly paid analysts, consultants and experienced lawyers, CAs, bureaucrats. This has given competition to traditional jobs in these fields and HR head of other sectors – like government, courts, medical institutions, research and development, defense etc as they struggle to retain the talent.

    c) Attrition Problem and Brain Drain: With globalization it has become easier for one to switch job within the country and even in other country with liberal visa regimes of various countries due to increasing opportunities. This becomes an issue for HR head as attrition becomes a huge problem. The IT, software and BPO sector for example faces this problem very much (more than 30% attrition) where training costs are high and attrition puts pressure on cost and delivery time. At country level there is larger phenomenon of Brain drain in which trained engineers, doctors and other talented individuals of developing countries immigrate to developed countries for higher education, highly paid jobs, much better life style and sometimes due to lack of opportunities in their nation.

    So globalization has changed the traditional equations of personnel management comprising satisfying the needs of employee, good working environment, sensitive leadership, inter-personal management etc. Now job enrichment, job satisfaction and adequate perks have become essential and moreover you have to be globally competitive.

    Answer 2.

    There are many differences in personnel policies of Public and Private sector enterprises of which some are as follows,

    1. In public sector there is more job security and stability for permanent employees. They have many social security benefits like health insurance and coverage, superannuation benefits etc. Private sector also have some social benefits as per various regulations like Labour Laws, Industrial dispute Act, Gratuity Act 1972, Employee State Insurance Scheme etc but not all sectors come in their domain and largely they can be relieved from their duty based on contract terms giving 1-2 months’ notice, they do not enjoy same stability as public sector employees do. Most private companies employ a large number of contractual employees who have almost no rights and security. In fact there is trend of hiring on contract basis in public sector also. (Currently approx. 80% of labour is in unorganized sector)

    2. In public sector work environment is seen with some typical bureaucratic features like hierarchy, detailed work division, delay, red-tapism and also corruption in some sectors, while in private sector we can see more variant of management structures, various novel ways to maximize efficiency, flexibility in policies, HR policies to create good working environment but some form of hierarchical system do exist. That is why we see best companies to work with mostly are in private sector except few in public sector. In private sector there is more accountability and managers are responsible for performance.

    3. Public sector personnel recruitment is bound by government policies of reservation and hence represent the society in more inclusive way, while private sector hiring depends on merit and capability based only and sometimes there are cases of bias against some social class, caste, creed and even religion in a very subtle way.

    4. The emoluments are high in private sector and there are high performance based benefits in various sectors and high posts. Whereas in public sector promotion is based on seniority and merit based both, in which mostly seniority plays a major factor in deciding the salary and other benefits, in high posts merit and contacts becomes important.

    Answer 3:

    Human resource policies are codified set of policies, rules, and procedures which define benefits, rights, ethics of work environment, performance management, their duties and expected behavior. These policies and practices make clear the employee about their role in organization, their acceptable and unacceptable behavior and align objectives of organization with the objectives of employee. It should ensure that there is no partial behavior or discrimination or exploitation of employees.

    However it is not always necessary that these policies always work in the favor of employees. As there is no standard HR policies and they vary in organizations according to country, statuary requirements, laws, culture, sector, region and situation etc. So there may be cases that in some region some policies are followed which allow employee’s exploitation as society in that region is backward and uneducated. It may also depend on country, for example in China due to restriction on freedom and liberal labour laws there is very dismal state of labour force. Sometimes HR policies can be very skewed towards benefits of management and sometimes in some sectors they can be very liberal to employees like in software industry – provision to work from home, flexible working hours, frequent team outing etc. Generally HR policies are made with the objective of maximizing efficiency of the organization and hence its productivity.

    1. Dear Gaurav

      Your answers are precise and good. Keep it up. I have two points to add.
      1. It has been alleged that women are discriminated against in the software and BPO sector
      2. How far will the Private sector resist the demands of the political class for reservations on the lines of Government institutions?

      Prof. Rao

  2. Globalization has removed the boundaries withing which organizations were functioning earlier. There are no fences, now it is a open field in which organizations operate. An vehicle being sold in U.S.A will be getting one of its essential part manufactured in some village of Punjab, another part somewhere in Thailand etc.. In this context where organizations are performing in such a integrated manner, Human Resource Management becomes a critical factor in successful functioning of the business.

    We can observe the changes that have taken place wrt HRM / PM because of globalization under following categories:
    1. Culture & Ethnicity : Most organiztions comprise of employees from multi-cultural background. Prior to Globalization, it was natural for an organization to hire people from same locality as they had no access to outside environment or the demand and resource of man power could be managed with the available resources.
    Post Globalization it is very common to find people from different countries working under a single roof. In such an environment certain changes have taken place in terms of culture and ethnicity which is very essential for a harmonious, co-operative working environment. Individual culture has been pushed a step back by organizational / working culture. However it should be noted that in order to appreciate various cultures HRM provides certain occasions like ethnic day etc exclusively to exhibit culture and ethnicity.

    2. Multi-lingual & official communication language: Globalization has also caused an impact on migration of people from one place to another place within a country.
    For example : In multilingual country like India, a place like Bangalore considered as Globalized city can witness people from several other less globalized places, where job opportunities are less compared to Bangalore. A hotel in Bangalore can be owned by a person from Mauritius, whose manager is from Kerala, cooks from Bihar, Karnataka etc. It is very common to see a common official language (English) among the top management and the same language continued among lower tiers or a common local official language (Hindi).

    It has become imperative for entrepreneurs / human resource managers to be multi-linguistic for better management. One of the prominent practices Globalization has introduced is usage of English language as a common official language across countries.

    There are certain situations where an organization is providing service to a client, say in Germany, for the purpose of better client management and client’s convinience it becomes imperative for certain members of organization involved in daily interaction with client to learn the native language of the client, German in this case.

    3. Technology – Oneness and Division : Technology has played a major role in keeping the globalized environment up and running. It has completely fast tracked the way businesses run. A foriegn business visit can be substituted by a video-conference. An on-site training can be substituted by online-tutor. A human messenger / telegraph is substituted by email or telephone call. There can be multiple teams working on a single project from different placces in different countries, still they can be connected regulary through technology.
    But there is an other side of the coin, technology has also created separation. A busy CEO meets his employees only in monthly meetings, any in between meetings or talks are carried out via email or telephone in some cases these tasks will be carried out by intermediatory like secratory. In such situations it become very critical for HRM to make sure every member of the company is working on same Goal. Naturally it becomes the task of HRM to form a bridge between various levels of the working class. In many cases, HRM will be the only one available in person to every employee and employer of the company.

    4. Offshoring : Offshoring is one of the popular working model that has born out of Globaliztion. Organizations of a particular country offshores certain part of its work to a company located in a different country. In many cases the offshore team is completely managed by the company that has offshored the project. In order to take the benifits of the resource and expertise available in different countries, most companies are venturing into this model which brings along with it the need for extra focus on HRM / PM. This model is widely spread in IT industry, where India is one of the prime beneficiaries.

    Members involved in PM / HRM need to be aware of the constantly changing requirements in the sector of personnel management and should adapt appropriately for the better utilization of human resource and maintaining healthy working environment which is very essential in the success of the organization.

    1. Dear Gaurav,
      Very comprehensive well thought answers. India in today’s context of globalised culture, has really become melting pot of different cultures and thereby different changes in organisational processes that enhances the labour productivity.

    2. Dear Mithun,
      I appreciate your views. I would like to add that today’s human resource practices are greatly facilitated by tec hnology which has made the personnel policies to become more effective. Though the global culture has opened doors for the multi-ethnicism, it also poses challenges to the human resource policy making function to draft a uniform personnel policies that does not hurt the sentiments of the people belonging to different ethnic backgrounds working under a single roof.

  3. 1.in the light of globalisation,which refers to flow of goods and services around the globe,the need is of personnel doing specialised work but at a fraction of their cost.human resource management is now predominantly concerned with attracting talent at the starting level.this is because,the work gets done usually at the lower levels.also,in the world of fast changing technology,a person “experienced” in a particular field is usually a person who worked on obsolete technology.hence,at the middle management level,hr policies are not so much concerned about attrition.however,at a higher level of company,which mainly deals with managing company wrt to hr policies,finance and legal,experience is highly cherished.hence , to attract ,higher remuneration is given.this ensures that in a globalised economy,with masses of people doing low level jobs directed by highly dynamic leaders ensure that the company is competetive.
    2.HR policies are vastly different in public sector because in a govt job,there is job security (carrot).Also,the job is predominantly transferable(stick).this ensures that work does not suffer.also,in our mixed economy,in a globalised time,the hr management are forced to be dynamic.this ensures “employee first” hr policies followed by psu behemoth like NTPC ensures that it is the top company to work for in India,ahead of every other company,public and private.also,after the sixth pay commision,the emolument of any psu is more than what you can find in private,sometimes 2-3 times of private sector.to keep up their profitability,pvt company cannot afford to compete with psu salaries.this leads to the question,how can psu stay competitive?the answer lies in technology.even in globalised world,high end technology flow is scarce.this ensures that companies for cheap labour go to countries,but do not export their closely held technological achievements there.hence,pvt companies are usually low tech,labour intensive industries.psu,on other hand have active interest in using high technology as it also builds up the national power.hence,psu are high tech ops.this also forces hr personnel to retain “experienced” personnel as they are the ones who would have helped in building the tech from ground up,and havea vision for taking that tech forward.hence middle rung employees in a psu are the most valued.
    3.ultimately,hr personnel have to ensure that companies interest are kept the foremost,propagandic marketing notwithstanding.so,in this case,if the employees interest becomes subordinate to company objectives.only the personal objectives can be channeled by hr personnel to flow in the direction of company objectives.

  4. Dear Hirak, it is a very good comparison between hr policies of public sector v/s private sector. It would like to add a point to very pertinent issues which often neglected by hr practices that is, whether it is private or public sector, hr personnel have to ensure to keep up t he morale of the employees as it has greater impact on the labour productivity.

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