Human Resource Policies Meaning, Features, Components

Human Resource (HR) Policies are a set of formal guidelines and principles that govern the behavior, actions, and decision-making processes related to an organization’s workforce. These policies serve as a framework for managing employee relations, ensuring compliance with labor laws, and fostering a productive and harmonious work environment. HR policies encompass a broad spectrum of areas, including recruitment, performance management, employee conduct, compensation, benefits, and workplace safety.

HR policies are designed to align with the organization’s goals and values while protecting both the employer’s and employees’ rights. They establish clear expectations for behavior and performance, promote fairness, and provide a structured approach to addressing grievances or disciplinary issues. Additionally, they play a crucial role in ensuring legal compliance by adhering to applicable labor laws and regulations.

Effective HR policies are transparent, well-communicated, and adaptable to changes in the workforce or external environment. They contribute to employee satisfaction and retention by fostering trust and consistency in organizational practices. Ultimately, HR policies serve as a strategic tool for organizations to create a positive work culture, mitigate risks, and enhance overall organizational efficiency.

Features of Human Resource Policies:

1. Clear and Concise

HR policies are designed to be easily understood by all employees. They use straightforward language and clearly define roles, responsibilities, and expectations. Ambiguity is avoided to ensure employees can easily interpret and follow the guidelines.

2. Consistency

A fundamental feature of HR policies is their consistency in application across the organization. Consistent policies help in treating all employees fairly and equally, reducing instances of bias or favoritism, and enhancing organizational trust.

3. Alignment with Organizational Goals

HR policies are tailored to align with the organization’s mission, vision, and strategic objectives. They support the broader goals of the organization by guiding workforce management in ways that promote productivity and growth.

4. Legal Compliance

HR policies are developed in adherence to applicable labor laws and regulations. This feature ensures that the organization operates within the legal framework, minimizing the risk of legal disputes or penalties.

5. Flexibility

Effective HR policies are adaptable to changing internal and external environments. They are periodically reviewed and updated to reflect evolving labor laws, technological advancements, and organizational needs.

6. Employee-Centric

HR policies consider employee well-being, rights, and needs. They include provisions for work-life balance, workplace safety, professional development, and grievance resolution, fostering a positive work culture.

7. Comprehensive Coverage

HR policies address a wide range of issues, including recruitment, performance management, compensation, benefits, training, workplace conduct, and termination. This comprehensive nature ensures no critical aspect of workforce management is overlooked.

8. Transparent Communication

Transparency is a crucial feature of HR policies. They are communicated clearly to employees through orientation programs, employee handbooks, and regular updates. This transparency builds trust and ensures everyone is aware of the rules and procedures.

9. Preventive and Proactive

HR policies are designed not only to address existing issues but also to prevent potential conflicts or problems. They set the groundwork for handling disputes, performance issues, and other workplace challenges efficiently and proactively.

Components of Human Resource Policies:

Human Resource (HR) policies consist of various components designed to address different aspects of workforce management. These components ensure that policies are comprehensive, systematic, and aligned with organizational goals and employee expectations.

1. Recruitment and Selection Policy

This component outlines the procedures and criteria for hiring employees. It includes job postings, interview processes, selection methods, background checks, and onboarding practices, ensuring fair and transparent recruitment.

2. Training and Development Policy

This specifies the organization’s commitment to employee skill enhancement and career growth. It includes guidelines for training programs, workshops, certifications, and leadership development initiatives.

3. Compensation and Benefits Policy

This component defines the salary structures, incentives, bonuses, benefits, and allowances. It ensures equitable and competitive pay practices while detailing health benefits, retirement plans, and other perks.

4. Performance Management Policy

This includes procedures for evaluating employee performance, setting objectives, providing feedback, and conducting appraisals. It ensures that performance reviews are fair, transparent, and aligned with organizational goals.

5. Employee Conduct and Discipline Policy

This outlines the code of conduct expected from employees and the disciplinary measures for violations. It addresses attendance, workplace behavior, harassment, conflict resolution, and ethical practices.

6. Leave and Time-Off Policy

This policy covers vacation, sick leave, maternity/paternity leave, and other forms of time off. It clarifies the eligibility, application process, and approval criteria for various types of leave.

7. Workplace Safety and Health Policy

This ensures a safe and healthy work environment by addressing safety protocols, emergency procedures, and measures to prevent workplace hazards and accidents.

8. Equal Opportunity and Diversity Policy

This component focuses on fostering a diverse and inclusive workplace. It prohibits discrimination based on gender, race, age, religion, disability, or other factors and promotes equal opportunities for all.

9. Grievance and Conflict Resolution Policy

This provides a framework for employees to report grievances and resolve conflicts. It includes processes for lodging complaints, conducting investigations, and reaching fair resolutions.

10. Termination and Exit Policy

This details the procedures for voluntary resignations, layoffs, and dismissals. It covers notice periods, final settlements, exit interviews, and rehire policies.

Requisites of a Sound HR policies: Recruitment, Selection, Training and Development, Performance Appraisal, Compensation, Promotion, Outsourcing, Retrenchment

A policy is somewhat a permanent feature of an organization. It being a standing plan, provides guidelines to managerial decisions. Therefore, policies should be developed on a sound basis. If this is not done, managers have to make decisions again and again. However, what features constitute a sound policy cannot be prescribed universally because situations vary so greatly and an organization may differ in respect of policy formulation and implementation from others.

A sound policy must Have

(i) specify more precisely how the decision will come what is to be done, who is to do it, how it is to be done, and when it is to be finished

(ii) establish a follow-up mechanism to make sure that the decision intended will take place

(iii) lead to new strengths which can be used for decisions in future.

Characteristics of Sound HR Policy

  1. Relationship to Organizational Objectives:

A policy is formulated in the context of organizational objectives. It tries to contribute towards the achievement of these objectives. Therefore, in formulation of a policy, those functions or activities which do not contribute to the achievement of objectives should be eliminated.

For example, if a policy of filling higher positions from within produces hindrance in attracting talents at higher level but the organization needs them, the policy can be changed because in the absence of suitable manpower, the organization may not be able to achieve its objectives.

  1. Planned Formulation:

A policy must be the result of careful and planned formulation process rather than the result of opportunistic decisions made on the spur of the moment. Since policies are relatively permanent features of the organization, ad hocism should be avoided because it is likely to create more confusion.

It is true that it is not possible to solve every problem in the organization on the basis of policies because new situations may arise, however, for matters of recurring nature, there should be well-established policies.

  1. Fair Amount of Clarity:

As far as possible, policy should be clear and must not leave any scope for ambiguity. If there is a problem of misinterpretation, the organization should provide the method for overcoming the ambiguity. Further, policy provides some discretion for managerial decisions but it should minimize the number of cases where decisions are based on personal judgement. If this happens frequently, there should be close scrutiny of the policy and suitable amendments should be made.

  1. Consistency:

The policy should provide consistency in the operation of organizational functions. Often the organization formulates policies in various functional areas and each function is related to other functions of the organization. If the policy in one area is inconsistent with another area, there may be conflict resulting in inefficiency.

This happens very frequently in functions having close relations such as production and marketing or finance and other functions. Therefore, the formulation of policies should be taken in an integrated way so that policies in each area contribute to other areas also.

  1. Balanced:

A sound policy maintains balance between stability and flexibility. On the one hand, a policy is a long-term proposition and it must provide stability so that members are well aware about what they are required to do in certain matters. On the other hand, the policy should not be so inflexible that it cannot be changed when the need arises.

In a changed situation, the old policy becomes obsolete. Therefore, there should be a periodic review of policies and suitable changes should be incorporated from time to time. The changes may be in the form of addition, deletion, or substitution of the existing policy.

  1. Written:

A policy may be in the form of a statement or it may be interpreted by the behaviour of the people at the top level. However, clearly-specified policy works better than the one which has to be interpreted by the organization’s members. When the policy is in writing, it becomes more specific and clearer. It creates an atmosphere in which individuals can take actions with confidence knowing fully the impact of a particular action.

A written policy is easier to communicate through the organizational manuals. However, written policy has certain disadvantages in the form of being inflexible, too much emphasis on written words and their interpretation, and leakage of confidential policy. However, if the policy has been formulated carefully, many of the dangers will be overcome. Of course, confidential policies cannot be made part of organizational manuals.

  1. Communication:

It is not just sufficient to formulate policies. Unless these are communicated properly to the persons concerned, no meaningful purpose will be served. Therefore, a system should be developed to communicate the policies to those who are to make decisions in the light of those policies.

While written policies can be communicated easily, problems exist for communicating unwritten ones. In such cases, there should be more interaction between policy framers and policy implementers.

HR Policies

  1. Recruitment and selection policy: To procure suitably educated and efficient personnel by offering those tempting wages, good working conditions, safety and security, and better future prospects.
  2. Training and development policy: To make available all possible facilities for the training and development of employees to enable them to do their job efficiently and to prepare them­selves for future promotions; to take effective steps including training and development pro­grammes to equip the employees in the latest techniques of production, management and so on; to get the performance appraisal done; and to provide adequate opportunities and facilities for the development of employees.
  3. Job evaluation, wage and incentive policies: To determine reasonably good wage rates and dearness allowance, and to work out incentive plans for workers after undertaking job evalu­ation and other necessary steps and also keeping in view the prevalent wage rates for similar jobs in other industries.
  4. Labour welfare policy: To improve industrial relations by evolving a suitable machinery for the settlement of disputes; to encourage mutual negotiations; to prepare and execute labour welfare programmes; and to arrange all possible facilities for the health, education and other welfare programmes.
  5. Retrenchment: All progressive companies keep good exit policies, so that feedback can be obtained and improvement can be brought about.

High Commitment Management Model

High-commitment management emphasizes personal responsibility, independence, and empowerment of employees across all levels instead of focusing on one higher power; it always intended to keep commitment at high level “calling all the shots”.

A high commitment system is unusual in its job design and cultural structure. These practices emphasize getting the tasks complete, but do it in a way that their employees enjoy doing it. According to Harvard Business School Professor Michael Beer, “leaders develop an organizational design, business processes, goals and measures, and capabilities that are aligned with a focused, winning strategy.” This kind of environment allows employees to approach tasks at ease, wearing jeans instead of suits and staying home to watch their children get on the bus for school before coming to work. Technology also plays a role in this system. Recently, technology has slaughtered barriers of communication, which makes this high-commitment model fit that much better. That father waiting for the bus can still answer phone calls and check emails for work, so is he working or is he spending time with his daughter? He can be doing both. As long as the job gets done, this system is casual on how it gets done, relieving employees of constant stress.

A flat organizational structure is one of the biggest success factors. Individuals are responsible for their own decision-making and these decisions, their skill, and their performance is how they get paid. Instead of putting too much weight on the individual, “people are likely to see the locus of the control coming from ‘within’ through the adoption of self-created demands and pressures as opposed to external and making them feel subordinate.” While these companies allow each employee to be a manager in their own way and try not to distinguish its structure by higher levels of employment, it doesn’t mean that they lack these higher powers entirely. It’s that under this system people aren’t relying on the general managers, CEOs, or other employees to do their work for them. This personal discipline is what drives the employees to help the company be successful. and eliminates the chance at a thought like, “Why would I want to help my company become better if I know I’m just going to get yelled at?”

Another focus of high commitment practices is their employee relationships. They only hire people who are flexible, determined, and are willing to handle challenges. Because this system relies on individual performance, there is a big emphasis on hiring the right people for the job. The detailed recruitment process can consist of many interviews with different members of the company, an induction course, and in some cases, team-building exercises. Once found, the right employees help create a strong bond and high trust throughout the entire company.

High commitment workplaces are successful through their importance on an individual’s responsibility in order to help the team prosper. By creating a culture that motivates individuals to want to succeed while sustaining high commitment, “these firms stand out by having achieved long periods of excellence.”

These models of best practice can take many forms; while some have advocated a universal set of HR practices that would enhance the performance of all organisations to which they were applied (Pfeffer, 1994, 1998), others have focused on high-commitment models (Walton, 1985; Guest 2001) and high-involvement practices (Wood, 1999) which reflect an underlying assumption that a strong commitment to the organisational goals and values will provide competitive advantage.

Others have focused on ‘high-performance work systems/ practices (Berg, 1999; Applebaum et al., 2000). This work has been accompanied by a growing body of research exploring the relationship between these ‘sets of HR practices’ and organisational performance (Pfeffer, 1994; Huselid, 1995; Huselid and Becker, 1996; Patterson et al., 1997; Guest, 2001). Although there is a wealth of literature advocating the best-practice approach, with supporting empirical evidence, it is still difficult to reach generalised conclusions from these studies.

This is mainly as a result of conflicting views about what constitutes an ideal set of HR best practices, whether or not they should be horizontally integrated into ‘bundles’ that fit the organisational context and the contribution that these sets of HR practices can make to organizational performance.

  • Universalism and high commitment

One of the models most commonly cited is Pfeffer’s (1994) 16 HR practices for ‘competitive advantage through people’ which he revised to seven practices for ‘building profits by putting people first’ in 1998. These have been adapted for the UK audience by Marchington and Wilkinson (2002).

Pfeffer (1994) explains how changes in the external environment have reduced the impact of traditional sources of competitive advantage, and increased the significance of new sources of competitive advantage, namely human resources that enable an organization to adapt and innovate. Pfeffer’s relevance in a European context has been questioned owing to his lack of commitment to independent worker representation and joint regulation (Boxall and Purcell, 2003), hence Marchington and Wilkinson’s adaptation, highlighted in Table.

HR practices for ‘competitive advantage through people’

With the universalist approach or ‘ideal set of practices’ (Guest, 1997), the concern is with how close organisations can get to the ideal set of practices, the hypothesis being that the closer an organisation gets, the better the organization will perform, in terms of higher productivity, service levels and profitability. The role of Human Resources, therefore, becomes one of identifying and gaining senior management commitment to a set of HR best practices, and ensuring that they are implemented and that reward is distributed accordingly.

The first difficulty with the best-practice approach is the variation in what constitutes best practice. Agreement on the underlying principles of the best-practice approach is reflected in Youndt et al.’s (1996: 839) summary below: Lists of best practices, however, vary intensely in their constitution and in their relationship to organisational performance. A sample of these variations is provided in Table. This results in confusion about which particular HR practices constitute high commitment, and a lack of empirical evidence and ‘theoretical rigour’ (Guest 1987: 267) to support their universal application. Capelli and Crocker-Hefter (1996: 7) note:

  • Integrated bundles of HRM: horizontal integration

A key theme that emerges in relation to best-practice HRM is that individual practices cannot be implemented effectively in isolation (Storey, 1992) but rather combining them into integrated and complementary bundles is crucial (MacDuffie, 1995). Thus the notion of achieving horizontal integration within and between HR practices gains significance in the best-practice debate.

HR practices for ‘competitive advantage through people’

The need for horizontal integration in the application of SHRM principles is one element that is found in the configurational school of thought, the resource-based view approach and in certain best-practice models. It emphasises the coordination and congruence between HR practices, through ‘a pattern of planned action’ (Wright and McMahan, 1999). In the configurational school, cohesion is thought likely to create synergistic benefits, which in turn enable the organisation’s strategic goals to be met.

Roche (1999: 669), in his study on Irish organisations, noted that ‘organisations with a relatively high degree of integration of human resource strategy into business strategy are much more likely to adopt commitment-oriented bundles of HRM practices’. Where some of the best-practice models differ is in those that advocate the ‘universal’ application of SHRM, notably Pfeffer (1994, 1998). Pfeffer’s argument is that best practice may be used in any organisation, irrespective of product life cycle, market situation or workforce characteristics, and improved performance will ensue.

This approach ignores potentially significant differences between organisations, industries, sectors and countries however. The work of Delery and Doty (1996) has highlighted the complex relationship between the management of human resources and organisational performance, and their research supports the contingency approach (Schuler and Jackson, 1987) in indicating that there are some key HR practices, specifically internal career opportunities, results-oriented appraisals and participation/ voice, that must be aligned with the business strategy or, in other words, be context-specific.

The ‘bundles’ approach, however, is additive, and accepts that as long as there is a core of integrated high-commitment practices, other practices can be added or ignored, and still produce enhanced performance. Guest et al.’s analysis of the WERS data (2000a: 15), however, found that the ‘only combination of practices that made any sense was a straightforward count of all the practices’. As with many high-commitment-based models, there is an underlying assumption of unitarism, which ignores the inherent pluralist values and tensions present in many organisations. Coupled with further criticisms of context avoidance and assumed rationality between implementation and performance, the best-practice advocates, particularly the universalists, are not without their critics.

Self-directed work teams

In a study of illumination in the workplace of Hawthorne and the Western Electric Company, a sociologist from Harvard Business School, Elton Mayo, concluded that when the organization established experimental work groups, “the individuals became a team and the team gave itself wholeheartedly and spontaneously to cooperation.” Through a natural system of collaboration, the teams are not only responsible for the work but also the management of their group. Mayo’s research uncovered that teams under their own direction established a capacity for self-motivated learning and change. This concept of designing the work system with the full participation of the people proved to be a breakthrough for organizations during the 1990s. During that time, employees closest to the product and customer began to have increasing decision making capacities and capabilities.

Interview programs

The Hawthorne Experiments sought to determine a correlation between light levels and productivity. Researchers had divided the employees into teams of six and interviewed the individuals to determine the effect of the lighting. Mayo discovered that the interview program set up by the study inherently gave the employees a sense of higher purpose.[9] Exposure of employee thoughts and concerns to managers appeared to be a fundamental aspect of the relation between managers and employees. Evidently, by having the ability to speak to their managers, the employees at Western Electric exhibited a dramatic improvement in their attitudes towards work. Essential to a highly committed work force, the interview program formally developed and sustained cooperation with management.

Problem-solving teams

The Hawthorne experiment further highlighted that teams working without coercion from above or limitation from below could astonish even their own expectations of themselves. Sociologist Fritz Roethlisberger argued that this informal organization left the team responsible for addressing the myriad of problems that continuously arose. Roethlisberger noted by studying the chemistry of informal groups that human interactions and collaboration have the potential to set when teams have to face problems on their own. Together the individuals of the team strive to improve the processes of the team by adapting to different demands and learning from each other.

Cross training

Cross training began to be heavily examined through the scope of modern Japanese management in the automobile industry in the 1970s. Sociologists examined the way in which the Japanese automobile firms cross-trained its employees through a company wide orientation and training program. As Japanese firms trained their employees in a multitude of aspects in the production process, sociologists discovered that the training brought the employees together and formed a connection in which all the employees were dedicated to the company’s mission. These established connections appeared to solicit cooperation among the work force. The Japanese auto plants revealed that flexibility within the production teams allowed employees to work on their own tasks while keeping others efficient.

Changing Role of HR Professionals

The role of Human Resource (HR) professionals has undergone significant transformation in recent decades, adapting to the dynamic needs of organizations and evolving economic, technological, and social environments. Traditionally, HR was seen as an administrative function primarily focused on hiring, payroll, and compliance with labor laws. However, with the increasing importance of human capital in driving organizational success, the role of HR professionals has expanded to include strategic, developmental, and advisory functions. This shift reflects the growing recognition that HR is a key player in fostering a culture of innovation, employee engagement, and long-term organizational sustainability.

  • From Administrative to Strategic Partner

One of the most significant changes in the role of HR professionals is the shift from an administrative to a strategic role. Historically, HR’s focus was on administrative tasks such as recruitment, benefits administration, and maintaining employee records. Today, HR professionals are seen as strategic partners in achieving business goals. They are involved in decision-making processes, helping to shape organizational strategy, and ensuring that the human resource policies align with the company’s objectives. HR plays an essential role in organizational planning, talent management, and creating a work environment that supports the achievement of long-term goals.

  • Talent Management and Development

As organizations recognize the importance of retaining top talent and fostering leadership potential, HR professionals have taken on the responsibility of talent management and employee development. HR now focuses not only on recruitment but also on identifying future leaders, ensuring ongoing skill development, and facilitating succession planning. Through training, mentorship, and career development programs, HR professionals work to nurture a workforce capable of meeting the challenges of an evolving business landscape. Their role in helping employees grow and advance ensures that the organization remains competitive in the talent marketplace.

  • Employee Engagement and Well-being

In the modern business world, employee engagement and well-being are seen as critical factors in driving productivity and job satisfaction. HR professionals now focus on creating a positive organizational culture, fostering open communication, and building trust between employees and management. They develop initiatives that promote work-life balance, mental health, and overall well-being. HR professionals also focus on improving employee morale and motivation by recognizing achievements, offering flexible working arrangements, and encouraging a healthy work environment. Employee engagement is central to organizational success, and HR plays a crucial role in cultivating it.

  • Use of Technology and Data Analytics

The digital age has brought about an increased reliance on technology and data analytics in HR functions. HR professionals now use advanced software systems for payroll, recruitment, performance management, and employee engagement. They also leverage data analytics to make informed decisions regarding workforce trends, compensation packages, and employee retention strategies. By using data, HR professionals can better understand employee needs, predict turnover, and develop tailored policies to improve performance and satisfaction. Technology has also streamlined administrative tasks, allowing HR professionals to focus on more strategic initiatives.

  • Diversity, Equity, and Inclusion (DEI)

The role of HR professionals has also evolved to include a strong emphasis on diversity, equity, and inclusion (DEI). In response to growing social awareness, HR departments are now at the forefront of creating diverse and inclusive workplaces. HR professionals are responsible for implementing programs that promote diversity in hiring, ensuring equal opportunities for all employees, and fostering a culture of inclusivity. This involves addressing unconscious biases, creating mentorship opportunities for underrepresented groups, and actively promoting workplace equality.

  • Change Management and Organizational Development

HR professionals are now integral to change management and organizational development. In today’s fast-paced business environment, organizations must adapt quickly to market shifts, technological advancements, and evolving customer needs. HR plays a pivotal role in managing change by supporting employees through transitions, providing training for new systems or processes, and ensuring that the workforce remains engaged and adaptable. Additionally, HR professionals work to shape organizational culture and structure to support growth and innovation.

Resourcing Strategy Meaning and Objectives

A resourcing strategy and a recruitment policy helps you understand future staffing needs and work out how to ensure those needs are met. The policy should be consistent and transparent, reflect the organisation’s mission and values, and comply with employment law regulations.

The resourcing strategy broadly states the goals that the organisation aims to achieve through recruitment. This could be by external recruitment or developing existing employees; working with the whole organisation to understand its current and future needs; and ways of addressing resourcing (both by filling vacancies and also through the wider needs and expectations of candidates).

The policy should clearly set out the recruitment process; demonstrate consistency across the organisation’s sectors; extend information about the organisation’s recruitment strategy; and integrate with strategic and operational objectives. Finally, check that your resourcing policy chimes with your employer brand, and that your organisation is fulfilling those ambitions and values.

Components of a resourcing strategy include knowing the talents and skills you need to meet your business requirements; where and how to fill gaps; and how to fulfil your future talent needs:

  • Workforce planning: The number and type of employees required
  • Employee value proposition: The ‘give’ and the ‘get’
  • Resourcing plans: Where to find your people; learning and development offer
  • Retention: Being ‘an employer of choice’
  • Flexibility: Addressing hard-to-fill roles; offering different hours and work locations
  • Talent management and succession planning: What future talent does the business require and where will these managers come from?

Successful resourcing strategy include:

  • Ensure you have a ‘resourcing champion’ overseeing your strategy, whatever the size of your organisation
  • Refine the employer brand and employee value proposition (evp) to determine how you stand out against the competition
  • Build talent internally by adjusting existing roles, providing training, flexible working, or creating career paths to build loyalty and enhance your employer brand
  • Develop an internal pool of candidates by using internal referral schemes and contacting previous applicants
  • Consider establishing relationships with graduates, past employees and other contacts to provide a talent pool
  • Keep a schedule of hiring practices and expenditure to monitor the most successful and cost-effective channels and inform future strategy
  • When selecting a recruitment agency, look for one key expert in your industry that offers a genuine partnership, based on longer-term resourcing needs.

If there is more than one person in your organisation who can hire new recruits, make sure any changes to hiring processes are communicated effectively. It is important to have a clear understanding of the current marketplace and what your business may need in terms of talent for the short and long term. The same goes for your organisation’s targets, projects and relevant timescales, and how these link to future vacancies.

Process

  1. Have a Workforce Plan

Imagine if you never had a vacancy again. This may seem far-fetched but you can get pretty close by having a thorough Workforce Plan which considers the type of workforce you need for the future, the volume of people you need and where they are based, what skills they’ll have and where you can get them from. If you build in a proactive approach to recruitment where you plan for the future and know what roles you needed and when, you would be able to build pro-active talent pools and reduce the need for in the moment, requisition-led recruitment, which would in turn limit the number of vacancies you have.

A key part of the Workforce Plan is to have a detailed view of Succession. You can also use the succession process to scenario plan (who’s likely to leave), future-proof your business, plan development, keep an eye on talented individuals and identify internal and external replacements succession doesn’t just have to be internal, you can keep external talent warm too. In my view part one of a resourcing strategy is to minimise vacancies. Workforce Planning is the best way to do this.

  1. Know and communicate what you’re about.

I’m not a fan of HR jargon but in the trade, this would be referred to as a strong Employer Value Proposition. In essence this means being really clear on what you stand for as an employer and what the prospective employee will get in return for working from you, for example fast career progression, high pay, long hours or strong values, flexibility, a great environment. It is important that this is reflected in all your recruitment literature and job adverts. A strong and accurate proposition will help you attract the right people to your business.

  1. Be clear on the type of person you’re looking for.

In order to attract the right people, you’ve first got to be clear on the type of person you’re looking for. This means knowing the skills, qualifications, experience you need to be a success in the role and combine this with the values the person needs to work effectively in your business.

  1. Advertise your roles in the right place.

It seems pretty simple when you think about it. I’ve done a lot of work with some great marketing people recently who have helped me to identify the right channels and right places to advertise based on where the people I’m trying to attract look for jobs. For example, if I’m trying to attract people out of the city then I’ll advertise on the London tube, if I’m trying to attract rural people, I’ll look at Farmer’s Weekly, if it’s HR people then the CIPD etc.

If you’re using a recruitment partner/agent, then it’s critical that you pick the right one. One that shares your values and can represent your role and brand as well as you can. The partner you choose says a lot about you to your prospective future employee. It’s about more than just price.

  1. Stay in touch with second place.

It is about making sure you keep in touch with the good quality, unsuccessful applicants for roles in your business. This is a great way to keep a warm pool of high-quality people interested in your business who want to work for you. They might not have been successful this time but they could be great for future positions. Staying in touch could also help you build an external talent pool so you’re not always starting your recruitment search from a standing start.

  1. Have robust selection methods.

Build a selection process and method for assessing candidates that reflects and effectively tests the skills applicants will need to be a success in the role. Don’t just rely on an interview which can be subjective build a recruitment assessment process that tests on the job aptitude through practical assessments, numerical, verbal and psychometric assessments and use referencing from previous roles. If you’re relying on interviews then use competency-based interviewing to draw out real examples of when they’ve had success before.

Resourcing Types

Internal Recruiting: internal recruiting involves filling vacancies with existing employees from within an organization.

Retained Recruiting: When organization hire a recruiting firm, there are several ways to do so; retained recruiting is a common one. When an organization retains a recruiting firm to fill a vacancy, they pay an upfront fee to fill the position. The firm is responsible for finding candidates until the position is filled. The organization also agrees to work exclusively with the firm. Companies cannot, in other words, hire multiple recruiting firms to fill the same position.

Contingency Recruiting: like retained recruiting, contingency recruiting requires an outside firm. Unlike retained recruiting, there is no upfront fee with contingency. Instead, the recruitment company receives payment only when the clients they represent are hired by an organization.

Staffing Recruiting: staffing recruiters work for staffing agencies. Staffing recruiting matches qualified applicants with qualified job openings. Moreover, staffing agencies typically focus on short-term or temporary employment positions.

Outplacement Recruiting: outplacement is typically an employer-sponsored benefit which helps former employees transition into new jobs. Outplacement recruiting is designed to provide displaced employees with the resources to find new positions or careers.

Reverse Recruiting: refers to the process whereby an employee is encouraged to seek employment with a different organization that offers a better fit for their skill set.

Human Capital Management

Unit 1 Human Resource Management
Human Resources Management Meaning, Definitions, Characteristics VIEW
Human Resources Management Objectives, Importance VIEW
Human Resources Management Functions VIEW
Human Resources Management Scope VIEW
Human Resources Management Process VIEW
Human Resources Management Challenges VIEW
Human Resources Management Recent Trends VIEW
Human Resources Manager Duties and Responsibilities VIEW
Paradigms for Post Modern Managers: Meaning, Definitions, Characteristics, Objectives, Importance, Functions VIEW
Process of Human Resources Development VIEW
Differences between personnel Management and Human Resources Development VIEW
Difference HRM and SHRM VIEW
Difference between HRM and IHRM VIEW
Unit 2 Human Resource Planning, Recruitment & Selection
Human Resource Planning Meaning, Importance, Benefits VIEW
Human Resource Planning Scope VIEW
Job Analysis VIEW VIEW
Job Design VIEW VIEW
Job Description VIEW
Job enrichment VIEW
Job Evaluation VIEW
Recruitment Meaning, Definitions and VIEW VIEW
Sources of Recruitment VIEW
Traditional and Modern sources of recruitment VIEW
E-recruitment, Twitter, Blog, Instagram, LinkedIn, walk in, talk in, write in, Artificial intelligence (Robots based) virtual discussion VIEW
Selection Meaning, Definitions VIEW
Process of Selection VIEW
Identification of five dark qualities in an individual before selection process of selection and Placement VIEW
Unit 3 Human Resource Practices
Induction Meaning, Definitions, Objectives and Purposes VIEW
Orientation Meaning, Definitions, Objectives and Purposes VIEW
Training Meaning, Need, Benefits and Methods VIEW VIEW
Pros and Cons of each Method of HR Training VIEW
Identification of Training & Development Needs VIEW VIEW
Human Resources Development of Managers and Employees VIEW
Performance Management System (PMS) Meaning, Definitions, Objectives VIEW
Methods of Appraising the past performance and current performance of the employee and executive VIEW VIEW
Projecting future performance of an employee VIEW
Individual employee Development VIEW VIEW
Performance appraisal and Performance Management System (PA vs PMS) VIEW
Unit 4 Compensation and Reward System
Compensation Meaning, Definitions, Objectives and Importance VIEW VIEW
Wages and Salary Perquisites VIEW
Fringe Benefits VIEW
Bonus and Incentives VIEW VIEW
Incentives in sun rise sector and sun set sector VIEW
Incentives in sun set sector VIEW
Performance based pay, VIEW
Merit-based pay, skill-based pay, and competency-based pay VIEW
Dual system of payment for the same job position VIEW
Promotion: Meaning, Definitions, Features VIEW
Methods of Promotion, Seniority vs Meritocracy VIEW
Unit 5 Employee Coaching, Counselling and Industrial Relations
Employee Coaching: Meaning, Definitions, Objectives, Types VIEW
Employee Counselling: Meaning Definitions, Objectives, Skills and Techniques VIEW
Industrial Relation: Meaning, definition VIEW
Actors in Industrial Relation VIEW

 

Human Resource Accounting Meaning, Features, Objectives and Methods

Human Resource Accounting (HRA) is a specialized area of accounting that involves measuring, recording, and analyzing the value of an organization’s human capital. It recognizes employees as valuable assets rather than just costs, aiming to quantify their contribution to the organization in monetary terms. This concept emphasizes the importance of skilled and experienced employees in driving organizational success and sustainable growth.

HRA focuses on assessing the cost of recruiting, training, and developing employees alongside evaluating their economic value and performance. Costs such as salaries, benefits, and training investments are categorized, and methods like historical cost, replacement cost, and present value of future earnings are used to estimate their value.

The primary goal of HRA is to provide information for better decision-making by management, such as resource allocation, talent management, and workforce planning. It also aids in evaluating the return on investment in human capital and improving transparency in financial reporting.

HRA benefits organizations by helping them understand the long-term impact of employee contributions, fostering effective talent management strategies, and aligning workforce investments with organizational goals. By recognizing human resources as strategic assets, HRA highlights their critical role in achieving competitive advantage.

Features of Human Resource Accounting:

  • Recognition of Human Capital as Assets

HRA acknowledges employees as intangible assets critical to the success of an organization. It shifts the perspective from viewing human resources as merely expenses to considering them as valuable investments.

  • Measurement of Costs and Value

HRA involves calculating the costs associated with human resources, such as recruitment, training, development, and retention. It also evaluates the economic value employees bring to the organization through their productivity and contributions.

  • Use of Quantitative and Qualitative Metrics

HRA employs both quantitative metrics (e.g., cost of training programs, employee turnover rates) and qualitative assessments (e.g., employee skills, leadership potential) to provide a comprehensive valuation of human resources.

  • Focus on Decision-Making

HRA aids management in making informed decisions related to workforce planning, training investments, promotions, and succession planning. It provides insights into how human capital investments impact organizational performance.

  • Enhanced Financial Reporting

By including human capital in financial statements, HRA offers a more transparent view of an organization’s intangible assets. This improves the quality of financial reporting and enhances stakeholder trust.

  • Alignment with Organizational Goals

HRA aligns the measurement and management of human resources with organizational objectives. It highlights the importance of workforce management in achieving strategic goals and sustaining competitive advantage.

Objectives of Human Resource Accounting:

1. Recognizing Human Resources as Assets

HRA aims to shift the traditional perspective of employees as expenses to recognizing them as valuable organizational assets. This objective highlights the long-term contribution of human capital to organizational success and positions employees alongside other tangible assets on the balance sheet.

2. Measuring the Cost of Human Resources

One of the core objectives of HRA is to quantify the cost associated with human resources, including recruitment, selection, training, development, and retention. By identifying these costs, organizations can evaluate their investment in human capital and plan for its efficient utilization.

3. Determining the Economic Value of Employees

HRA seeks to calculate the monetary value employees contribute to the organization. It evaluates the impact of human resources on productivity, innovation, and profitability, providing a clear picture of their return on investment (ROI).

4. Facilitating Effective Decision-Making

HRA provides management with accurate data about human capital, which aids in making informed decisions. This includes areas such as workforce planning, compensation strategies, talent development programs, and succession planning, ensuring that human resource investments align with organizational goals.

5. Enhancing Transparency in Financial Reporting

HRA integrates human capital valuation into financial statements, making them more comprehensive and transparent. By doing so, it enables stakeholders to understand the intangible value human resources bring to the organization, fostering greater trust and accountability.

6. Supporting Human Resource Development

Another key objective of HRA is to promote the continuous growth and development of employees. By identifying skill gaps and measuring the effectiveness of training programs, HRA helps organizations design initiatives that enhance employee performance and satisfaction.

Methods of Human Resource Accounting:

Human Resource Accounting (HRA) employs various methods to quantify the value of human resources. These methods can be broadly categorized into cost-based methods and value-based methods, each offering unique perspectives on human capital valuation.

1. Historical Cost Method

This method involves recording the actual costs incurred in hiring, training, and developing employees. These costs are treated as investments and are amortized over the expected service life of the employees.

  • Advantages: Simple to implement and focuses on actual expenses.
  • Disadvantages: Ignores future potential and does not consider the impact of inflation.

2. Replacement Cost Method

This method estimates the cost of replacing an employee with a similar skill set and experience. It includes expenses for recruitment, training, and onboarding of new hires.

  • Advantages: Reflects the current value of human resources.
  • Disadvantages: Can be subjective and challenging to estimate accurately.

3. Present Value of Future Earnings Method

This approach calculates the present value of an employee’s expected future earnings during their tenure. The formula discounts future earnings to the current period.

  • Advantages: Focuses on potential contributions.
  • Disadvantages: Highly dependent on assumptions about future performance and tenure.

4. Opportunity Cost Method

This method values human resources based on the opportunity cost of not employing them in their most productive capacity. It considers the income that would be forgone if employees left the organization.

  • Advantages: Highlights the economic impact of skilled employees.
  • Disadvantages: Limited applicability as it assumes perfect mobility of employees.

5. Economic Value Method

This method evaluates the economic value of employees by estimating their contribution to the organization’s overall profitability. It combines cost and performance metrics.

  • Advantages: Provides a comprehensive valuation of employee contributions.
  • Disadvantages: Requires complex data and analysis.

6. Adjusted Present Value Method

This method adjusts the present value of future earnings by incorporating factors such as employee turnover, training effectiveness, and market conditions.

  • Advantages: Offers a nuanced valuation.
  • Disadvantages: Complex and resource-intensive.

7. Human Resource Value Index Method

This method assigns an index value to employees based on factors such as skills, experience, performance, and potential. The index reflects their relative value to the organization.

  • Advantages: Emphasizes qualitative aspects of human resources.
  • Disadvantages: Subjective and prone to biases.

Collective Bargaining, Meaning, Forms, Pre-Requisites, Characteristics

Collective Bargaining is the process of negotiation between employers and employees (represented by trade unions) to determine fair wages, working conditions, benefits, and job security. It aims to establish a mutually agreed contract that protects workers’ rights while ensuring business stability. This process fosters industrial peace, reduces conflicts, and enhances employee satisfaction. Collective bargaining can be distributive (win-lose), integrative (win-win), or productivity-based. It is a crucial tool for ensuring fair labor practices and promoting a balanced relationship between workers and management. Effective collective bargaining strengthens workplace democracy, ensuring that employees have a voice in decision-making processes.

Forms of Collective Bargaining:

  • Distributive Bargaining (Win-Lose Bargaining)

Distributive bargaining occurs when employers and employees negotiate over limited resources, such as wages or benefits, where one party’s gain is the other’s loss. It is a competitive approach where both sides try to maximize their own advantage. This type of bargaining is common in situations where workers demand higher pay while employers aim to control labor costs.

  • Integrative Bargaining (Win-Win Bargaining)

Integrative bargaining focuses on mutual gains rather than competition. Both parties work together to find creative solutions that benefit both employers and employees. For example, improving working conditions or offering productivity-linked incentives ensures workers are satisfied while businesses remain profitable. This approach fosters collaboration, trust, and long-term industrial harmony.

  • Productivity Bargaining

In productivity bargaining, workers agree to enhance their efficiency, skills, and output in exchange for better wages, incentives, and benefits. Employers commit to providing better training, technology, and working conditions. This approach is common in industries where performance-based pay structures and efficiency improvements are prioritized to boost overall productivity.

  • Composite Bargaining

Composite bargaining extends beyond wages and focuses on job security, working conditions, training opportunities, and retirement benefits. It aims to improve the overall quality of work-life for employees. Workers negotiate for stable employment, skill enhancement, and improved workplace safety, ensuring their well-being while maintaining a productive work environment.

  • Concessionary Bargaining

In concessionary bargaining, trade unions agree to certain compromises, such as wage cuts or reduced benefits, to help struggling businesses survive. This is common during economic downturns or financial crises, where companies may need cost reductions to stay operational. Workers accept temporary sacrifices in return for job security and long-term stability.

Essential Pre-Requisites for Collective Bargaining:

  • Strong and Recognized Trade Unions

A well-organized, united, and legally recognized trade union is essential for effective collective bargaining. The union should represent a majority of employees and have skilled leadership to negotiate with employers. Without a strong union, workers’ demands may be fragmented, reducing their bargaining power and making negotiations ineffective.

  • Willingness to Negotiate

Both employers and employees must show a genuine willingness to engage in fair negotiations. If either party is rigid or unwilling to compromise, the process fails. Successful collective bargaining requires a cooperative attitude, mutual respect, and an understanding of shared interests to achieve a win-win agreement.

  • Legal and Institutional Support

A strong legal framework and government support are essential to ensure fair negotiations. Labor laws should protect both workers and employers, preventing unethical practices like unfair dismissals or wage exploitation. Institutions such as labor courts or mediation bodies help in resolving disputes and ensuring compliance with agreements.

  • Availability of Accurate Information

Both parties must have access to reliable data on wages, productivity, profits, and industry trends. Accurate information ensures informed decision-making, leading to fair and just agreements. Misinformation or lack of transparency can cause mistrust and disrupt negotiations, making it difficult to reach mutually beneficial settlements.

  • Effective Leadership and Negotiation Skills

Strong leadership and skilled negotiators are crucial for successful collective bargaining. Union leaders should be knowledgeable about labor laws, industry standards, and economic conditions to make strong arguments. Employers should also have experienced negotiators who understand business needs and are willing to offer reasonable compromises.

  • Clear Objectives and Demands

Unions must clearly define their objectives before entering negotiations. Vague or unrealistic demands can lead to failed discussions and industrial disputes. A well-structured proposal that outlines specific concerns—such as wages, benefits, or working hours—ensures that negotiations are focused and result-oriented.

  • Industrial Harmony and Trust

A work environment with mutual trust and industrial peace supports productive collective bargaining. If there is ongoing conflict, negotiations may become hostile. Both parties should engage in discussions with an open mind, fostering trust and commitment to long-term agreements that benefit both employees and employers.

  • Mechanism for Implementation and Review

A structured process for enforcing agreements ensures that negotiated terms are implemented effectively. Employers must honor commitments, and unions should monitor compliance. Periodic reviews should be conducted to address emerging issues, ensuring that agreements remain relevant and effective in maintaining workplace harmony.

Characteristics of Collective Bargaining:

  • Bipartite Process

Collective bargaining involves two parties—employers and employees (or trade unions)—who negotiate terms of employment. It is a mutual discussion where both sides present their demands and concerns. The process requires cooperation, compromise, and dialogue to reach an agreement that benefits both workers and the organization, ensuring industrial peace and better working conditions.

  • Dynamic and Continuous Process

Collective bargaining is not a one-time event but a continuous and evolving process. As economic conditions, labor laws, and workplace environments change, agreements may require modifications and renegotiations. Periodic discussions help adapt to new industry trends, ensuring that agreements remain fair and relevant over time.

  • Voluntary Negotiation

The process of collective bargaining is based on voluntary participation. Both employers and employees must come forward willingly to negotiate without coercion. There is no external force imposing terms; rather, agreements are reached through mutual understanding and consensus, ensuring both parties feel heard and respected.

  • Aims at Industrial Peace

One of the primary goals of collective bargaining is to reduce industrial conflicts by addressing workers’ grievances and employer concerns through dialogue. By reaching fair agreements on wages, working conditions, and benefits, the process prevents strikes, lockouts, and labor disputes, promoting a peaceful work environment.

  • Flexible and Adaptive

Collective bargaining is a flexible mechanism that adapts to different industries, labor conditions, and economic changes. Unlike rigid laws, bargaining agreements can be tailored to specific organizational needs, making it an effective tool for addressing workforce concerns in a way that benefits both parties.

  • Focused on Economic and Non-Economic Issues

Collective bargaining covers both financial and non-financial aspects of employment. While it primarily negotiates wages, salaries, and benefits, it also addresses issues such as job security, working hours, workplace safety, promotions, and employee rights, ensuring comprehensive labor agreements.

  • Rule-Making Process

Through collective bargaining, binding agreements are created, forming a set of rules that govern employer-employee relationships. These agreements serve as guidelines for future labor relations, ensuring that workers’ rights and company policies are maintained consistently over time.

  • Legally and Socially Recognized

Collective bargaining is backed by labor laws and government policies, making its agreements legally binding. It is also recognized as a socially acceptable way to resolve labor disputes. A fair agreement benefits both workers and employers, contributing to economic stability and improved industrial relations.

Stress Management Through Mind Control and Purification

People can learn to manage stress and lead happier, healthier lives. Here are some tips to help you keep stress at bay.

  • Keep a positive attitude.
  • Accept that there are events that you cannot control.
  • Be assertive instead of aggressive. Assert your feelings, opinions, or beliefs instead of becoming angry, defensive, or passive.
  • Learn and practice relaxation techniques; try meditation, yoga, or tai-chi for stress management.
  • Exercise regularly. Your body can fight stress better when it is fit.
  • Eat healthy, well-balanced meals.
  • Learn to manage your time more effectively.
  • Set limits appropriately and learn to say no to requests that would create excessive stress in your life.
  • Make time for hobbies, interests, and relaxation.
  • Get enough rest and sleep. Your body needs time to recover from stressful events.
  • Don’t rely on alcohol, drugs, or compulsive behaviors to reduce stress.
  • Seek out social support. Spend enough time with those you enjoy.
  • Seek treatment with a psychologist or other mental health professional trained in stress management or biofeedback techniques to learn healthy ways of dealing with the stress in your life.

Stress Management Intervention Primary, Secondary and Tertiary

Primary Intervention

Actions at the primary level directly target the causes or sources of stress that are present within an organization in order to reduce or completely eliminate them. The aim is to reduce the possibility of developing mental health problems by reducing workers’ exposure to the risks in their work environment.

For example, it is known that lack of participation in the decision-making process has consequences for the mental health of individuals. Thus, an organization that wishes to undertake primary prevention could establish a mechanism which gathers the suggestions and requests of individuals, analyzes them, and applies them within the work environment with the participation of these individuals. In this way, the organization helps to reduce employees’ exposure to this risk factor and to prevent the development of work-related mental health problems.

Advantages and disadvantages

Primary prevention strategies are the only ones that reduce or eliminate mental health problems at work at their source. Because these strategies directly attack the causes of the problem, they will also considerably reduce their resulting costs. However, such significant results will require a real commitment from the organization. This explains why such strategies are used less often. It takes time and energy to eliminate the risks present in the workplace. Sometimes several months go by before the positive effects of primary strategies can be seen. Financial, human and technical resources are also required.

Such strategies require support by upper management and the commitment of all persons concerned. They must be part of a well planned and structured process. Ensuring the success of such an undertaking is a major challenge. For example, the development and functioning of the decision-making process described above can be expected to take some time and require the mobilization of human and technical resources. A system has to be implemented to gather suggestions made by employees, as well as to analyze, choose and apply them within the work environment. All these steps require significant effort and cannot be accomplished overnight.

Although implementing primary level strategies normally requires time, energy and resources, this is not always the case. Sometimes improvements can be made by simply adapting certain existing management practices within the organization. Team meetings are a good example. Several organizations hold weekly or monthly meetings with their employees. Not much is required to make these meetings an occasion to give employees recognition and support, and to facilitate feedback. In addition, an organization that wants to encourage the participation of employees in the decision-making process could use these meetings to gather requests and suggestions from employees until such time that an official process is implemented.

Secondary prevention:

Secondary prevention aims to help individuals develop the knowledge and skills to better recognize and manage their reactions to stress. Giving them the necessary tools allows them to better adapt to the situation or to the work environment and reduces the impact of stress. The content and form of these strategies may vary considerably but they usually include awareness and information-sharing activities, as well as skills development programs.

Advantages and disadvantages

Secondary prevention strategies are a useful tool because they make individuals aware of and inform them about the problem of mental health at work. These strategies also help them develop their skills and their mental resources in order to increase their resistance to stress.

However, secondary prevention strategies do not change the conditions in which work is performed. They only deal with the consequences of the problem in order to control the damage. This is why such strategies only have short-term effects. For example, while stress management training changes people’s reaction so that they can better adapt to their work, it does not eliminate the sources of stress within an organization.

Many firms that until now have relied exclusively on this type of strategy now realize that they are unable to adequately fight against work-related mental health problems. In order for secondary prevention strategies to be totally effective, they must be combined with primary and tertiary strategies.

Tertiary prevention

Tertiary prevention strategies aim to treat and rehabilitate persons as well as facilitate a return to work and the follow up of those who suffer or have suffered from a work-related mental health problem. These strategies generally include counselling services to refer employees to specialists if need be. Tertiary prevention activities are often part of employee assistance programs. These programs feature personalized client-centred help for persons with difficulties so they can analyze their problems and feel supported in their search for solutions. These strategies may also include return-to-work programs for employees who are on sick leave, as well as a help network for example, informal caregivers who can provide support, active listening and referrals to professional resources if necessary.

Advantages and disadvantages

In spite of the fact that the quality and quantity of services vary from one organization to another, they generally help individuals who have personal difficulties or work-related difficulties to obtain information, help and support from in-house counsellors and from counsellors outside the organization. Tertiary level services are voluntary, confidential and available at all times.

As far as drawbacks are concerned, tertiary activities, just like secondary ones, are centred on the person rather than the work situation. By trying to reduce the symptoms, once again they target only the consequences of the problem. Furthermore, because the Employee Assistance Program (EAP) is confidential, it cannot deal with organizational causes.

Return-to-work program

  • Maintains the employment relationship with the person on leave;
  • Return-to-work plan;
  • Employment support measures (for example: progressive return to work, temporary assignments, medical follow up).

Peer help networks

  • Active listening;
  • Information;
  • Support;
  • Referrals to specialized resources.

Employee assistance programs (EAP)

  • Information;
  • Assessing needs;
  • Short-term help through individual or group meetings;
  • Telephone support line;
  • Referrals to specialized resources (doctors, psychologists, psychiatrists, social workers, guidance counsellors, lawyers).
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