Human Resource Management

Importance and Limitations of HRM

Human resource management (HRM) is one of the most important aspects of management. Regardless of which level or department a manager belongs to, he must know about the basic principles of HRM. This is because all managers have to deal with people in one way or another. In order to excel in this venture, a manager must be aware of the limitations of HRM too. A good understanding of HRM can boost productivity as well as efficiency in a business organization.

Importance and Limitations of HRM

Importance of HRM

According to the Indian Institute of Personnel Management, the main aim of HRM is to achieve efficiency and justice. This firstly requires organizations to enable coordination amongst employees to help them work together. Secondly, the terms and conditions of service must be such that employees feel satisfied with their work.

Therefore, effective human resource management is important for organizations and also their employees. The most important objective of HRM is to facilitate an organization’s employees in achieving their collective goals.

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Specific objectives of HRM

The following are important objectives that HRM seeks to accomplish:

i) It aims to utilize human resources effectively.

ii) It creates an efficient organizational structure of management hierarchies. In other words, it divides organizations into various levels and departments depending on the nature of work, responsibilities, accountability, etc.

iii) HRM facilitates the maximum potential for human development on all fronts. It basically does this be helping employees advance through training and personality development.

iv) HRM also helps employees advance on social fronts by providing them with welfare services. This can generally be in the form of perks, insurance, financial incentives, etc.

v) HRM tries to reconcile the goals of individual employees with those of the organization. This, in turn, motivates employees to remain loyal towards the organization they work in.

Achievement of objectives by HRM

Management experts generally believe that HRM aims to achieve the above-mentioned objectives. In order to do so, managers use the following activities and tactics:

a) Manpower planning, i.e. determining how many employees with what kind of qualifications they need for each activity.

b) Effective recruitment and placement of employees in all departments and levels.

c) Constant training and development of employees to help them work effectively.

d) Motivating employees by promising them financial and welfare incentives.

e) Remunerating employees adequately to keep them loyal towards the organization.

Limitations of HRM

Despite all the benefits that HRM offers, it also carries certain drawbacks. A good understanding of these drawbacks can help managers implement HRM principles effectively and derive maximum benefits.

The following are some basic limitations of HRM:

1) Uncertainty of future

The future of all business organizations largely remains uncertain. This is because many social, political, technological and financial factors can affect their functioning. These factors end up affecting HRM as well because they dictate employment.

2) Problems of surplus staffing

Whenever an organization is over-staffed, HRM provides solutions like termination of excess employees, VRS, etc. This, in turn, negatively affects existing employees as the threat of job termination looms on them all the time. Such negative psychological pressures can generally make employees inefficient.

3) Conservative attitudes of top-level management

The top-level management of many organizations often possesses a conservative attitude in functioning. It can be reluctant in changing its own ideas and beliefs to accommodate the quirks of employees. This can create hindrances for managers in employing HRM practices.

4) Time-consuming

HRM generally requires managers to collect all sorts of information from employees with respect to their functioning. Collecting all this data from all departments can be highly time-consuming.

5) Expensive

In order to facilitate an organization in functioning effectively, HRM suggests solutions like training, VRS, bonus, perks, etc. Therefore, implementing HRM solutions can be highly expensive too.

Solved Questions on Limitations of HRM

(a) According to the Indian Institute of Personnel Management, the main objectives of HRM are efficiency and __________.

(b) One of the most important limitations of HRM is that the __________ of all organizations largely remains uncertain.

(c) Since HRM suggests solutions like training, VRS and bonus, it can often be very __________ to implement.

Answers:          (a) justice          (b) future          (c) expensive

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2 responses to “Performance Appraisal”

  1. Ashley Johnson says:

    I liked that you said that one thing to consider when you own a business is to conduct performance appraisals. I would imagine that this would help you to evaluate which areas of the business need improving. I would be sure to have performance appraisals in order to help my business to become more successful.

  2. 9 links says:

    We at 9 links believe for performance appraisal to be done objectively…they should be assessed using psychometric assessments.

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