UGM June 2019 Q35

• HRM consists of people-related functions as hiring, training and development, performance review, compensation, safety and health, welfare, industrial relations and the like. These are typically the functions of ‘Personnel Management’ and are administrative and supportive in nature. Appropriately called ‘doables’, these activities are highly routinized and have been often outsourced.

More important functions of HRM are the building of human capital. Human capital refers to the stock of employee skills, knowledge, and capabilities that may not show up in a balance sheet but have a significant impact on a firm’s performance.
As stated earlier, human capital (also known as ‘deliverables’) lends a competitive advantage to a firm. Obviously, building human capital is the major function of an HR professional. These activities (routine as well as capital building initiatives) are not carried out in isolation. They are interdependent.

• HRM necessitates alignment of HR policies and practices with the organization’s strategies—both corporate as well as functional. By meshing HR practices and policies with strategies, the HR executive helps formulate and implement business strategies. The HR manager then assumes the mantle of a strategist. In fact, as will be stated later, the very concept of HRM signifies that the role of the HR executive is elevated, from an administrative level to that of the board. He or she becomes a member of the board and thus takes part in decision making.