Nature, Importance, and Scope of HRM – A Comprehensive Guide

Knowing the Nature, Importance, and Scope of HRM is of utmost importance in your quest for becoming an HR professional. Human Resources Management is a process that can lead to improved individual, group, and organizational effectiveness. It involves managing the human resources of an organization to make sure that they are invested in the success of their work. This process includes HR planning, recruitment, selection, and development, followed by motivation, career development, and promotion. From Employee onboarding to employee resignation, Human Resource Executives and Managers play a vital role in promoting culture and employer branding. A strong Human Resource department has gained prominence in a post-pandemic world, wherein employers are seeing unprecedented attrition and switching.

Definition of human Resource Management or HRM
Nature, Importance, and Scope of HRM: Word Cloud
The Great Resignation - Source WEF
Source: World Economic Forum

Definitions of Human Resource Management

Unlike other branches of management, human resource management take a resource-based view of the organization. Many modern days leaders consider human resources as the source of ultimate competitive advantage that differentiates them from the competition. With the advent of technology and the gradual shortening of the employee life cycle, HR has assumed center stage for discussion in management science studies again. Let us look into a few classical definitions for this old yet evolving branch of management.

According to Flippo, “HRM is the planning, organizing, directing and controlling of the procurement, development, compensation, integration, maintenance, and reproduction of human resources to the end that individual, organizational and societal objectives are achieved”.

The National Institute of Personal Management (NIPM India) defines human resources – personal management as “that part of management which is concerned with people at work and with their relationship within an enterprise. Its aim is to bring together and develop into an effective organization of the men and women who make up enterprise and having regard for the well–being of the individuals and of working groups, to enable them to make their best contribution to its success”.

According to Decenzo and Robbins, “Human Resource Management is concerned with the people dimension” in management. Since every organization is made up of people, acquiring their services, developing their skills, motivating them to higher levels of performance, and ensuring that they continue to maintain their commitment to the organization is essential to achieve organizational objectives. This is true, regardless of the type of organization – government, business, education, health or social action”.

According to Gary Dessler – “Human Resource Management is the process of acquiring, training, appraising, and compensating employees, and attending to their labor relations, health, safety and fairness concerns.”

According to French Wendell – “Human Resource Management is the recruitment, selection, development, utilization of and accommodation to human resources by organizations.”

According to Story, HRM is a distinctive approach to employment management that seeks to achieve competitive advantage through the strategic deployment of a highly committed and capable workforce, using an array of cultural, structural, and personnel techniques.

Thus in all the definitions, we see these keywords like recruitment, selection, development, and utilization of resources. Many contemporary writers like Story have defined Human Resource Management as a part of the central strategy of the organization and part of the competitive advantage. We created a Word Cloud for an easy reference

Definition of Human Resource Management or HRM
Word Cloud for Definition of Human Resource Management

The Nature of Human Resource Management

Human resource management is important because it helps businesses to maximize employee productivity and effectiveness. By managing employee performance, training and development, and compensation and benefits, businesses can ensure that their employees are able to contribute to the company in the most efficient way possible. Additionally, human resource management can help to improve employee morale and motivation, leading to a more positive and productive work environment. Ultimately, by investing in human resource management, businesses can ensure that they have a skilled and dedicated workforce that is able to help them achieve their long-term goals.

We will narrate a comprehensive list of why Human Resource Management is Important.

Nature of human Resource Management or HRM
Nature of HRM

Nature of HRM 1: Objective Oriented

HRM’s aim is to accomplish objectives. Those objectives can be their individual aims or group aims or any other departmental or organizational objective or societal objective.

Nature of HRM 2: HRM as a Process

Human Resource Management is a process like other functions like Quality and Operations. It performs the main functions such as acquisition, including human resource planning, recruitment, and selection of employees. The development function is concerned with the training and development of employees. The motivation function includes providing recognition and reward to the employees and the maintenance function is concerned with providing good working conditions, welfare facilities, etc.

Nature of HRM 3: Universal Application

All organizations have HRM requirements that must be adhered to. It is universal in application and is required at all organizational levels for all types of work.

Nature of HRM 4: Continous Activity

HRM is a continuous activity. Organizations need to manage human resources on a continuous basis and maintain competitiveness by adapting to changes quickly. The dynamic needs of HRM arise due to changes in environmental conditions as well as changes in the strategy of an organization

Nature of HRM 5: Integrated use of Sub-Systems

Human resources management encompasses a wide range of tasks, including employee training and development. Human resource managers can incorporate various techniques in order to increase individual, group, and organizational success.

Nature of HRM 6: Interdisciplinary

The field of HRM has a lot to do with psychology, economics, philosophy, organization behavior, and sociology. This can affect individual, group, and organizational effectiveness. There isn’t any branch of management that has so much of interactions with other branches of management. It encompasses from strategy to operations.

Nature of HRM 7: Team Spirit Development

HRM aims to maintain team spirit in the organization. This is because every organization needs group and department unity to be effective. If people aren’t working towards one common goal, productiveness declines, and opportunities for growth diminish.

Nature of HRM 7: Development of a professional attitude

Formal coaching and training along with a professional body to monitor the professional activities are essential for an activity to be classified as a profession. Many HRM executives are trained MBAs and it is one of the most sought-after branches of management specialization.

Nature of HRM 8: Long-Term Vision/Benefits

In the long run, HRM will create better monetary and non-monetary benefits for employees, the organization, and society. Employees will gain quality job opportunities and an improved corporate image from their company; organizations benefit from higher returns on investment, and better products or services; finally, society sees an improved level of goods or services and a greater sense of quality as well.

Nature of HRM 9: Dynamic Nature

Many changes in employment practices and labor laws happen fast. The organization must keep itself aware of these new changes and must change its policies to match current conditions.

The Importance of HRM

Human resource management (HRM) is a critical function in any organization. Its role is to ensure that the organization has the right people in the right jobs and that they are motivated and engaged in their work. HRM also plays a key role in developing and implementing organizational strategy.

Organizations that are successful in today’s competitive marketplace understand the importance of HRM and invest accordingly in their HR function. They recognize that HR is not just a support function, but a strategic partner that can contribute significantly to business success.

An effective HRM function adds value to an organization by attracting, developing and retaining talent, and by aligning the workforce with the business strategy. It also helps to create a positive work environment where employees are engaged and productive.

When done well, HRM can be a major source of competitive advantage for an organization. It can help to attract and retain the best talent, develop a skilled and motivated workforce, and create a positive work environment that enhances employee engagement and productivity.

Lets us look in detail at the importance of HRM in a modern-day organization

Importance of Human Resource Management or HRM
Importance of HRM
  1. Access to Right People: HRM gives you access to the right people at the right time. HRM acts as a bridge between departmental leaders and resources and finds the right people for the right job. Also, HR is critical in developing a succession plan for critical positions and allows the flow of specific talent in and out of the organization
  2. Effective use of manpower: HRM has the capacity to make sure that employees are placed in the right position, and also makes efficient use of them. After selecting an employee, they can be put in a workstation that better fits their skillset.
  3. Manpower Motivation: HRM (Human Resource Management) keeps staff motivated by providing rewards and incentives. HRMs work to create a compensation plan for employees that provides the best motivation for their work. If a worker is highly motivated, they will put in their best effort to accomplish company objectives.
  4. The morale of the Employees: Human resource managers make efforts to improve employees’ morale by inviting suggestions from group members, providing incentives, etc. because employees work in a group. Teamwork is essential for the success of an organization, so it is important to improve employee morale. Motivation and Morale are two critical M’s of Human Resouce Management and every organization looks forward to a motivated and engaged workforce.
  5. Employee Development: HRM enables career development. As manpower is one of an organization’s valuable assets, it is vital that companies use this effectively. If your employees are not motivated and loyal then they have no use to you and will not produce quality work. Hence, HRM plays a critical role in reskilling and upskilling the employees thereby increasing the strategic and competitive advantage of an organization
  6. Maintaining Relationships in the Organization: The HRM department is responsible for helping establish working relationships among company members and their respective jobs. The HRM department is also in charge of creating clear lines of authority and responsibility among various departments.
  7. Building an Employer Image: In many cases, we have seen that an aggrieved employee creates major issues in employer building. With the advent of Social Media and social job rating platforms like Glassdoor and LinkedIn, HR assumes a very important role in the value perception of an organization. An organization with a good work culture can acquire and retain great employees
  8. Social Responsibility: HRM helps fulfill the social responsibility of the organization. By providing appropriate training and development programs, organizations provide employees with the necessary skills to produce quality goods and services for social progress. This results in a sustainable and responsible business.
  9. Nation Building: Effective HRM is required in order to speed up the economic development of a nation in order to promote peace and prosperity. Taking an organizational view of the HRM can be a parochial way. Building an ethical base of employees is critical for building an organization and helps fulfill the national responsibilities of an organization.

The Scope of Human Resource Management

The HRM process in an organization starts with planning from a resource to onboarding the same to the departure of the resource and finding a replacement for the same. Hence, HRM has an overarching umbrella in which all functions reside. The scope may therefore not be limited to employee lifecycle, but extend to the overall strategy of an organization.

Human resource planning:

Human resource planning involves forecasting the future demand and supply of human resources. It involves finding out the number of skilled, unskilled, and semi-skilled people required. It also involves finding out the possible ways to ensure that the supply of human resources meets demand continuously.

Job analysis

Job analysis is a process of collecting information about the job. Job analysis involves job description i.e. details about the job and job specification i.e. qualities and qualifications necessary to perform the job.


Recruitment is a process of finding out and attracting capable people for the job. The process starts with finding of new recruits and ends when applications are submitted


Selection is the process of picking individuals from the various applicants. Individuals who have the necessary qualities and qualifications suitable for the job.

Training and Development

Training and development refer to an attempt made by the organization to improve the current and future performance of the employee by imparting certain skills, abilities, and knowledge.

Performance Appraisal

It is a systematic evaluation of an individual’s performance on the job. Generally, such evaluation is done with respect to certain predetermined standards in relation to job knowledge quality and quantity of output, cooperation, versatility, etc.

Job Evaluation

Job evaluation is the process of analyzing and assessing the various jobs systematically in order to ascertain their relative worth in the organization. For example job of a clerk or a manager. Job evaluation helps in determining salary differentials.

Executive Remuneration

The executive is considered to be an individual who is in a management position at the highest levels. HRM function involves deciding the amount to be paid as salary, bonus, commission, and long-term incentives, etc. to the executives

Safety and Health

HRM scope also involves ensuring the safety of employees from professional hazards. It also involves ensuring that they don’t work in an unhygienic environment.

Employee welfare

Employees’ welfare services include workers’ recreation facilities like gymkhana, conveniences such as provision of drinking water, washbasins, etc. distribution of work hours, canteen services, and so on. Proper employee welfare would improve their productivity.

Employee Communication

HRM function involves developing healthy communication between various members of the organization. Effective communication is important for performing basic functions of planning, organizing, leading, and controlling in an effective manner.

Promotion and Transfer

Promotion and Transfer involve improvement in pay, prestige, position, and responsibilities of an employee. Formulating promotion policies, transfer policies, selecting individuals for promotion or transfer, etc. are included in the scope of human resource management.

Trade Unions

Trade unions are voluntary organizations of workers formed to promote and protect their interests through collective action. HRM should ensure that a healthy relationship is developed between the management and the union which will create a conducive environment for work.

Developing Ethical Value

Ethics refers to a system of moral principles. It is a study of right and wrong. It is the duty of the HRM department  to  formulate norms for the employees of the organization

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