Introduction
Economic development of a country is very much dependent on the quality of human resources available. The right resources will go a long way in reducing porveryt levels and also helps in achieving a high growth rate. The Human resources can be defined as the talent, skills and knowledge of the people which is used in the production of goods and providing valuable services. By development of quality human resources, high economic growth rate can be attained by terrifically reducing the poverty of the country. Through the development of competent human resources, the overall work performance of the government sector will increase. There will be increased production in both agricultural and non agricultural goods; there will be an increase in the foreign employment, increase in the payment with improved contact to national and international markets. The Long Term Vision of HRD is “To develop necessary competent human resources capable of competing in the national and international labor market, for the continuous development of the country.” (Chapter 29: Human resource development: Background).
All these will have a positive impact on the economy. For the development of the country, there should be competent and competitive human resources to compete in both national and the international market. This can be developed only by participating both the public and the private sector, and also by organizing proper training programmes and timely revision of health and education programmes. The private sector should be also motivated by providing them more incentives and infrastructure. Development of the HRD will lead to equitable distribution of income, increased employment opportunities, improvements in the infrastructure and also lead to better social benefits like education, health care etc. (Silva, 1997).
Definition of Human Resource Development (HRD)
“HRD is a process of developing and unleashing human expertise through organization development (OD) and training and development (T&D) for the purpose of improving performance.” (Swanson, 2003). The main dominance of performance includes the organization, work process and group or individual levels. Organizational development (OD) is the process of systematically and constantly incorporating the organizational changes for the purpose of improving performance.
A function of OD is to search for pioneering and advanced solutions for organization-wide issues, such as team building. T& D is the process of systematically developing expertise in individuals for the purpose of improving the performance of the organization. The three critical applications areas of HRD include Human Resource Management, career management and quality improvement. HRD provides purpose and direction for the continued growth of the organization. According to McLagan “HRD may be the only function in a clear position to represent human ethics and morality.” (What is HRD? evolution of the field, 2001).
He is also of the opinion that HRD is the only function which represents human ethics and morality. The main mission of HRD is to provide individual development so that his performance of the current job can be improved, to provide for career development so that his future performance can be improved and also to provide for organizational development as a whole. Overall it is associated with optimal utilization of human resources and improved performance, which will lead to the competence of the organization. Individual development involves training in some practical works and also helps in improving the knowledge of employees. HRD will adapt according to the changes in the environment and technology.
Due to this character, it has received increased attention from both managers and academicians. From a micro perspective, one of the greatest advantages of HRD is on individual development, and from the macro point of view, it leads to improvement in the efficiency and productivity of the employer and of the organization. (Nurmi, 1999).
The Core believes of HRD includes that the organizations are mainly human-made and they heavily rely on the human knowledge in order to achieve their goals. The human expertise is developed through HRD processes in order to achieve long-term or short-term profits for the individual and for the organization involved. The important indicators of HRD is a country’s stock of human capital, which is the indicator of the level of HRD in a country and those which measure the additions of this stock; this is the rate of growth of human capital formation over a fixed period. The growth of an organization forms an integral part of the HRD. HRD in the organizations will normally adapt according to the technological changes and also changes in the environment. Because of this reason, it has gained increased attention from both managers and academicians. HRD also forms an important part of the society also. (Lesson 11: Approaches to HRD. p. 51).
Theoretical Foundation of HRD
Theories are important to a fast growing and developing discipline like HRD. HRD as a function has its own core theories. A theory should explain what a particular phenomenon is all about and how does it work. Theoretical foundation of HRD foundation should consider knowledge and expertise in integrating the systems and also the human resources in the overall performance system. (Byrd. et al, 2007. p. 15).
In a globally competitive environment, the human resources must prove their importance in a more measurable way. There are three main theories involved in the process HRD, which include Psychological theory, Economic theory and Systems theory. These three theories should be closely integrated with each other and also with the organizational policies, so that the organizational goals can be achieved easily. (Swanson, 2003). The psychological theory represents all aspects of human beings; it considers all aspects of developing the human resources as well as developing the socio economic relationship between the human resources and systems. The specific psychological theories relevant to HRD include Gestalt Theory, Behavioral Theory and Cognitive Theory.
Psychological theories mainly review the relationship between thought and behavior of human resources. In Gestalt theory, it assumes that such relationship does not exist in vacuum, but should include within a large complex and interactive environment, so that a variety of human perceptions could be aroused. This would inurn improve the communication skills and also increase the job satisfaction within the organization. This theory also has implications on organizational design, change management and conflict management.
The Behavioral psychological theory has gained more importance than other psychological theories. An individual’s behavior is visible and it could be easily verified. The behavior of an individual can successfully explained as responses to some particular situations. It can be further improved by punishment and rewards. This is a useful theory in HRD in the sense that it measures the performance of individual and is made accountable. It could be also used as a decision making tool in various areas like work design, workplace hazards, performance management and motivation.
The cognitive psychological theory focuses on the analysis of various mental responses of the individuals. It measures how an individual make meaningful assessments out of his own experience. It also provides guidelines for decision making in complex situations, and also support training and organizational development.
The economic theory deals with the effective and efficient use of human resources to meet the organizational objective. Some of the special economic theories relevant to HRD include Human Capital theory, Scarce Resource theory and sustainable resource theory. The Human capital theory analyses the bondage between the HRD practices and the economic output.
“When we speak of human capital, what we mean is that an individual by investing in the following categories can improve his capabilities. They are
- health facilities and services
- on – the –job training (including apprenticeship),
- formal education,
- study programmes for adults (e.g., Non-formal education) and extension programmes in agriculture,
- migration of individuals and families in search of jobs.” (Chapter 10: Human resource development).
This theory predicts the return on the investment in the human resources; also it represents the value of the human skill. The Scarce resource theory explains that the scarce resources are the greatest strength and weakness of HRD. The cost benefit analysis of the human resources could not be done since there is no limit as to the contribution of the human capital. Their performance can be also improved by providing adequate training.
The sustainable resource theory states that the capital invested in the human resources must produce returns in a long run. The sustainable resources not only consist of the investment in human resources, but also the skills possessed by the human resources. In general the HRD contributes to the economic theory by developing the human potential by training and development by using the available physical resources.
The systems theory considers the complexities and diversities of the organization’s environment, work process and also considers the individual and group variables. Some specific systems theories relevant to HRD are General systems theory, Chaos theory and futures theory. The General systems theory interprets the nature of the human resources and also makes further analysis in order to improve the performance.
The major role of the General systems theory is to provide a common language, which helps the management to discuss the general problems in the organization and to effectively find a solution for it. In this theory, each system is considered important and also makes more analysis about the system and also considers the methods for improving it. A system can be broken down into number of subsystems, so that effective control can be achieved by analyzing each system independently.
The knowledge about one part of the system will help to have a knowledge about another part and component of the system. The systems can be either controlled or uncontrolled. Only in the controlled system, communication is effective since there will be passing of information between the systems. There will be a detector, selector and effector for the efficient processing of the information among the organization. The chaos theory is important since it can be used in the day to day management, especially in the crisis management. If there is any displacement from the actual situations, the human resources should use their will power to adjust according to the situations. This theory helps to make intervention efforts during the transition stage, and so proves to be an effective management theory. (Economic, psychological, and systems theories in HRD: Economic foundations, 2006).
A comparative analysis of the two foundation theories of HRD is made. The systems theory and the economic theory will be compared and differentiated to know their influence to an organization and also the economy as a whole. The human capital theory, which is the most important and the most influential economic theory, is the key determinant of the economic performance of a country. In this theory, individuals are considered as human capital and it also takes into consideration so many economic factors like technology, education, research, innovation etc. The systems theory give more importance to the knowledge of the human resources in the organizations, which is considered as the most important function of the human organisms and of social organizations. (Boulding, 1956).
Knowledge is improved by the intake of meaningful information which we will get through education and training. Human capital theory has stressed the significance of training and education as a key to participate in the global economy. With the globalization and high competition in the international market, the education has also been internationalized. This has improved the quality of education and also induced the development of culture and standard of the people. Because of this knowledge exploration was noticed and there was high development in the economy. Lack of investment in education and training will increase the risk in employment, which will lead to the problem of unemployment and poverty in the economy.
Human capital theory has a great influence in the HRD in the since that it contributes easy access to education and thereby contribute to more equitable distribution of income. It is therefore redistribution of the tax measures. Through education and training, high productivity can be achieved with low wage costs, since high productivity is dependent on the quality of human capital. The structural reforms in the human capital theory form a basis of the nation’s policy particularly regarding the labor policy and immigration.
Both the theories are concerned with the behavior of human resources, since it form the basis of the economic growth as a whole. Just as the human capital theory forms the basis for the nation’s policy framework, systems theory also has a level of framework, without obtaining accuracy in this, no relationships or dynamic theories are possible. In the systems theory, communication between the systems is given important. Because of the specialization of trade, systems have break down into so many subsystems and the communication between the subsystems was found ineffective. Thus the main objective of the systems theory is to develop and enable one key person to collect the relevant communication from all the systems.
Therefore Management Information System (MIS) is considered important since it specifies a socio-technical system, which consists of human and technological elements. Systems theory helps in optimizing the decision making process of an organization, and the organizational development is achieved. “Communication and transaction provide the vehicle for a system to achieve equilibrium. Culture is communicated, learned patterns and society is a collectively of people having a common body and process of culture.
A subculture can be defined only relative to the current focus of attention. When society is viewed as a system, culture is seen as a pattern in the system.” (Walonick, 1993). Human capital theory has been criticized on a number of grounds since it considers the economy to act rationally to maximize its wants, but the fact is that the economy are acting irrationally since their culture and politics influence it’s behavior. This theory is also criticized since it is applied as a means of accounting for economic growth. “The criticism of the theory is that the human capital does not contribute directly to the growth of the economy, but it would contribute to the health, education, housing etc. Thus investing in the human resources would bring about the returns indirectly.” (Fitzsimons, 1999).
Human capital theory can be differentiated form the systems theory in another point of view that the human capital theory considers the human capital as a commodity, but the systems theory considers the human capital as part of the whole system in which it operates. In Human capital theory, behavior is based on the economic self interest of the individuals operating in it. It is the only behavioral factor considered; all other behaviors are excluded and considered as distortions. But in the systems theory, behavior of each individual is explained by the structure and arrangement of the lower individuals of which it is composed.
Human capital theory has both mathematical and theoretical base and it does not considers the concepts such as information , which is appropriate at each levels and does not make use of higher level systems. But the systems theory considers the information system as the most important since it contributes to better communication within and outside the organization and also help in the development of the organization. The information provided through the cybernetics along with other systems theories gives an idea about the behavioral pattern existing in an organization. Thus the whole system can be controlled and the output or the net result could be predicted easily. Total quality management can also be achieved because of this.
The major defect of the Systems theory is that it fails to recognize that the strong relationship in the organization is the most important performance strategy in an organization. The major limitation of the Human capital theory is its failure to recognize the co-operative and collaborative value of relationships among organization’s human resources. (Byrd, 2007. p. 15).
Because of the important position of the human capital in the development of the economy, research is being conducted to include the human capital into the System of Nationals Account (SNA), which is the international standard of National Accounting. The three main indicators of human capital are taken into consideration, which includes the value added to human capital, the output of human capital and the intermediate consumption invested for the outputs. But the introduction of human capital to SNA will make the accounting of the household sector more complicated.
This issue is debatable since it may lead to variety of interpretations. Human capital theory suggests that both the individuals and the society get the benefits from investments in the human capital. Taxation and the educational subsidies also influence in the formation of the human capital. In the human capital theory, by investing more in the human resources, more productivity can be achieved thereby receiving high wages. In order to utilize human capital enough motivation should be also provided. It also plays an important role in both micro and macro economics. Some scholars believe that the human capital is concerned about two categories of persons, one is technical personnel and other is managers since their functions are outstanding and therefore there is no substitute for it. But some other scholars consider human capital as all the personnel in the organization.
But however, human capital could be included in the investment accounts and assets accounts of the enterprise, government sector and also household sector. (Wang, Wang & Zhang, 2006. p. 49-69). Due to globalization, information driven business like e-commerce and networking has increased, where the understanding of systems theory may prove to be invaluable. Systems theory is more than a management buzzword; it considers more on the complexities of the organization and interprets it. Without this, the organization would be completely disassociated. This theory is useful in HRD investments such as training and treats each individual factor within the system. Like wise, the systems theory can be an important break way from the theory of organization and control, since it gives more emphasis on communication system and organization structure.
The decision making process can be also improved, which in turn will improve the behavior of the system, and will lead to more powerful systems. In the systems rule of transformation, inputs are simply converted to outputs. But due to the application of cybernetics control to the system, the systems will assess the degree to which it is meeting its goal and select a suitable strategy to efficiently achieve the goals. The structure of a system determines the potentialities for behavior.
Systems theory helped to get an idea about the change, chaos etc and help to convert it into an identifiable pattern and it also help in the change management strategies. Systems theory can be used effectively in the prediction of economies of scale since there is a link between the systems theory and the economic theories. Diseconomies of scale would be also noticed as an influence of chaos in the system in the form of any inputs or insufficiently trained labor or human resources. Simulation techniques can be also introduced as part of the systems theory since it will lead to more powerful HRD.
The cybernetics control could be also developed along with the simulation techniques so as to develop a good organizational system. Mangers can use the systems information so that they can modify the usual strategic plans, and also successfully implement the plans in spite of the real world developments. The long term scenario of the project needs to be evaluated periodically during the implementation, so that the complexity and the chaos can be identified and successfully recovered.
The systems theory can also be applied in the field of Management Information System (MIS). Due to the technological innovations, the technology has become more and more complex, and because of that the application of the systems theory in the information system is also increasing. The systems theory provides a helping hand and a base for understanding the MIS and using it in the complex organizations. This theory is also found useful for finding the hidden systems and order at any level in large organizations. This theory also provides its inputs, process and outputs and is well designed to perform a new role in the information systems. (McKinney Jr, 2002).
“In implementing the systems approach, it is important to appreciate that, while the decisions taken at each stage are always affected by earlier decisions, they may themselves necessitate some of these earlier decisions being changed. It is also important to realize that the stages shown are not the only ones possible, and that, once taken, a decision can always be reconsidered. The approach should thus be dynamic, always allowing for second thoughts and the refinement of ideas.” (Rajasekar).
Therefore it could be concluded that both education and training are the important systems through which the human resources of a nation can be maintained and improved. Education and training spreads skills and knowledge and because of that the quality of human resources are increased and they will become increasingly adaptable to the environment. Because of this high pace of development can be also achieved. High levels of education guarantee economic development and so investment in the human capital also increase competitiveness and growth of the economy.
Since the returns from the human resources are achieved late, long term planning must be done. High foreign investment can be also used as a means of developing the stock of human capital. “Developing the education, knowledge, skills and abilities of people helps the economy to grow through the production and provision of marketable goods and services and by attracting investment. This in turn helps to create the surpluses needed to raise living standards through increased incomes, more equitable income distribution, increased employment opportunities, improvements in infrastructure and better social benefits (e.g. education, health care, housing, social security).”
Social barriers and tensions can be reduced by proper human resources development practices. It will also result in employees having opportunity for “upward mobility”. In some countries which have high population growth, a certain amount of control (in growth) can be achieved through HRD by promotion of small families. This situation will lead to better education levels. This level of education can contribute to people understanding the importance of low population growth. (Silva, 1997).
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