The Evolution Of HRM In India Since Independence

Human resource management (HRM) is a relatively recent concept that has gradually evolved to encompass various aspects of organisational behavior, personnel management, industrial relations, and labor legislation. The journey of HRM in India is a reflection of the country’s socio-economic transformation since independence, as it has transitioned from a predominantly agrarian economy to a more industrialised and service-oriented one.

The Emergence of Modern Industrial Labor and Worker Status

The landscape of labor in India has undergone significant changes since independence. During the colonial era, labor practices were harsh, with slavery and serfdom prevalent in various forms. However, there were still some categories of workers, such as skilled craftsmen, artisans and apprentices, who enjoyed a degree of freedom in their relationships with employers. This dynamic began to change significantly with the advent of industrialisation, which led to the establishment of factories and other industrial enterprises.

Industrialisation brought about the congregation of large numbers of workers under single establishments, owned by individual employers or companies. Initially, these employers were primarily focused on maximising profits, often disregarding the human aspects of labor management. However, as the workforce grew and became more organised, there was a marked shift in the attitude of employers towards their workers.

“The evolution of workers' rights in India, from British rule to the present day, has significantly influenced HR development. As workers gained rights and formed unions, HR practices had to evolve to manage a diverse and growing workforce effectively. At ESDS, we proudly reflect this progression by upholding our employees' social rights and nurturing strong relationships,” shares Komal Somani, CHRO & Whole Time Director at ESDS Software Solution. 

Recognising the need for better labor conditions, the Indian state began to enact labor laws aimed at improving the physical working environment, setting minimum standards for terms of employment, and providing welfare amenities for workers. Social security measures, such as compensation for work-related injuries and maternity benefits, were also introduced. Additionally, workers were granted the right to form trade unions and engage in collective bargaining, significantly altering the traditional ‘hiring and firing’ prerogatives of employers. This period marked the beginning of a more structured and humane approach to managing labor.

The Industrial Revolution Era & the Beginnings of HRM

The systematic development of HRM in India can be traced back to the influence of the industrial revolution, which began in the mid-19th century in Western Europe and the USA. The industrial revolution introduced machinery and mechanical energy to production processes, leading to the emergence of factories that employed large numbers of workers. This shift from the cottage industry to the factory system necessitated new methods of managing human resources.

"The field of HRM has always been fundamentally centered on people and it can be clearly seen throughout history. In my view, this focus will only strengthen in the coming decades. At the end of the day, it's the people who form the backbone of any organisation and their well-being should remain our top priority,” comments Pranay Prakash, Head of HR, BluWheelz.

During this era, HRM practices focused on the recruitment, training and control of workers within the factory system. However, the underlying philosophy was still rooted in a master-servant relationship, where the employer had significant control over the workforce. The industrial revolution laid the foundation for the formalisation of HRM practices, although they were initially rudimentary and heavily influenced by the need to maintain control over the workforce.

The Trade Union Movement Era

As the factory system became more entrenched, workers began to organise themselves into trade unions to protect their interests. These unions were primarily concerned with addressing issues such as child labor, long working hours and poor working conditions. Over time, their focus expanded to include economic concerns, wages, employee benefits and services.

"The Trade Union Movement arose as a powerful force for change, born from the need to protect the dignity and rights of workers in an era of industrial exploitation. What began as a struggle against child labor and inhumane working conditions evolved into a broader fight for fair wages, benefits, and the economic empowerment of the working class. As we look to the future, trade unions must continue to adapt, championing not only traditional rights but also addressing the emerging challenges of the modern workforce in a rapidly changing global economy,” highlights Sreekanth Arimanithaya, CHRO and EIR, The Machani Group.

The rise of trade unions forced employers to adopt more structured HRM practices, including the implementation of grievance handling systems, arbitration methods for resolving conflicts and the establishment of employee benefits programmes. This period saw the emergence of more formalised HRM practices as a response to the growing power of organised labor.

The Social Responsibility Era

The early 20th century marked the beginning of a more humanistic and paternalistic approach to labor management in India. Some factory owners began to view their workers as part of an extended family, adopting a paternalistic approach that provided workers with various concessions and facilities. This included reduced working hours, improved workplace amenities and the establishment of model villages for workers.

“I believe the focus has evolved from a customised to a more personalised approach to employee well-being. They appreciate being recognized as individuals with unique potential and talents. In fact, workplaces that support personal growth while valuing contributions in fulfilling roles are increasingly sought after,” adds Prakash.

While these practices were ostensibly driven by a genuine concern for workers' welfare, critics argue that they were also motivated by the need to counteract the growing influence of trade unions. Regardless of the underlying motives, this era contributed to the development of the social welfare aspect of labor management in India.

The Scientific Management Era

Around the beginning of the 20th century, the principles of scientific management, developed by Frederick Taylor, began to influence HRM practices in India. Taylor's approach emphasised finding the "one best way" to perform tasks based on time and motion studies, significantly increasing worker productivity. His principles included replacing rule-of-thumb methods with scientific approaches, promoting harmony and cooperation between workers and management, and focusing on the development of each worker.

“Scientific management principles have laid the groundwork for data-driven HR practices in India, emphasising efficiency and standardisation. Modern HRM incorporates these principles through advanced workforce analytics, streamlined processes and performance-based compensation systems. According to a 2024 PwC study, 54% of the companies surveyed have implemented AI for business operations, with a focus on digital transformation, including workforce analytics. This evolution maintains a balance between efficiency and employee well-being, showcasing the enduring impact of scientific management,” says Anjali Sharma, AVP and Global Head of L&D, Fulcrum Digital.

In India, the application of scientific management techniques led to the standardisation and simplification of work processes, as well as the introduction of differential wage systems. These practices laid the groundwork for more efficient and systematic HRM practices in the country.

The Human Relations Era

The 1920s marked a shift in focus towards the human factors in the workplace. This era was characterised by a growing interest in understanding the psychological and social dynamics of work. Pioneering studies, such as those conducted at the Hawthorne plant of Western Electric Company in the USA, highlighted the importance of considering human behavior and interpersonal relationships in the workplace.

“The much needed focus on psychological and social dynamics is transforming HR in India, with AI-powered platforms enhancing employee well-being and collaboration. These initiatives improve workplace culture and deliver measurable returns; companies investing 3% of sales in digital transformation report higher returns, according to PwC. Companies today are enhancing HR operations by integrating GenAI, which automates tasks such as document generation, thereby lightening the workload for HR professionals. AI-driven chatbots in HR service delivery also efficiently handle routine inquiries, further streamlining processes and improving employee experience. These advancements are key to fostering both cultural and operational excellence in modern workplaces,” adds Sharma. 

In India, the human relations movement led to a greater emphasis on employee morale, motivation and job satisfaction. HRM practices began to incorporate psychological insights, leading to more holistic approaches to managing human resources.

The Behavioral Science Era and the HRM Era

The behavioral science era, which emerged in the mid-20th century, further advanced HRM practices by emphasising the importance of understanding human behavior in the workplace. This era introduced more sophisticated research methods and provided new insights into the role of managers, the nature of organisations, and the behavior of individuals within those organisations.

In the post-independence period, HRM in India continued to evolve, incorporating elements of systems and contingency approaches. These approaches emphasised the importance of considering the interdependence of various factors in HRM, leading to more integrated and data-driven management practices.

“This era revolutionised HRM by applying scientific research to understand workplace behaviors better. This era emphasised the use of data to enhance motivations, productivity and mental well-being within organisations. Today, organisations leverage these principles through data-driven HRM strategies, which focus on aligning workforce efficiency with company objectives and employee needs,” comments Somani. 

As India's economy grew and diversified, the scope of HRM expanded to include not just workers, but also supervisory and managerial personnel. The industrial relations departments of large organisations evolved into full-fledged HR departments, reflecting the increasing complexity of managing human resources in a rapidly changing business environment.

The evolution of HRM in India since independence reflects the broader socio-economic changes that the country has undergone. From its early roots in the industrial revolution to the more sophisticated practices of today, HRM has played a crucial role in shaping the Indian workforce and contributing to the country's economic development.