Human Resource Development
The term ‘Human Resource Development or HRD’ is used in different contexts and with various meanings. According to F.H.Harbison, human resources are “the energies, skills, talent, and knowledge of people which are, or which potentially can or should be applied to the production of goods or the rendering of useful services”.
In Human Resource Management, HRD is defined as “organized learning activities arranged within an organization in order to improve performance and/or personal growth for the purpose of improving the job, the individual and/or organization”.
HRD includes the areas of training and development, career development, and organization development.
The most important indicators of HRD are classified into:
- Those which measure a country’s stock of human capital,
- Those which measure the additions to this stock.
This is the rate of human capital formation over a specified period. The stock of human capital indicates the level of HRD in a country, and the rate of human capital formation indicates its rate of improvement.
Human capital means 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.
Earlier, the economist thought that the economic growth of a nation could be developed only by increasing investment in Physical capital. But later, during the 1960s, economists realized investment in human capital is as important as investing in Physical capital.
Example: Tamil Nadu does have a large number of Billionaires or Large Corporations but it is the second-largest economy in India and it is eyeing 1 Trillion USD GDP by 2030. This is because Tamil Nadu invested a lot in Human Capital such as Schools and College Education especially in the field of Medical and Engineering.
The state’s literacy is 80.33% in 2011 is above the Nationals average and 100% Gross Enrollment Ratio (GER) in primary and upper primary education. For all the states Tamil Nadu and Kerala stand tall only because of their Human Capital.
Of all the factors that increase human capital, education is considered very important. For that now a separate branch is known as the Economics of Education.
Economics of Education
Its birth was announced by Schultz in 1960 in his survey on Human Capital Theory. Although great economist like Adam Smith and Marshall have already expressed their opinions on the value of education, it is only last fifty years, the economist started to apply the tools of economics to study the importance of education in the economy.
Sometimes, it is asked whether education is consumption or investment. It is generally agreed that education is both consumption and investment. Nowadays, economists treat it mostly as an investment.
Harbison and Myers have given the following as human resource indicators. They are :
- Number of teachers (first and second levels) per 10,000 population ;
- Engineers and scientists per 10,000 population ;
- Physicians and dentists per 10,000 population.
- Pupils enrolled at first–level (primary) education as a percentage of the estimated population aged five to fourteen inclusive ;
- The adjusted school enrollment ratios for the first and second levels combined.
- Pupils enrolled on second level (secondary) education, as a percentage of the estimated population aged fifteen to nineteen inclusive
- Enrollment in third–level (higher education) as a percentage of the age group twenty to twenty-four.
The first three indicators i.e Teachers, Engineers, Scientists, Physicians, and dentists are used for measuring the stock of human resources. The last four indicators are measures of additions to the stock.
The following two indicators tell us about the orientation of higher education :
- The percentage of students enrolled in scientific and technical faculties in a recent year
- The percentage of students enrolled in the faculties of humanities, fine arts, and law in the same year.
Harbison and Myers constructed a simple composite index of HRD by taking the arithmetic total of:
- enrolment at the second level of education as a percentage of the age group fifteen to nineteen, adjusted for length of schooling
- enrolment at the third level of education as a percentage of the age group, multiplied by a weight of 5.
Harbison and Myers have given more weightage to higher education than second-level education. Based on the composite index of HRD, Harbison and Myers classified countries into:
- Partially developed
HRD and Economic Development
There is a close relationship between the indicators of HRD and indicators of economic development. The level of economic development can be studied by making use of the following indicators:
- Gross National Product (GNP) per capita in United States dollars
- Percentage of the active population engaged in agricultural occupation
- Public expenditures on education as a percentage of national income; and
- The percentage of the total population in the age group five to fourteen inclusive.
The findings of an important study by Harbison and Myers reveal:
- There is a very high positive correlation between the composite index of HRD and G.N.P. per capita in U.S. dollars
- There is a high negative correlation between the composite index and the percentage of the active population engaged in agriculture.
- There are also high correlations between the adjusted second-level enrolment ratio and GNP and the percentage engaged in agriculture.
- Correlations between the first level enrolment ratio and GNP and percentage in agriculture are lower than the correlations of either the composite index or the second level enrolment ratio with GNP and percentage in agriculture.
This shows that an index based on higher levels of education correlates more significantly with measures of economic development than one based on the lowest level of education. While evolving strategies for HRD, the government has to make some basic choices. Such as:
- It has to decide informal education whether the emphasis should be on quantity or quality. In secondary and higher education,
- It has to decide whether priority should be given to science and technology or law, arts and humanities ;
- It has to decide in skill development whether the reliance should be placed on pre-employment formal training or in-service training ;
- It has to decide whether incentives should be provided by manipulation of wages and salaries or should be left to market prices and finally
- It has to consider the needs and desires of the individual and the needs of the State.
The choice between quantity and quality in educational development can take many forms. Some countries have to choose between education for all or high-quality secondary and university education for a smaller number of potential leaders.
There is also a choice between educating fewer students with better-qualified teachers and large numbers with unqualified teachers. In general, political and social pressures lead to an emphasis on quantity whereas rapid economic growth requires high–level manpower.
And there should be a proper balance in the development of education in science and technology and law, arts and humanities in secondary and higher education. The theories of human resource development, in a general way, refer to educational planning. They can be divided into three categories:
- Manpower approach
- Social demand approach and
- Rate of return approach.
The manpower approach to educational planning assumes that manpower with different levels and types of education is essential to attain a certain target growth rate of GNP. Then, the target is divided into different sectoral contributions to GNP.
In a given year, the GNP is divided into different sectors and manpower structure in each of the sectors is analyzed. Then the needed manpower with different levels and types of education is estimated.
Death, retirement, and migration are taken into account to estimate the necessary manpower. From the additional manpower requirements, enrolment figures are worked out. But the post–manpower forecasts proved that the estimates are far away from actual requirements.
Moreover, this approach to educational planning does not say anything about the method of financing education.
Social Demand Approach
The social demand approach for education can be studied by making use of the social rate of return analysis.
Rate of Return Approach
If we assume education as an investment, then we may look at it as individual investment and social investment. Under conditions of perfect competition, the individual investors would be undertaken if the internal rate was greater than the market rate of interest.
But today education and health are largely in the public sector. The social investment criterion is that resources are to be allocated to levels of education and years of schooling so as to equalize the marginal “social” rate of return on educational investment (Mark Blaug).
It may be noted that only pecuniary (monetary) values are taken into account while calculating the social rate of return. But the economic case for state education is generally made on the ground that external or indirect benefits of education exceed the direct personal benefits to those who are educated.
But non-pecuniary returns to education and externalities are usually left out in the estimates of the social rate of return. This is a limitation of this approach.
The article is written on the topic ‘Human resource development in India’ for Upsc and other state services exams. This article discussed What is Human resource, What is Human capital, What is Human resources development and its Indicators. And also discusses the importance of Education in the Economic development of the country.