HRM is a system approach. HRM system is an integrated guiding map that shows the integrated form of HRM comprising inputs, process and output components and their interaction with the environmental factors.

Inputs:

1. Human Energy and Competencies: It represents the availability of Human Resource and their skills and abilities.
2. Organizational Business Strategy: It represents the course of action chosen to achieve the organizational goals
3. Labor Market: It is a essential source of supply for human resources. The availability of quality manpower in the external market has a great influence on organizational activities.
4. Labor Union and Legislation: Labor union and legislation affects the selection of particular HR strategy and activities.

Process:

1. Acquisition: HR planning, Recruitment, employee socialization.
2. Development: Employee training, Management development, career development.
3. Motivation: Job design, performance appraisals, Reward, compensation/benefits, and discipline.
4. Maintenance: Safety and health and employee relation.

Output:

1. Quality of Work life(QWL): It refers to the creation of effective working environment in which the employees get highly motivated to dedicate their full effort toward work.(autonomy, recognition, belongingness, progress and development, reward system )
2. Productivity: It is the relationship between the quantity produce from the inputs used. Success of organization depends upon higher productivity. Thus, the overall productivity is the major outcome of the HRM system.
3. Readiness to change: Change is inevitable in an organization. Management should carefully plan and implement the changes. Sometimes employees may resist the changes because of fear of job termination, transfer etc. Thus to reduce the fear HRM system allow the time or create the environment for further training and development, effective communication and accept the changes.

Challenges of HRM

1. Globalization: Globalization means providing the access for buying and selling goods across nations. In other words, globalization means off-shoring of business from one country to another to get advantage of low cost, low tax and skilled manpower. Usually, developed countries like U.S, Japan, UK etc. are off-shoring their business to developing countries like India, China, Thailand, Vietnam, Cambodia, Indonesia etc. This process directly and indirectly affects the HR practices and HR policies of local organization. Higher pay from those off shoring organizations attracts most of the qualified personnel, which will be the challenge for local organization to retain their staffs. Besides, international organizations also have the challenge to train and develop the local people to work in international standard as well as socialize them in their company.
2. Work Force Diversity: Work force diversity means that organizations are becoming more heterogeneous in terms of gender, race, ethnicity and other background. The participation of women and minorities in the workforce has been increasing .Such increasing in diversity increased the roles and responsibility of HR managers to handle diversity related issues and problem at work. There is increasing need for training, education and other awareness programs to develop a certain level of awareness to recognize differences at work.
3. The contingent workforce: Contingent workforce refers to part-time, temporary workers appointed for short time contract. Due to the increasing effects of globalization the prevailing employment pattern of employing permanent employees has been changes. Organization are now interested in appointing workers and even professionals managers on a contingent basis to fulfill the demand of peak business time when only a limited number of core employees are not able to cope with increased work pressure . Since, they are the temporary workers for a certain period of time the role of HR manager to use their skill fully and ensure quality of their work is a challenge in at present context.
4. Decentralized work sites: Since, due to the advance technological improvement, today’s employees are not required to sit in office and work from 9am to 5 pm. Instead, they can work at home and report to the head office with computer linkage. This form of decentralized worksites is getting popular in developed as well as developing nations. The challenge for HR managers is to monitor work process and ensure the quality of work done in the decentralized sites as well as to design the reward system for their performance.
5. Employee involvement: The employee involvement at the workplace is necessary for the efficient and effective utilization of resources. To motivate the employees to give higher effort toward work is big challenge of HR managers. So managers can use techniques like delegation of authority, job redesign, job enrichment, reward system etc to enhance the employees contribution at work.
6. Changing Skill requirement and avoiding skill deficiencies: Due to rapid changes in information technology, the inflow of foreign investment and transfer of technology, there has been increasing demand of skilled and knowledgeable man power. Similarly, the blue collar jobs are being replaced by technical knowledge workers. Thus, to fulfill this demand HR manger have to take necessary measures like offering handsome salary, effective working environment , fringe benefits etc to attract them . Similarly, due to obsolescence of current technology and manufacturing process, organization needs to train the employee to avoid skill deficiencies.