Chapter 10: Fundamentals of Human Resource Management (CAIIB – Paper 1)
1. Which of the following best defines Human Resource Management (HRM)?
A. Managing production processes in the organization
B. Providing financial capital to employees
C. Managing people at work to achieve organizational goals
D. Designing only the salary structure of employees
HRM is the process of managing people at work by planning, organizing, staffing, directing, and controlling to achieve organizational objectives effectively.
2. Which of the following is the main difference between HRM and HRD?
A. HRM deals with the broader management of people, whereas HRD focuses on their training and development
B. HRM only deals with payroll while HRD deals with recruitment
C. HRM is concerned only with top management, HRD with middle management
D. HRM is short-term focused while HRD has no role in future growth
HRM is the overall management of human resources, while HRD (a sub-part of HRM) focuses specifically on developing employee skills, knowledge, and competencies through training, education, and career development.
3. Which of the following functions is NOT a direct part of HRM?
A. Recruitment and Selection
B. Designing technical machinery for production
C. Performance Appraisal
D. Employee Compensation Management
HRM deals with people management functions like recruitment, training, appraisal, compensation, and employee relations. Designing machinery is a production function, not HRM.
4. Which of the following best represents the structural relationship between HRM and HRD?
A. HRM is a subset of HRD
B. HRM and HRD are independent of each other
C. HRM is only concerned with legal compliance while HRD is about welfare
D. HRD is a subset of HRM
HRM is a broad concept that covers all aspects of managing human resources, whereas HRD is a narrower function under HRM focusing specifically on training, learning, and employee growth.
5. The 'soft' perspective of HRM emphasizes:
A. Employee motivation, commitment, and development
B. Purely cost reduction and efficiency improvement
C. Only administrative compliance
D. Machine-centric productivity
The 'soft' HRM perspective focuses on treating employees as valuable assets by enhancing motivation, participation, commitment, and continuous development.
6. Which of the following is a key function of HRD within HRM?
A. Payroll Management
B. Recruitment Process
C. Training and Career Development
D. Employee Grievance Redressal
HRD is primarily concerned with training, education, skill enhancement, and career development to improve employee potential and organizational performance.
7. Which of the following is a key strategic role of HR professionals in modern organizations?
A. Only preparing salary slips for employees
B. Aligning people strategy with organizational goals
C. Maintaining office premises and infrastructure
D. Acting solely as administrative clerks
The modern HR professional is not just an administrator; they play a strategic role in aligning HR practices with business goals to ensure long-term growth and competitiveness.
8. Dave Ulrich’s model identifies four roles of HR professionals. Which of the following is NOT one of them?
A. Strategic Partner
B. Administrative Expert
C. Employee Champion
D. Production Supervisor
Ulrich’s model defines four roles: Strategic Partner, Administrative Expert, Employee Champion, and Change Agent. "Production Supervisor" is not part of HR roles.
9. In the role of “Employee Champion,” HR professionals are primarily responsible for:
A. Addressing employee concerns, welfare, and engagement
B. Preparing financial statements for the company
C. Monitoring daily machine efficiency
D. Conducting marketing campaigns
As an “Employee Champion,” HR ensures that employee needs, grievances, and development are addressed to maintain motivation and commitment.
10. An HR professional acting as a “Change Agent” would most likely be involved in:
A. Filing employee tax returns
B. Approving stationery purchases
C. Facilitating cultural, structural, and process changes in the organization
D. Conducting physical inventory checks
HR professionals as Change Agents help organizations adapt to new strategies, technologies, and cultural shifts, ensuring smooth transformation.
11. Which of the following BEST describes the administrative role of HR professionals?
A. Setting marketing strategies
B. Designing new machinery
C. Preparing credit appraisal reports
D. Ensuring compliance with labor laws and managing employee records
Administrative roles include compliance, record-keeping, payroll, and labor law management, which form the foundation of HR responsibilities.
12. In banking organizations, HR professionals play a vital role in:
A. Monitoring ATM cash balances
B. Developing leadership pipeline and succession planning
C. Designing core banking software
D. Verifying loan documents for customers
In banks, HR ensures leadership development, talent management, and succession planning to sustain competitive advantage in the financial sector.
13. What is the primary focus of Strategic Human Resource Management (SHRM)?
A. Handling routine payroll operations
B. Resolving employee grievances only
C. Aligning human resource policies with long-term business strategies
D. Managing day-to-day attendance of employees
SHRM integrates HR policies and practices with organizational strategy to gain a sustainable competitive advantage.
14. Which of the following is NOT a feature of Strategic HRM?
A. Short-term operational focus only
B. Integration with corporate strategy
C. Long-term perspective
D. Emphasis on human capital development
SHRM focuses on the long-term alignment of HR with strategy, whereas a short-term operational focus belongs to traditional HRM.
15. In the banking sector, Strategic HRM is most useful for:
A. Managing ATM replenishment
B. Daily cash transaction reconciliation
C. Regulatory compliance of each branch
D. Building leadership pipeline and enhancing customer-centric workforce
Strategic HRM in banks ensures leadership development, talent management, and workforce alignment with customer service excellence.
16. Which model highlights that HR policies must achieve both vertical fit (with business strategy) and horizontal fit (consistency among HR practices)?
A. Harvard Model
B. Best Fit Model
C. Michigan Model
D. Resource-Based View Model
The Best Fit approach to SHRM emphasizes alignment of HR policies with business strategy (vertical fit) and ensuring internal consistency among HR practices (horizontal fit).
17. Which of the following BEST represents the 'Resource-Based View' (RBV) of Strategic HRM?
A. Competitive advantage is achieved mainly through market share
B. Technology alone drives organizational growth
C. Human resources, if valuable, rare, inimitable, and non-substitutable, create sustainable advantage
D. Profitability depends only on capital infusion
The Resource-Based View stresses that people are unique resources. If HR is valuable, rare, difficult to imitate, and non-substitutable (VRIN), it becomes the source of long-term advantage.
18. A bank implements a “Talent Management Program” focusing on leadership skills, succession planning, and employee retention. This reflects:
A. Purely administrative HR
B. Short-term HR planning
C. Routine manpower scheduling
D. Strategic Human Resource Management
Initiatives like talent management, leadership pipeline creation, and retention policies reflect Strategic HRM because they support long-term business sustainability.
19. Which of the following marked the beginning of formal HR practices in Indian banks?
A. Introduction of digital banking
B. Nationalization of banks in 1969
C. Launch of ATMs in the 1990s
D. Implementation of Basel III norms
The nationalization of banks in 1969 led to formal HR departments and systematic HR practices to manage a large workforce effectively.
20. During the 1980s and 1990s, HR functions in Indian banks shifted focus from administrative to:
A. Purely clerical work
B. Marketing and sales only
C. Regulatory compliance only
D. Strategic planning, training, and development
Indian banks recognized the importance of employee development, training programs, and strategic HR planning to improve efficiency and competitiveness.
21. Which government initiative significantly influenced HR development in public sector banks?
A. Recommendations of the Narasimham Committee on banking sector reforms
B. Introduction of e-KYC norms only
C. Launch of mobile banking apps
D. RBI’s daily liquidity monitoring
The Narasimham Committee (1991) reforms encouraged banks to adopt modern HR practices including training, performance appraisal, and talent development.
22. What was a major HR challenge for Indian banks during rapid technology adoption in the 1990s–2000s?
A. Maintaining cash at branches
B. Attracting foreign investments
C. Training employees to handle computers, core banking, and ATMs
D. Compliance with taxation norms
Rapid technology adoption required HR to focus on skill development, training programs, and change management for employees.
23. Modern HR functions in Indian banks emphasize all EXCEPT:
A. Employee engagement and development
B. Ignoring talent retention strategies
C. Leadership and succession planning
D. Aligning workforce with organizational goals
Modern HR in banks focuses on talent retention, employee development, leadership, and strategic alignment; ignoring talent retention is counterproductive.
24. Which of the following best describes the evolution of HR functions in India?
A. Strategic → Administrative → Training only
B. Employee welfare → Payroll → Recruitment only
C. Technology management → HR planning → Marketing
D. Administrative → Welfare → Training → Strategic HRM
HR in India evolved from basic administration and employee welfare to systematic training and finally to strategic HRM aligned with organizational goals.
25. Which of the following is a primary function of HRM in banks?
A. Managing only cash transactions
B. Approving loan disbursements
C. Recruitment, training, and development of employees
D. Installing ATM machines
Core HRM functions include recruiting the right talent, training and developing skills, and aligning workforce performance with organizational goals.
26. Performance appraisal in banks is primarily conducted to:
A. Monitor branch cash balance
B. Assess employee performance and identify development needs
C. Approve customer loans
D. Prepare marketing campaigns
Performance appraisal evaluates employee performance, provides feedback, and helps plan training, promotions, and career growth.
27. Which HRM function deals with planning salaries, incentives, and benefits in banks?
A. Recruitment
B. Training & Development
C. Performance Appraisal
D. Compensation and Benefits Management
Compensation and benefits management ensures employees are rewarded fairly through salary, incentives, and other benefits to maintain motivation and retention.
28. Employee relations in banks primarily aim to:
A. Conduct financial audits
B. Monitor branch operational efficiency
C. Maintain positive work environment and resolve grievances
D. Install banking software updates
Employee relations aim to foster good communication, resolve conflicts, and maintain a positive and productive workplace culture.
29. Training and development in banks is mainly conducted to:
A. Manage cash flow in branches
B. Enhance skills, knowledge, and productivity of employees
C. Approve loans for retail customers
D. Monitor ATM networks
Training and development programs improve employee competencies, keep staff updated with banking practices, and support career progression.
30. Career planning in banks helps employees to:
A. Track branch transactions
B. Maintain regulatory compliance
C. Install banking software
D. Identify growth opportunities and plan future roles within the organization
Career planning guides employees in setting goals, identifying opportunities for growth, and preparing for future responsibilities in the bank.
31. HR policies in Indian banks are primarily designed to:
A. Focus only on marketing goals
B. Guide recruitment, training, compensation, and employee welfare consistently
C. Monitor ATM transactions
D. Approve loans for large corporations
HR policies ensure consistent and fair practices in recruitment, development, compensation, and welfare across the bank.
32. Which of the following is a major HR practice adopted by Indian banks to improve employee performance?
A. Installing new ATMs
B. Approving credit limits
C. Performance appraisal and reward systems
D. Monitoring branch cash balances
Banks use structured performance appraisal systems, linked with rewards, promotions, and training to enhance employee productivity and engagement.
33. Which of the following HR practices promotes employee retention in Indian banks?
A. Ignoring employee feedback
B. Delaying salary payments
C. Minimizing training opportunities
D. Career development programs and recognition of performance
Career development, growth opportunities, and recognition programs are key HR practices that improve motivation and reduce turnover in banks.
34. Which HR policy ensures fair treatment and equal opportunity in Indian banks?
A. Technology adoption policy
B. Equal Employment Opportunity (EEO) policy
C. ATM maintenance policy
D. Customer service policy
EEO policies prevent discrimination based on gender, caste, religion, or other factors, ensuring fair recruitment, promotions, and workplace practices.
35. Modern HR practices in Indian banks include all EXCEPT:
A. Competency mapping
B. Talent management
C. Ignoring employee welfare initiatives
D. Succession planning
Modern HR practices focus on employee development, talent retention, competency mapping, and succession planning. Ignoring welfare is counterproductive.
36. Which of the following HR practices is directly linked to regulatory compliance in Indian banks?
A. Employee engagement programs
B. Leadership development initiatives
C. Career counseling sessions
D. Maintaining records, training on compliance, and adherence to labor laws
HR ensures compliance with labor laws, RBI guidelines, and other statutory requirements through proper record-keeping, training, and monitoring.
