(i) Developmental Functions: HRD is the process of improving the knowledge, skills, aptitudes and values of employees so that they can perform the present and future jobs more effectively. 

It involves the following activities: 

1. Performance Appraisal: It implies systematic evaluation of employees with respect to their performance on the job and their potential for development. 

2. Training: It is the process by which employees learn knowledge, skills and aptitudes to further achieve organisational and personal goals.

3. Career planning and development: It involves planning the career of employees with the help of promotions and transfers and implementing these career plans so as to fulfil the career aspirations of people. 

(ii) Compensation Functions: These refer to providing equitable and fair remuneration to employees for their contribution to the attainment of organisational objectives. 

It consist of the following activities: 

1. Job Evaluation: It is the process of determining the relative worth of a job. 

2. Wage and Salary Administration: It implies developing and operating a suitable wage and salary programme by conducting various surveys on wage and salary structure in different organisations. 

3. Bonus: It involves payment of bonus under the payment of Bonus Act, 1965, as well as non-statutory bonus and other incentives.