The Stages in the Development of Personnel Management and Human Resource Management - Term Paper Example

The effectiveness of Human Resource Management (HRM) is the key to success of any organization, is what is believed today. Personnel management has evolved to human resource management (HRM) over the last two decades but the debates over the differences and their efficacy is endless. HRM function includes a variety of functions like recruitment and selection, training and development, employee benefits and compensation, performance appraisal and motivation techniques. HRM has further evolved to strategic HR where the responsibilities of the personnel widely vary from what it was when it was still commonly known as personnel management. This paper will summarize the stages in the development of the personnel management and human resource management, discuss the changed management approaches to the employment of people and determine the direction in which the function is heading. Personnel management was concerned with obtaining, organizing and motivating the human resources (Armstrong 1977, cited by Armstrong 2000) while HRM was described as a ‘perspective on personnel management’ (Hendry & Pettigrew, 1990, cited by Armstrong, 2000). According to Armstrong (2000), the HR directors and managers are doing much the same thing as the personnel directors and managers were doing 20 years ago. When HRM theory was introduced it was supposed to have strategic integration, high commitment, high quality and flexibility but it only focused on challenging deficiencies in attitude, coherence, direction and scope of the existing personnel management (Armstrong). The true professionals recognized that to succeed in the changing global scenario they would have to become more professional in their approach and they were encouraged to do so by recognized bodies. They were cognizant of new ideas and implemented new practices for which HRM has no role to play. According to Armstrong even though the name has changed there has not been any discontinuity or changes to the paradigm, which has been endorsed by Caldwell (2002) who expressed confusion whether HR was a change in the name rather than a change in identity or practice. Caldwell (2002) reveals that in 1990 a little over 6 percent companies in UK used the HR title which increase to about 9 percent in 1993 but surprisingly by 1998 it had gone up to 64 percent. The job title data of members of the Chartered Institute of Personnel and Development shows that 42 percent of the 43,700 members used the personnel title while 58 percent used the HR title which further confirms that HR title had overtaken the personnel title. Different perspectives did emerge when HRM was introduced although it was highly criticized from different corners. It was considered amoral and anti-social by some while others found it full of internal contradictions and problems. The concept of HRM was invented by academics and popularized by consultants. Initially HR practices included opportunities to express grievances, opportunities to benefit from training, information on business issues, effective system for dealing with bullying and harassment, employee involvement, pay per performance, and avoidance of redundancies. According to Armstrong these existed in progressive firms even before the concept of HRM was introduced. Nevertheless consciousness was growing that professionals need to sensitive to the organizational change that was taking place. They should avoid being trapped in the logic of rational choice. They needed to be aware of the evolving business needs and how new ideas may fit into these. HRMism gradually became a phenomenon identical with “virtually anything to do with managing the employment relationship”. The game has remained the same but the way it is played has changed, says Armstrong but Caldwell clarifies that despite confusion evidence suggests that there were distinguishing characteristics between the perceived roles and practices of personnel and HR specialists. A study suggested four key areas of differences – level of formal qualifications, involvement in strategic planning processes, authority devolved to line managers or supervisors, and adoption of sophisticated “high commitment” practices associated with HRM. Gradually evidence further revealed that the personnel specialists are more receptive to the traditional practices while the HR people identified themselves with the HR mode of thinking. Although they shared similar commitments, the HR specialists appeared to emphasize the forms of commitment associated with HR. The HR specialists understood the importance of culture change. The people management professionals started performing more strategic or change-oriented roles in enhancing business performance. This was viewed in sharp contrast to the negative image associated with the personnel practitioners who were supposed to be tactical, reactive and short-term in their approach which was hostile to change. By 1992 the HR specialists took up the role of advisors or consultants offering expertise or advice in a persuasive or non-directive manner. This led to the devolution and growing business unit autonomy while avoiding accusations of interference in line-management decision making. This was a characteristics approach to HR change management. HRM became a mode of change management and most models of HRM give ‘organizational commitment’ a pivotal role in the process of managing people. According to HR specialists a committed workforce is essential to meet challenges as a committed workforce translates into flexibility, achievement of performance targets, and identification with the mission and values of the organization. Within HRM also there were two widely accepted models – the hard and soft versions (Truss et al., 1997). The hard model is based on notions of tight strategic control and the economic model of man while the soft model is control through training, development and commitment. Organizations use communication as a means to maximize commitment. Despite these claims, organizations in reality exercise strategic control similar to the hard model. Recent studies reveal that management of human resources is now considered and activity to be carried out by all managers (Thornhill & Saunders, 1998). Today human resource is considered not merely as another resource but human capital, which has to be valued and nurtured. Since they are considered human capital and make a difference to the organization, they have to be managed strategically. The line managers should become more involved in HRM at the operational level. The role of the personnel specialist has also undergone a change. He concentrates on formulating strategy and is not concerned with what happens at the operational level from the perspective of the line manager (Bond & McCracken, 2006). Cunningham and Hyman (1999) contend that government deregulation, intense competition and efficiency pressures in domestic and international markets was responsible for greater focus on the management of employees to meet the increasing demand for quality good and services. The personnel specialists had consistently failed to achieve results which led to the importance of HRM. Organizations started employing new approaches to management of employees. The personnel function has seldom acquired security, independence, stability, status or credibility among its management peers. They merely kept adjusting to internal and external stimuli. According to Budhwar (2000), certain issues are too complex for the top management to comprehend and it is easier for the local managers to respond fast to it. When middle managers are allowed to use discretion and take decision, it prepares them to be future managers. Besides, the cost to company is reduced with such a practice. MacNeil (2003) states that the role of HRM in many organizations is more strategic in nature which is also responsible for devolution of responsibility to line managers. By the close of the twentieth century, business houses came to accept that people, not cash, buildings, or equipments differentiate one company from another. “Corporate culture is moving into the limelight and proving to be an untapped asset for employees and businesses alike”, according to (Musante, 2001). Researches have shown that at the time of economic turndown the companies having strong and adaptive cultures are better able to handle the financial crisis than those with weak and poorly defined cultures. The right combination of people and culture can mean the difference between the financial success and failure. This was a concept not previously recognized or given importance by the personnel specialists. HRM is based on the concept of bringing about organizational transformation and culture change (Caldwell). Organizations today recognize the need to attract the right brains to thrive in the competitive market and retain the employees. “…the primary way to drive new innovation is by investing in people first”, (Stanford, 2005). Retaining employees, especially the high-performing employees, can be challenging in this fast-paced employment world. No matter what the current economic climate may be, organizations must be sensitive to the importance of retaining their top performers. “Managers readily agree that retaining your best employees ensures customer satisfaction, product sales, satisfied coworkers and reporting staff, effective succession planning, and deeply imbedded organizational knowledge and learning” states (Heathfield, 2007). All these come under strategic management of human resources. According to Mintzberg (1979), every organized human activity gives rise to two fundamental and opposing requirements: the division of labour into the various tasks to be performed and the co-ordination of these tasks to accomplish the activity (cited by Cordeiro & Filipe). Work can thus be coordinated through mutual adjustment, standardization or direct supervision. Most companies do not make rational choices but merely guess how best to assign employees to jobs (Richards et al., 2003). Today people come with diverse skills but they are treated as undifferentiated resource. Organizations thus lose the opportunity to make substantial gains in productivity, profitability, and personnel development. Workforce requirements have to be anticipated and tailored training provided. There has to be a systematic and continuous approach to fit the right person to the right job at the right time. Real-time deployment tools are available which help to adjust staffing according to the changing customer demands. Succession-planning tools and workforce management software can help to organize the workforce. Today people want to spend less time managing routine transactions and interactions. Merely formulating policies and procedures are not enough. Procedures have to be easily understood and applicable. HR function should contribute to the work climate, performance, and overall effectiveness of the organization and these criteria should be used for evaluation (Becker et al., 2001 cited by Luthans & Sommer, 2005). Changing business conditions, demographics, and globalization necessitate managing the dynamics of talent and resource management. Organizations need to move away from the traditional role of answering questions and resolving disputes. The organizational structure needs to be changed. At the same time, with latest software available in the market for HR functions, the downsizing has become necessary. SAP has a system that can incorporate payroll, performance management, benefits administration, the handling of regulatory-compliance issues, e-recruiting and employee self-service transactions (Shuit, 2006). Its strong point is that it integrates human resources system under the umbrella of workforce management. Due to this the HR function is not so much for collecting and processing employment data but more about how to manage teams. Since the routine work is automated, the personnel specialist now has the responsibility to identify the high potential people in the company, create a development plan for them and follow their progress. Software and system are now in place to assist the HR which now leaves the personnel specialist to concentrate on strategic influence. The HRM now focuses on employee commitment, culture change, finding the right talent for the right job, thereby reducing attrition, and greater participation by the line managers. Retention and motivation too are areas of interest in the changed workplace environment. Thornhill and Saunders suggest that the way the personnel specialists and the line managers interact, has an impact on the organization. Research suggests that both these group of managers do not work in harmony with each other. Hence the impact on an organization is bound to be negative. The reasons for change in responsibilities of the HRM have been caused due to advanced technology, involvement of HR in strategic decisions of the firm, automation of routine jobs. HR at the close of the twentieth century was not involved in the development of business strategies but now it has gradually evolved to taking strategic decisions and it is now expected to contribute to organizational performance. The onus is now on individuals to manage their careers and the organization contributes by empowering them to manage themselves. Reference: Armstrong, M., (2000), The name has changed but has the game remained the same? Employee Relations, Vol. 22 No. 6, 2000, pp. 576-593. 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