The Changing Role Of Human Resources In Corporate America - Research Paper Example

From the very beginning of entrepreneurship business leaders were challenged by the issues of management of other people’s labor in production. Likert claims that: “Of all tasks of management, managing the human component is the central and most important task, because all else depends upon how well it is done” (1967, cited in Pieper, 1990, p.1). Since the time when functions of personnel management became an independent area in American corporations at the end of 19 century, it has undergone a lot of changes. The process of especially impetuous development in the human resources management (HRM) research and practice at a whole world, in general, and in the United States, in particular, is observed during last thirty years. The changes in HRM theories and practices directly depend on the understanding of the role of human resources in the overall corporative business management system. Practically until the early 1980s the management of personnel in corporations was considered as a simple operational task, reducing it to a set of managerial techniques such as manpower planning, labor deployment, reward and dismissal. People were regarded as objects that were selected in accordance with work requirements: the personnel were recruited, managed, attended, and when it was not longer needed - dismissed and compensated. However, increasingly the view on the personnel was changed, successfully enough for both employees and business. Today corporations consider the human resources as a key source of corporative competitive advantages and integrate HRM activities in the general business strategy. This paper is intended to explore the origins of the personnel function, to describe briefly a process of the changing role of human resources’ understanding in the US corporations, to reveal the differences between old and current human resources conceptions and to trace the impact of these conceptions on the related HRM approaches and practices. Springer and Springer (1990) assert that the history of the personnel management in the United States began in the late nineteenth century, namely in 1890’s, when the NCR Corporation set up a separate personnel unit in its structure. Partly, it was a response of the corporation’s top management on a current challenge – the corporation had reached such a size that functional specialization was extremely needed in order to the corporation was managed effectively. But a size of corporation was not only one reason. Also important factors that caused the personnel office establishing were external ones: values of individualism and free enterprise capitalism, which were strong in the United States of that time; the mobility of workforce; a great numbers of immigrants – all of these factors demanded a new approach to organizing relationship between corporations and their employees. At that time, the term “human resource” has not been coined yet; employers were considered simply as one of the factors of productions, with its costs that were to be handled in a similar way as any other corporative costs. The main task of personnel managers was “to establish a method by which they could best discern, among a large and diverse applicant pool, the individuals who would make efficient and cost effective employees” (Springer and Springer, 1990, p.41). For a long time since the first appearance of the personnel office both labor and personnel management functions have been viewed by corporations and researchers mostly as organisational elements with significant costs that should be minimized. The pioneer initiative of the NCR Corporation in 1890 had highly important consequences for the development of human resource management. First of all it was a global start – following the NCR Corporation numerous other corporations and organizations both in the USA and around the world have organized separate personnel offices, functions of which were further laid at the heart of the “employment management” concept. Another important consequence was the emergence of welfare work. Corporations started to provide various amenities for their employees, which included both workplace amenities (e.g. lunch rooms, corporative libraries and magazines) and family ones (e.g. medical care and company-provided housing) (Kaufman, 2007). Thus, although employees were treated as any other corporative assets, the corporations started to assume overall responsibility for good health conditions and welfare of people working for them. During two decades after the Second World War the American companies grew in size significantly, many of them turned into large, even into mega, corporations (e.g. General Motors and IBM). It evidently gave a powerful incentive to new, more systematized and centralized personnel practices (Kaufman, 2007). In 1965 the term “human resources” was at the first time introduced by Raymond Miles, according to Pieper (1990). Miles intended to distinguish an emerging at that time view of the workforce from the old human relations model, based upon “keep-people-happy” strategies and purely administrative tasks of personnel management. The key difference was in that, according to the new approach, workers were considered to have the potential to grow and to develop. It was presumed that people in corporations constitute a dynamic resource pool of multiple capabilities, skills and knowledge. In addition, it was perceived that employees have needs that are compatible with the needs of the corporation. Such a view caused a significant shift in the understanding of human resource management tasks – now the major task of HRM was proposed as to help the corporation’s employees “to actualize and develop their potential in accordance with the needs of the organization and the interests of the individuals in question” (Pieper, 1990, p.2). At the same time, in the middle of 1960s, Becker introduced the human capital theory and the concept of the human capital as the productive capabilities of people. Jackson and Schuler (1995) explain this concept that knowledge, skills and experience of people, working in a company, define the company’s ability to be productive and adaptable; that’s why knowledge, skills and experience of employees have economic value and constitute the company’s human capital. Following them, Wright, McMahan and McWilliams (1993) define human resources as “the pool of human capital under the firm’s control in a direct employment relationship” (p.7). Human resource practices, from this point of view, are “the organisational activities directed at managing the pool of human capital and ensuring that the capital is employed toward the fulfillment of organisational goals” (Ibid.) Since the 1960s, a number of new approaches to HRM has arisen, all of them considered human labor as the major asset of an organization, in contrast to the old viewing of labor primarily as a cost factor. Kaufman emphasizes the importance of this shift (2007, p.35): “The bedrock idea is that by treating employees as organizational assets rather than disposable commodities, structuring work to make it more interesting and self-controlled, and creating mutual-gain forms of compensation the employment model is transformed from an inflexible, high-conflict, and low-productivity system …to a flexible, low-conflict, and high-productivity unitarist HRM system.” An important consequence of such understanding of sophisticated human labor’s significance was the acceptance of the necessity to invest in the development of employees (Pieper, 1990). This new for its time organizational model is now widely known as “high-commitment workplace” or “high-performance work system” (HPWS). In the middle of 1970s the term “personnel management” started to be increasingly replaced by the term “human resource management”. It was generally caused by several factors, including a growing understanding of the importance of human resources for the corporation success and a necessity of regular management of these resources (Schuler and Jackson, 2005). Further development of HRM led to emerging of theories, concepts and approaches, which are used by contemporary human resource managers and researchers. Schuler and Jackson (2005) argue that this development “reflect the dramatic changes that began to occur during the 1980s” (p.12). Among the challenges they mention the following ones (Ibid.): The focus of business shifted from domestic to multinational to global. The speed at which business was conducted increased; Organizations recognized that labour costs and productivity must be addressed from a world-wide perspective. Many companies realized that competitive advantage could be seized and sustained through the wise utilization of human resources. In addition, according to Schuler and Jackson (2005), corporations and companies in the United States started to view human resource managers as important partners who should take part in all strategic decision making processes. At the same time employees with their knowledge, skills and experience became to be recognized as potential sources of corporate competitive advantages. As a result, in 1980s the new concepts was developed by a large group of researchers from USA and Europe, according to which the personnel function should be integrated into general strategic management of corporations. The new term strategic human resource management was coined (as well as the international human resource management was developed a bit later). From that time HRM is defined as consisting of the following elements (Pieper, 1990, p.3): Traditional personnel administration (staffing, rewarding, work design). A specific management philosophy that values labor as the major asset of an organization and that regards human beings as being able and willing to grow and develop. Personnel development. The integration of the personnel functions into strategic management. Jackson and Schuler (1995) also suggest using HRM as an umbrella term “that encompasses (a) specific human resource practices such as recruitment, selection, and appraisal; (b) formal human resource policies, which direct and partially constrain the development of specific practices; and (c) overarching human resource philosophies, which specify the values that inform an organization’s policies and practices” (p.238). Thus, the understanding of the term “human resource” and the human resource management study and practice has made a great progress during the last century. But as Springer and Springer notify, the challenges of HRM in the United States and in the world have never been greater than they are in our days (1990, pp.58-59): “The rate of change in the world of work is increasing dramatically. We are moving from the traditional office to the automated office to the home office. We are moving from the blue collar employee to the pink collar employee to the androgenous employee whose collar we never see because we are only linked by a computer. …We are only beginning to discern the jobs of the future while we already know that the workforce of the future will have serious limitation”. In addition, while some corporations view their employees as an important organisational asset and recognize HRM as a strategic driver of competitive advantage, there are a great deal of organization continue to practice out-of-date instrumental methods of people management in its administrative, mostly cost-focused manner (Kaufman. 2007). In conclusion, it is worth to give some insights concerning the future of workplace and workers in corporative America. O’Toole and Lawler consider that during last decades a major shift has occurred in the American economy and workplaces as the result of several factors, which include the following ones (2006, p.147): increases in the costs of benefits, particularly health care; a downward pull on wages due to competition from offshore workers; increasing use of contingent workers; the substitution of capital for labour; a wage squeeze on services-sector employees due to growth of low-cost competitors (e.g. Wal-Mart). Thus, to remain competitive and to continue offering good conditions for job, the American corporations should address each of these issues. In particular, they should pay the attention to: health-risk education; managing people right; making supportive supervision; encouraging work/family balance; creating a sense of community within the corporation. In summary, aiming to provide a brief overview of a process of the changing role of human resources’ understanding in the US corporations, we showed the differences between various human resources conceptions and the impact of these conceptions on the related HRM approaches and practices, as well as a rapid changing of the nature of U.S. human resource management during the last century. References Jackson, S.E., & Schuler, R.S. (1995). Understanding human resources management in the context of organizations and their environments. Annual Reviews of Psychology, 46, 237-264. Kaufman, B.E. (2007). The development of HRM in historical and international perspective. In Boxall, P., Purcell, J., & Wright, P. (Eds.), The Oxford Handbook of Human Resource Management. Oxford: Oxford University Press. O’Toole, J., & Lawler III, E.E. (2006). The new American workplace. New York: Palgrave Macmillan. Pieper, R. (1990). Introduction. In Pieper, R. (Ed.), Human resource management: an international comparison (pp.1-26). New York: de Gruyter. Schuler, R.S., & Jackson, S.E. (2005). A Quarter-century review of human resource management in the US: The growth in importance of the international perspective. Management Review, 16 (1), 11-35. Springer, B., & Springer, S. (1990). Human resource management in the U.S.-Celebration of its centenary. In Pieper, R. (Ed.), Human resource management: an international comparison (pp.41-57). New York: de Gruyter. Wright, P.M., McMahan, G.C., & McWilliams, A. (1993). Human resources and sustained competitive advantage: A resource-based perspective. CEO Publication, G 93-19 (239), November. Los Angeles, CA: University of Southern California, Center for Effective Organizations Read More