By the end of the seventies, the main features of personnel management as it appears today were in place, with the focus being on key roles such as: the collective bargaining role; the implementer of legislation role; the bureaucratic role; the social conscience of the business role; and a growing performance improvement role
The 1980s saw substantial changes as a result of legislation. Personnel management bacame more business-orientated and management-orientated and the decade saw the rise of performance-related pay as a major motivating force. It also witnessed the development of performance management systems. Personnel started to be represented on corporate boards and the personnel director was expected to act as a “business partner” rather than a specialist, taking an even-handed stance on the needs of the organisation and its employees.
By the 1990s a reaction against the more egregious features of the enterprise culture brought in the virtues of teamwork, empowerment and continuous development in “the learning organisation”. The language of competences began to be used extensively and more sophisticated approaches were developed to such processes as culture management, performance and reward management, performance-related pay and management development. The importance of being “strategic” and developing cohesive personnel politics was very much stressed, giving personnel an important role in the development of the business and of business strategy.
Through its evolution and development many people still remain critical of the term “personnel management”. In Around the mid-80s, when the arrival of the term 'human resource management' (HRM) arrived from the USA, it sparked off a worldwide debate as to whether HRM is a new and distinctive philosophy with a paradigm shift towards a more strategic approach to people management; or simply “new wine in old bottles” and in reality no more than a different term for what good personnel managers have always been doing (Mullins 2005).
According to S. Dev Anand (New Straits Times 2, Jan 27, 2001), one major difference in the debate of personnel management versus human resource management is the contract of employment. In personnel management an employee’s contract of employment is clearly written and employees must observe strictly the agreed employment contract. The contract is so rigid that there is no room for changes and modifications. There is no compromise in written contracts that stipulates rules, regulations, job and obligations.
HRM on the other hand, does not focus on one-time life-long contract where working hours and other terms and conditions of employment are seen as less rigid. Here, it goes beyond the normal contract that takes place between organizations and employees. The new "flexible approach" encourages employees to choose various ways to keep contributing their skills and knowledge to the organization. HRM, with its new approach, has created flexi-working hours, work from home policies and "open contract" systems, some of which are currently practiced by some multinational companies such as Motorola, Siemens and GEC. HRM today gives employees the opportunity and freedom to select any type of working system that can suit them and at the same time benefit the organization as well. Drucker (1996) calls this approach a "win-win" approach.
Another perceived difference in the HRM versus Personnel management debate is the way the two look at Leadership and management roles. Personnel management emphasizes much on leadership style which is very transactional. This style of leadership merely sees the leader as a task-oriented person, where the leader focuses more on procedures that must be followed; punishment for non-performance and non-compliance of rules and regulations; puts figures and task accomplishments ahead of human factors such as personal bonding, interpersonal relationships, trust, understanding, tolerance and care.
Whereas, HRM creates leaders who are transformational. This leadership style encourages business objectives to be shared by both employees and management. Here, leaders are more focused on people-orientation, and importance on rules, procedures and regulations are eliminated and replaced with:
- Shared vision;
- Corporate culture and missions;
- Trust and flexibility; and
- HRM needs that integrates business needs.
The above is based on HRM strategy that focuses in transformational leadership, a style which encourages "participative management". This according to John Storey is an “ideal type”. Here, the HR managers and the line managers are equally important in directing and co-coordinating people resources in order to achieve "bottom-line" objectives.
Although, some might perceive human resource management as being nothing new because the approach and strategies are still the same as in personnel management. It can be argued that Personnel management is a more traditional, classical way of managing people; using a functional model, however, HRM is seen as a more scientific way of management (F.W. Taylor) which uses a holistic model.
While the debate as to which (Human resource management or Personnel management) is the better term to use continues, both types are still faced with the same problems and decisions that are universal to all. With the world constantly changing, generating new issues, new ideas, managers in Hr have to make a lot of choices with regards to how to deal with these new ideas and new circumstances, some of which are not always easy to make. Many external and internal factors influence Hr policies ranging from: laws and regulations, national culture, unions, technology, structure, competitive strategy, corporate strategy etc.
One such contextual factor that influences personnel management is intensified competition in product markets. This could mean maintaining a continual downward pressure on costs, resulting in fewer people, in which case the Hr function is faced with the need to cut jobs and develop new means of intensifying work. It could also mean keeping pay levels down at or below market rates, thus making it harder to recruit and retain staff while maintaining their motivation and commitment. However when cost cutting is not imminent, an alternative to compete on grounds other than cost, would be to accept prices charged to customers will be higher than of some competitors, but offering greater overall value. The need would then be on finding and motivating more high-quality performers. This would then require a more sophisticated set of Hr practices. Recruitment would take place less, but would be of a higher standard to secure the services of highly capable people. A more sophisticated approach to employee development would have to be adapted as well as more commitment to employee involvement.
Although competition is a very important factor influencing personnel management, another such factor that inevitably influences Hr activity is the use of technology. The direct effects it has are: the use of email and intranet as tools of information provision and communication; use of internet as new method of recruitment; development of web-based approaches to training and learning; use of computer databases to hold staff information and generate reports etc. Technology can also bring more general change to an organization in terms of its structure, job duties, work allocation etc, which requires different types of action from Hr. Whether it is in recruitment, the need to bring in people with different skills and attributes; consider different types of training; or making redundancies etc.
Dealing with things such as contextual factors and its effect on organizations is only one part of personnel activity. A personnel manager has to be concerned with many other things such as: Employee resourcing, employee development, employee relations, employee reward, employee services, organization etc.
Employee resourcing can be broken into human resource planning and recruitment and selection. To find and bring in people that the business needs for its success is a crucial part of human resource. The people may not be employees- they may be consultants, contractors, temporary etc. Once recruited, people have to be retained within the business by a series of strategies that sustain their interest and motivation as well as keeping the focus of their activities within a changing organizational and business context.
Employee development is concerned with the training needs of individuals. Training and development is an issue that has to be faced by every organization and the extent to which an individual is trained depends on various factors such as: change in the external environment (new technology, legislation etc); change internally (new processes, markets etc); availability of suitable skills within existing workforce; knowledge and skills of those carrying out the training etc.
Employee relations or some might say industrial relations is about the involvement and participation of employees. All jobs have the potential to be alienating, making the job holder feel indifferent to both the job and to the management, who are seen as responsible for obliging the employee to continue doing the job. Involvement is basically concerned with preventing this type of alienation. Because the issues are often collective, concerning a number of people in a similar situation, many procedures incorporate the recognition of trade unions and ways of making that recognition productive for both parties.
Employee services is concerned with health and safety and welfare of employees in the workplace. The development of health, safety and welfare provision, is to a large extent interrelated with the development of human resource management itself, as discussed earlier. However its importance is not lost even today. Health and safety has been given increased emphasis by trade unions and at present in the media. It is the human resource department’s responsibility to advice managers on the organizations legal obligations.
Personnel activity sometimes also requires personnel specialists to take on a number of roles within the overall framework of the personnel function. The extent to which these roles are played, depend partly on the type and structure of the organization, its culture and the environment in which it exists.
Personnel staff can take on the role of “facilitators” where they act as change agents, playing a major part in planning and managing any changes concerned with the ways in which the business is organized (contextual factors?) its processes and systems (technology?) and how its employees are developed and managed (training).
Another role that can be taken on by personnel staff is that of consistency monitors, where they basically oversee activities to ensure that personnel policies and procedures are implemented and administrated consistently and fairly. Overlooking the provisions of employment, equal opportunity and health and safety legislation are also key areas that must be seen to and put into effect to avoid the organization getting into any difficulties on legal matter.
Although taking on these specialist roles is all part of personnel activity, there are various factors (internal, external, environmental etc) which can have a strong influence on the way these roles are played. When acting as facilitators, personnel staff may have to consider different aspects such as the social system of an organization – the way in which work groups are organized and the processes of interaction that take place, an organizations technical system – the ways in which the work is organized and carried out to deliver products or services to customers.
When acting as consistency monitors, personnel staff may have to look at external factors such as government interventions in dealing with new legislation or making sure that environmental factors are effective and running in line with an organizations contingency theory.
After having outlined in depth the various responsibilities, functions and roles of a personnel specialist, it is clear to see that the personnel function plays a major and important part in the contribution to organizational success. It contributes to the creation of added value by ensuring that people with the required competences and levels of motivation are available, thus helping to create a culture and environment which stimulates quality performance. An added value approach to personnel is directed positively to improve employee motivation, commitment, skill, performance and contribution, thus getting better value for money from personnel expenditure in areas such as training, reward and employee benefits.