Out Line the key features of HRM as an approach to managing people in the workplace. Compare and contrast the HRM approach with more traditional personnel management. Assess the advantages of the HRM approach for employers.

University Degree Business and Administrative studies

1. Introduction

Human resource management (HRM) becomes much more popular than ever before, in fact, essentially replaces the terms ‘personnel management’ or ‘personnel administration-on’. However, ever since the term HRM came into currency (along with human resource development (HRD)), it has come in for much criticism. Many people considered HRM as a revolution of personnel practice. In contrast, a number of commentators have argued that there is not any significant difference in the concepts of personnel management (PM) and HRM. Torrington (1989) commented that: ‘Personnel management has grown through assimilating a number of additional emphases to produce an even richer combination of experience ... HRM is no revolution but a further dimension to a multi-faceted role.’ It is highly common to find texts citing HRM as simply being variation on a single theme; that HRM is merely personnel management, under a new label eloquently stated by Armstrong (1987) as being ‘Old wine in a new bottle’.

Nevertheless, is HRM a complete transformation of personnel practice or just a ‘wolf in sheep’s clothing’? (Armstrong, 1987) How to critically discuss the role of HRM and its activities within an organisation? To answer these questions, we must make sense of HRM and analyse the relationship between HRM and PM.

2. The Origins of HRM

The origins of HRM may be traced back to the 1950s in the United States. Along with the Thatcherite era and an emphasis away from collective bargaining, reduction in bureaucracy and a move from the collective to the individual, a new void in the personnel function required to be filled, when personnel specialists found themselves having to adjust to the enterprise culture and the market economy. Thus, HRM emerged as a practiced personnel function, promising flexibility, responsiveness and a marked increase in the value of the employee.

Furthermore, with the reduction in heavy industries and increase in services and high technology, HRM promised to put emphasis on the longer-term strategic issues. The push towards this seemingly ideological approach to personnel increased in the late eighties, arguably, due to increasing competitive pressures, increased globalisation and a generally harsher business environment. It is these factors that caused managers to enhance internal corporate effectiveness and thus improve external competitiveness. This entailed the maximisation of all resources, including the human resource.

By the early 1980s, a number of US analysts were writing about HRM and devising models and explanations for its emergence. Among the most significant of these commentators are Devanna (the Matching model), Beer (the Harvard model), and Walton. In the UK, Guest, Pettigrew and Hendry, Storey, and Poole have provided significant commentary on HRM. More recently Huselid, Mc Duffie and Arthur have extended the analysis to HRM ‘bundles’. (Lan Beardweel and Len Holden, 2001: 27) Storey (1989) distinguished between HRM practices belonging to what he referred to as a ‘hard’ model (rooted in the manpower planning tradition) and ‘soft’ (rooted in the human relations approach to organisational analysis) (Cf. also, Legge, 1995), and has developed a model that sets out four-part basic determinants of HRM practice for analysis - beliefs and assumptions; strategic aspects; line management; and key levels.

3. The Relationship of HRM and PM

3.1 The Nature of HRM

According their statements, such as Beer and Spector (1985), Walton (1985), Guest (1987) and Foulkes (1986), there is such definitions of HRM differ from traditional personnel management. HRM presents significant issues for the analysis and operation of employment relationships. It refers to the activities an organisation carries out to utilise its human resource effectively. These activities include determining the firm’s human resource strategy, staffing, appraisal, management development, compensation, and labour relations. HR managers, irrespective of whether they work for a purely domestic firm or an ...

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3. The Relationship of HRM and PM

3.1 The Nature of HRM

· Strategic integration – integration of HRM issues into strategic plans of the organisation;

· High commitment – to pursue agreed goals and strong identification with the enterprise;

· High quality – managerial behaviour that leads to investment in, and management of, high quality employees, which directly bears on the quality of outputs;

· Flexibility – functional flexibility and an adaptable organisation to manage innovation.

3.2 Similarities Between PM and HRM

It may be useful to start with outlining PM. Personnel management has come a long way since its modern industrial inception around 1900 and has expanded to encompass a broad and complex set of decision making problems. It concerns mostly issues related to industrial relations and administering employees. A short definition might be: ‘The recruitment, selection, development, utilisation of, and accommodation to, human resources by organisations.’ (French, 1978) In such a way that not only will they achieve satisfaction and ‘give of their best ’ at work, but by so, doing enable the employing organisation to achieve its goals. Mc Gregor’s Theory X and Theory Y reflect underpinning norms, values and opinions that managers have about the people who work for them.

Therefore, there are similarities between personnel management in construction and ‘hard’ models of HRM, particularly in relation to manual workers.

· Both recognise that line managers are responsible for managing people - personnel function provides the necessary advice and support services;

· Identical with regard to respect for the individual, balancing organisational and individual needs and developing people both for personal and organisational objectives;

· Both recognise their essential function of matching people to ever-changing business requirements;

· Same range of techniques are used e.g. selection, training, management development, reward management;

· Personnel management and ‘soft’ version of HRM attach importance to the process of involvement, participation and communication.

3.3 Differences between PM and HRM

HRM aims to integrate all of the personnel functions into a cohesive strategy. There are a number of other key differences.

· PM is workforce-centred, directed mainly at the organisation’s employee, finding and training them, arranging for them to be paid, explaining management’s expectations, justifying management’s actions; HRM is resource-centred, sees employees as resources, however, they are viewed as being fundamentally different from other resources - they cannot be managed in the same way. It not only emphasises the importance of employee development, but also focuses particularly on development of ‘the management team’.

· PM is, characteristically, a range of activities centering on the supply and development of labour to meet the immediate and short-term needs of the organisation. The activities of recruitment, selection, rewards, development, etc. are, very largely, not integrated into a coherent strategy; On the other hand, HRM more emphasises on ‘group psychological state’, and a shift away from individual-based psychological theories of ‘worker morale’. (Mahoney & Deckop 1986) It seeks to adopt a long-term view emphasising the need for everyone in the organisation to work towards a common goal.

· PM operates in organisations where there are traditional ways of working and there is not much involvement of the workforce in decision-making. It tends to specialise in most of the traditional activities mentioned; HRM emphasises the importance of the involvement of everyone in teams or in quality circles. It trends to devolve many of these activities to line managers, concentrating instead on developing policies, planning, monitoring and evaluating.

· PM managers want a fair system for all and are keen to have rules and procedures to encourage this; HR managers tend to say that people have a right to proper treatment at work and efficient management will achieve this. HRM has more emphasis on planning, monitoring and control to ensure the right number of people (not necessarily employees), with the right skills in the right place at the right time.

Generally, HRM has been labelled a fundamentally new approach to personnel management with a number of distinctive features; for example, strategic integration, an emphasis on mutuality, and treating people as a resource to be invested in rather than as a cost. In this sense, HRM is essentially a business-orientated philosophy with an aim of achieving competitive advantage.

4. A Strategic Perspective of HRM

In order to achieve an organisational goal, HRM accepts the HR function as a strategic partner in the formulation of the company’s strategies as well as in the implementation of those strategies through HR activities. HRM can play a role in environmental scanning i.e. identifying and analysing external opportunities and threats that may be crucial to the company’s success. Similarly HRM is in a unique position to supply competitive intelligence that may be useful in the strategic planning process. HR also participates in the strategy formulation process by supplying information regarding the company’s internal strengths and weaknesses. The strengths and weaknesses of a company’s human resources can have a determining effect on the viability of the firm’s strategic options.

By design the perspective demands that HR managers become strategic partners in business operations playing prospective roles rather than being passive administrators reacting to the requirements of other business functions. Strategic HR managers need a change in their mindset from seeing themselves as relationship managers to resource managers knowing how to utilize the full potential of their human resources. The new breed of HR managers need to understand and know how to measure the monetary impact of their actions, so as to be able to demonstrate the value added contributions of their functions. HR professionals become strategic partners when they participate in the process of defining business strategy, when they ask questions that move strategy to action and when they design HR practice that align with the business strategy. By fulfilling this role, HR professionals increase the capacity of a business to execute its strategies.

The primary actions of the strategic HR manager translate business strategies into HR priorities. In any business setting, whether corporate, functional, business unit or product line a strategy exists either explicitly in the formal process or document or implicitly through a shared agenda on priorities. As strategic partners, HR professionals should be to identify the HR practices that make the strategy happen. The process of identifying these HR priorities is called organizational diagnosis, a process through which an organization is audited to determine its strengths and weaknesses.

Translating business strategies into HR practices helps a business in three ways. First, the business can adapt to change because the time from the conception to the execution of a strategy is shortened. Second, the business can better meet customer demands because its customer service strategies have been translated into specific policies and practices. Third, the business can achieve financial performance through its more effective execution of strategy.

In brief, a strategic perspective of HRM that requires simultaneous consideration of both external (business strategy) and internal (consistency) requirement leads to superior performance of the firm. This performance advantage is achieved by:

· Marshalling resources that support the business strategy and implementing the chosen strategy, efficiently and effectively.

· Utilizing the full potential of the human resources to the firm’s advantage.

· Leveraging other resources such as physical assets and capital to complement and augment the human resources based advantage.

HRM can be seen as a development that originated from tranditional personnel management and which has replaced it to some extent. Key managers and some professionals in the personnel function felt the old system was no longer functional and there was a need for a change in the status of personnel practitioners as well as for getting them more involved in business decisions. HRM also reflects changes in philosophies and practices with respect to the management of people in organizations.

In HRM there is a greater emphasis on strategic issues and on the way in which the human resource contributes to the achievement of cooperate objectives. Almongst the natural concerns of the organization are sensitivity to the needs of stakeholders, the development of human resources to meet future challenges, and ensuring that people’s energies are sufficiently focused in order to add value to organizational inputs. HRM underlines the importance of flexibility and the ability to react and adapt quickly management, where the requirement of the quality of both the operations of the organization and the product or service trigger a need for high caliber staff to secure competitive advantage.

Although HRM unashamedly embrace a cost effective business approach, it values employee for a perfectly understandable reasons. Being concern with the well-being of people is seen as a powerful way to motivate and inspire the work-force. HRM takes a systems approach to the analysis and management of organization. It likes to see the different parts of the organization functioning effectively and together moving cooperatively towards meeting the overall goals of the enterprise. This is facilitated through the management of systems such as human resource planning, recruitment and selection, appraisal, training and development, and rewards. These systems must be integrated and “pull in the same direction”. In this way the HRM function assists the organization to be more effective and profitable.

6. Conclusion

Through outlining the key features of HRM, comparing and contrasting with the similarities and differences between the two, outlining the strategic role of HRM, meanwhile, providing a case study of a company, it can be concluded that, comparing with traditional personnel management, HRM is a development, which originated from personnel management and is a better way of people management.

Strategic integration and the promotion of employees’ commitment are key features of the HRM model that bring about a new role and scope for the personnel function in the organisation. It is the vital to the ongoing success of an organisation in today’s highly competitive market place. A strategic approach to HRM does everything to ensure that the right number of the right types of motivated, energised, and self-directed people with creative ideas and corporate commitment are there to manage the organisations business and in return the people are given adequate reward, agreeable job securities, continuously enlarging opportunities, and reinforcing employer-employee relationship.

· Armstrong, M. (2001) A Handbook of Human Resource Management Practice. 8th edition, Kogan Page, London

· Boxall, P. (1993) The Significance of Human Resource Management: A Reconsideration of the Evidence, International Journal of Human Resource Management, vol. 4, no.3, Sep.

· Guest,D.E. (1987) Human Resource Management and Industrial Relations, Journal of Management Studies

· Guest,D.E. (1999) Human Resource Management: the Workers’ Verdict, Human Resource Management Journal

· Lan Beardwell and Len Holden (2001) Human Resource Management, 3rd Edition

· Legge.K. (1978) Power. Innovation and Problem Solving in PM. Mc Graw-hill

· Legge, K. (1991) Human Resource Management: A Critical Analysis

· Legge, K. (1995) Human Resource Management: Rhetoric and Realities, London: Macmillan

· Margaret, F. and Caroline, H. (1996) Introduction Human Resource Management, New York: Longman

· Price, A.J. (1997) Human Resource Management in a Business Context, International Thomson Business Press

· Storey, J. (1987) Developments in the Management of Human Resources: An Interim

· Storey, J. (1989) New Perspectives on Human Resource Management, London: Routledge

· Storey, J. (1992) Developments in the Management of Human Resources: An Analytical Review, Oxford: Basil Blackwell. Taylor, F W (1911) The Principles of Scientific Management, New York: W. W. Norton & Co. (1967 edition)

· Storey, J. (2000) Human Resource Management: A Critical Text, Thomson Learning

· Torrington,D. and Hall, C. (1967) Personnel Management, A New Approach, Condon

· Torrington,D.P (1989) in Armstrong, M., (2000) The Name Has Changed But Has the Game

Out Line the key features of HRM as an approach to managing people in the workplace. Compare and contrast the HRM approach with more traditional personnel management. Assess the advantages of the HRM approach for employers.

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