Personnel Management and HRM

HRM TO PM- Old wine in new bottle or a brand-new product?

INTRODUCTION:

Human resource has always been the most important part of any organisation. They are one of the major keys for any organisation to achieve its goals and objectives. An organisation is deemed to be successful if it manages its personnel efficiently and effectively. Management of Human resource or Personnel is not a new concept and it has been in practice for more than 100 years. Though with times this management strategy has been given different names like Welfare Management (early 1900s), Labour Management (in 1920s), Personnel Management (in 1960s) and the latest one being Human Resource Management (in 1990s). So, what is Personnel Management and Human Resource Management? Let’s look at the definitions of both given by different philosophers.

What is Personnel Management?

Personnel management is defined as:

‘Personnel Management aims to achieve both efficiency and justice, neither of which can be pursued successfully without each other. It seeks to bring together and develop into an effective organisation the men and women who make up an enterprise, enabling each to make his/her own best contribution to its success both as an individual and as a member of a working group. It seeks to provide fair terms and conditions of employment, and satisfying work for those employed.’ (IPM quoted in Hendry, 1995, p 10)

But as per Legge (1989, 1995), Keenoy (1990), Sisson (1990), Hope -Hailey et al (1997) explained that Human Resource Management was a revolution. It focuses more on the strategic aspect of managing people and taking decisions

What is Human Resource Management?

HRM as defined by Storey (1995;5):

‘Human Resource Management is a distinctive approach to employment management which seeks to achieve competitive advantage through the strategic deployment of a highly committed & capable workforce, using an array of cultural, structural and personnel techniques.’

Hendry and Pettigrew (1990) also explained that HRM was a labelling around the obviously seen changes but focussing on the shortcomings in attitude, scope, coherence and direction of existing personnel management.

LITERATURE REVIEW AND ANALYSIS:

Personnel Management:

In 19^th century, Personnel Management was accepted and developed as a specialised function of the organisation. Torrington interestingly defines the ‘Personnel Management’ as ‘Industrial Cinderella’ which was not very much highlighted due to its large and ugly sisters known as Sales and Production. In the mid-1900s i.e. during the decades of 1950s and 1960s a lot of Personnel Managers were seeing the Managing Directors of the company in the role of ‘Prince Charming’ and producing a glass slipper so that Cinderella can really show her paces. (Torrington, 1969)

In the Personnel management, the duty of the manager is to be directly in charge of the activities of the people under him and has full responsibility for them. But a Personnel Manager can only assist other managers in doing their jobs, he cannot take their job and do it for them.

Personnel manager provides advice & assistance to line managers but also need to access control on them. Personnel managers work in such a way that they maintain the balance between the different internal departments of the organisations so that there would not be any chance of getting into inter departmental grouping. Personnel management believes in ‘one rule applies to all’. If there is a certain wage for a level, them PM ensures that every person working at that level is entitled to same wage pay. No one would get less, no one would get more. Personnel Management believes in efficient communications within the organisation. It ensures that what top management wanted their employees to deliver should be clearly communicated to the employees.

As for example we can have a recent study where the position and role of HR professionals in American School industry are that of Personnel Managers who are into compliance and administrational activities rather than strategic decision making. (Tran, 2015) (see appendix- case study 1)

In Storey’s opinion (Storey 2001;9) HRM could be classified in 2 approaches-

HARD HRM Approach-:

It focuses on the need for adopting a strict business oriented style which lays emphasis on productivity, efficient use of human resources & the organisational objectives. It reflects to the old style of Management (Personnel Management) of getting things done no matter what. The focus is on identifying the personnel needs of the business and hire and manage accordingly (hiring, moving & firing).

An example of this approach can be given from the recent scenario- The Government of United States of America. The president of USA takes a decision and all the other staff members must oblige his decisions. The flow of communication is one way i.e. from top level to bottom level. No two-way communication flows in that hierarchy. Anyone not agreeing to his decision is fired.

Hard HRM theory is being followed by small and medium size companies also. The company in which author worked followed a the management style based on Hard HRM theory and it was quite successful in achieving its goals and objectives. (see appendix- case study 2)

SOFT HRM Approach: –

It lays emphasis on getting mutual benefits, thus fulfilling the objectives of the organisation & the ones of the employee’s. To reach this target, it highlights the importance of implications & motivations of personnel, respecting commitments and common values. It reflects the modern style HRM focussing on the organisational goals & that of employee’s. In this approach, the manager trust the employees and gather their opinions. They believe that the employees come forward and take responsibilities and perform with an intention to impress and progress.

A perfect example of SOFT HRM theory is GOOGLE INC. (see appendix- case study 3)

With Google having an excellent employee friendly workplace atmosphere, Googlers find it motivating enough to work towards achieving the goals and Google is benefitted in way that employees give outstanding work performances sometimes in their free times too like Gmail, Google Suggest.

With such amazing and very successful formula of motivating and retaining employees there is no doubt that Google is one of the best places to work and the growth of employee as an individual and as a part of the organisation. (Martin, 2014)

In recent years, HRM has become popular and important because of many reasons major amongst them are- increased legal frameworks, getting to know what employees need from the organisation, increased complexity of manager’s activity due to changes in internal & external environmental factors, increased level of required knowledge, consistency and equity within the organisations, high cost to organisation due to absenteeism & delays in work etc.

In global competitive business environment, the organisation which is capable of building and leading efficiently its labour force will create benefits for all its stakeholders.

In recent times the companies find it essential to train its employees and make them more competent to be able to compete with rapidly changing business and global environment. But the point is how much do employees gain from such training and development depends (Berry, 1990). A case study was published in Financial times by a successful entrepreneur Luke Johnson who thought that the HR departments create confusions, unnecessary expense to the company and burden on the back of productive worker. (see appendix-case study 4)

Differences between HRM and PM.

There are certain philosophers who have quoted the differences between the Personnel management and Human Resource Management. Let’s have a look at them:

1. PM was more focused on satisfying the employee work related as the main thinking of Personnel Managers was the employee’s main motivation is Money while HRM focuses on Organisation, Observation and Control as its thinking is that employee work to impress beside the monetary factor. Armstrong (2009)
2. PM is supply driven and it is more about the employee’s role in the organisation if he has been hired while HRM is demand driven and it is more related to the circumstances in which an organisation needs an efficient employee. [Torrington 1989:42]
3. PM is more control and compliance associated in the way that all the work should be done within the rules and regulations whereas HRM is associated with commitment of employees, their feeling about being connected to the organisation and its goals.
4. With regards to Employee Relations- PM is said to be pluralist, low trust & collective as Personnel Managers believe in Hire, Retain & Fire policy while, HRM is unitarist, high trust and individual as it believes in giving training to the person who is not able to perform well. [Bratton & Gold, 2012:20]
5. PM has hierarchical organisational structure like that of Military organisations (Government of U.S.A) whereas HRM has a flexible organisational Structure where there is a flow of 2-way communication (Government of India). [ Cole 2002:3]
6. As per a survey in UK in 1999 (with n=350 companies) Personnel Managers were supposed to be older, male, long serving and having less qualification whereas HR specialists are young, both female and male, short serving and highly qualified. (Caldwell 2002)

Similarities between HRM & PM.

PM and HRM both advocate & prioritize to maximise the efficiency of Human resource.

PM and HRM both are responsible for the recruitment and selection of Human resource

PM and HRM both assess the work of Human Resources and make appraisal policies

Conclusion and Recommendations:

After a detailed analysis, it is evident that Human Resource Management, though evolved from Personnel Management in terms of basic concepts of managing human resources, it has grown to an entirely new concept now of involving strategic decision making and making employees a part of the decision-making process. Though both HRM and PM are concerned with maximising the efficiency of human resources, HRM makes it as a part of the job to make sure employees are not used as a machine to achieve any objective but as a part of the organisation who takes its employees together and walk towards the path to achieve its set objectives.

In practical scenario, the most companies follow the path between the concept of Personnel management and Human Resource Management as both deal with objectives like Staffing, Performance, Change Management and Administration objectives. (Eno et al. 2015)

Every debate should end with the fact that PM and HRM are complementary to each other not contrary to each other.

We can say that however there are various changes occurring in the style of management of Human Resource, the foundation and principles on which PM is based is still the same. PM and HRM both advocate and prioritise to maximise the efficiency of human resource. They have similar focus its just the way to achieve that focussed objective has taken various paths.

With the changing scenario and growing globalisation Personnel managers must make changes to be adaptable to the changing business environment and should be more considerate in knowing the needs of employees and make them feel the part of the organisation so that employees can relate and feel attached to the organisational goals and objectives.

Now days where HRM is turning towards more strategic behaviour, companies are more and more involving their employees into strategy and decision making process and should enhance a 2-way communication policy so that employees can give a feedback on strategies made. These days when the world is rapidly changing and the competition is getting higher and higher day by day, an open communication process with the employees and making them feel connected to the organisation is the best possible way to retain them and to divert them in achieving the goals of business.

In practical world, also there is no company in world who follows exact academic definition of either PM or HRM. Companies should use a ‘Best Fit’ strategy and follow a path somewhere between PM and HRM and use all the techniques be it from PM or from HRM to manage the most important resource of organisation i.e. Human Resource as this is the only thing which can give a competitive edge to the company over its Competitors and a company who is able to maintain and retain its employees over a longer period of time can use the competitive edge to convert its goals and objectives into reality.