Personnel management versus human resource management

Some commentators (Marchington et al, 1992; Storey, 1992; Legge, 1989, 1995) have brought to the light the revolutionary nature of HRM. Others have denied that there is any sort of significance with regards to the difference in the concepts of personnel management and HRM. Torrington (1989) put forward that: ‘Personnel management has fully fledged through a number of additional emphases to bring into being an even richer amalgamation of experience…HRM is no revolution but rather a further facet to a multi-faceted role’.

Traditional personnel management tended to be narrow-minded, striving to influence line managers, whereas HRM is integrated into the role of line managers, with a strong proactive stance and a bias towards business.

Although HRM and personnel management focus on people management, but when critically examined there are municipal differences between them that arise when making mention about the nature of relations, leadership and management role, contract of employment and pay policies and job design.

Nature of relations

This can be viewed from two different perspectives which are pluralist and unitarist approach. Unitarist theory treats the workplace as an integrated and harmonious entity, which is fully opposite to Marxist theory and it has its concentration on domination and contradiction. On the other hand, a pluralist approach recognizes the diverging interests of employers and employees leading to conflicts of interest which HRM will need to negotiate and resolve to meet organisational goals (Moore & Gardner, 2004). There is a clear difference between both perspectives because in personnel management the focus is more individualistic that is more emphasis is placed on an individual rather than a group. The synchronisation between management and employees are solely on contractual basis where one hires and the other performs the task required.

On the contrary, HRM focuses more on unitarist, through a shared vision between management and staff, create a commercial vision and mission which are linked to business goals and the fulfilment of mutual interest in such a way that the organisation’s needs are satisfied by employees as well as the needs of the employees are catered for by the organisation. Motorola is an exceptional example of an organisation that practice this unitarist approach which also drives into team management and sees employees as partners in an organisation (Armstrong M, 2000). Unitarism is echoed in models of HRM that are developed in the US, and is exercised in some South East Asian countries (Nankervis et al, 1996), although there is a real gap in empirical research to validate claims that unitarism exists within the western administrative force. HRM certainly breeds several involvement schemes as a method of securing employee fidelity and dedication but recognises the organisational veracity that existing industrial relations practice cannot always be eliminated suddenly (Blyton and Turnbull, 1992). Taking a look at royal mail as an example following a unitarist approach with an effort to overcome opposition to team working and employee involvement, they sought and obtained an agreement with the communications workers union in 1992 which set the factors to a new industrial approach. Partnership was the keyword and the union was privy to more company information as opposed to the pluralist approach in personnel management.

Power and management relationship

In personnel management the flow of power is centralised where the top management has utmost influence in decision-making sporadically, even the personnel managers are not allowed to show forth or voice out ideas or engage in any opinion that involves employees.

Contrary to this, HRM views the decentralisation of power in which the power is shared by introducing the middle and lower management groups. It is likely that the measure to which these management groups were introduced was to increase empowerment, for the reason that employees could play an important role in conjunction with line and HR managers to make group and mutual decisions that are advantageous to both sides (management and employees). In addition, HRM throws more emphasis on total quality management (TQM) approach as part of team management with the participation of management personnel and employees with shared power and authority. Conversantly, the nature of management is more on bottom-up approach in that employees feedback are encouraged where opinions are given to top management and then top management gives support to employees to achieve communally agreed goals and objectives. In prescriptive organisational communication text, it is also accentuated that communication is a two-way process, upward and downward flows. Most commonly used schemes in HRM are suggestion schemes, employee appraisals and attitude surveys. For example, Broadmoor Special Hospital is set to introduce a consultative committee representation on European works councils and incorporating non-union representatives; they suggested to invite non-unionised delegates to sit on its joint consultation and negotiating committee under the contemplation to give the non-unionised workforce equal symbol on the committee to that of the individual unions (People management 1994).

Source: Human Resource Management by J. Bratton and J. Gold p. 313

Leadership and management role

The leadership style adopted by personnel management is very transactional. Transactional style sees the leader as a task -focused individual. The leadership style focuses on procedures that must be carried out; castigation is often the result from non-compliance of rules and regulations, and task accomplishment. Human factors such as personal bonding, interpersonal relationship, trust, understanding, tolerance and care are actually not really taking into high consideration as much as the task at hand or in the distance future.

Transformational leaders are created by HRM. This style encourages business objectives to be divided by both employees and management. People-orientation is the key coupled with shared vision, corporate culture and mission, and trust and flexibility replaces the crude approach of procedures, rules and regulations (Yukl G. et al, 1992). This approach to or style of leadership and managing the employment relationship influences strategies and organisational objectives. Among large British companies, this style might be found in such companies as Marks & Spencer and in American companies such as IBM.

Contract of employment

Employee’s contract of employment is clearly written and there must be strict observation of the agreed employment contract, in personnel management. The rigidity of the contract is very tight in that there is no allowance for changes and adjustments. In addition there are no compromise in written contracts that stipulates rules, regulations, obligations and jobs.

While, as for HRM it does not involve in just one long-term duration contract where working hours, conditions, stipulations and other terms of conditions are perceived as less stringent. This totally exceeds the standard contract that takes place between employees and organisations. With HRM approach employees are motivated to choose various ways to keep contributing their competencies and acumen to the organisation. In fact, this approach of contract of employment has created work from home policies, the open contract system currently practiced by Motorola and Sony Ericsson (Armstrong M., 2000) and flexi-working hours. Employees now have the chance and lack of restrictions to select any type of working system that can suit them also at the same time benefit the organisation as well; this approach is known as the ‘win-win’ approach (Drucker & White, 1996).

Pay policies and job design

This is solely based on skills and knowledge required for the job criteria when looking at a personnel management viewpoint. The fundamental nature is mainly based on the ability to perform the task and duties as required by the employment contract only and value added incentives are not often or likely encouraged mainly because the job design is very serviceable, however the functions are more departmentalized (separate jobs are grouped or categorised into one functional department) this is also known as labour sharing assessed on job needs and skill possessions and requests.

Whereas HRM on the opposite lane encourages organisations to look beyond, without actually considering pay for functional duties although this does not eradicate the importance of pay. The underlying piece of information is that pay is designed to motivate continuous job performance which has a link with value-added incentives such as gain sharing scheme, variable recognition programs and individual incentive plans (A.D Stajkovic et al, 2001). The kind of job design with HRM tends to be teamwork and cyclical based. New approaches in the direction of job design are created such as job rotation which is inter and intra -departmental based, also job enlargement is introduce which motivates an individual to take on more tasks simultaneously with increase incentives and benefits. Clearly job design is related to key elements of the HRM cycle, selection, development, and rewards. As we all know, a company that produces small-batch high value-added products using highly skilled manual labour will have different recruitment and selection priorities from another company that specialises in large-batch production with the help of unskilled operators. In addition, HRM emphasized the fact that job design had to consider the social and psychological aspect of work. This emerged out of the Hawthorn experiments conducted by Elto Mayo in 1920s, with congruence to their findings which stated that workers are motivated by more than just economic incentives and the work atmosphere; recognition and social connections are needed also, which is contrary to personnel management (Sisson, 1990: 1). For example British steel rolled out local dialogues for blue-collar employees would be paid monthly salaries rather than weekly wages, and would be granted longer holidays and better sick-pay terms but in return, were asked to adopt flexible working practices. Team working was pitched in and a promotion was based on competence and capability criteria. On the personnel management boat, Steel used to be a highly supervised, separated, labour intensive industry, with promotions based on seniority with no great extent of value-added incentives which is contrary to HRM (People management, 1997).

Industrial relations

At the nucleus of industrial relations are work and the employment affiliation. The employment relationship is a social, economic and political association in which an employee provides physical as well as mental labour in exchange for rewards allocated by the employer (Watson, 1986). In organisations where employees are represented by a trade union, the price of the pay level is determined through the collective bargaining process.

Personnel management has always espoused the importance of adopting a strategic view. The industrial relations approach has viewed personnel management as part of a system of employment regulation in which influences shape the management of the employment relationship be it internal or external influences. Within the economic and social context, a lot of emphasis is based on the consideration of personnel practice. The most striking views of this relationship between personnel management and industrial relations kicks on from a point of an overwhelming prominence on shareholder value as the key business driver, as opposed to the interests of other stake-holders; institutional share ownership by investment trusts and pensions funds which supports a centre of attention on short-term effectiveness as the key directory of business performance rather than long-term market share or added value. In personnel management approach there is a relative ease of takeover, which not only underlines the pressure on short-term profitability to preserve share price but also promotes development by attainment rather than by internal growth; and lastly a quality on financial engineering as the hub of organisational proficiency, and the supremacy of financial management both in terms of control systems, personnel, and activities, over other functions. The traditionalist approach is often associated with personnel management. This approach is associated closely with dictatorial management which is hostile and snubs to identify trade unions.

On the contrary, HRM has been seriously influenced by industrial relations. Traditionally, trade unions influence rewards; union representatives attempt to make the most of the reward side of the earnings. With respect to recruitment and selection, in some industries, most notably printing and construction, trade unions customarily had extensive control over external recruiting. Trade unions also take an active interest in human resource development. They try to make certain that training opportunities are allocated equitably and that the employer adheres to the standard of maintained or improve earnings during training. HRM differs from personnel management in taking actions when it comes to industrial relations because of the concept of strategic choice and industrial relations strategies. The strategy mainly involves a plan that encompasses interaction with the competitive environment to achieve organisational goals (Daft, 1998). Finally, the approach habitually used in HRM, is the standard moderns style were managers change their approach to trade unions in response to internal and external amendments and pressures.

Conclusion

Personnel management can be seen as workforce centred which is fully focused at the organisations employees. Such as selection and training, wage or salaries arrangements, explaining management’s expectations etc. Personnel management has actually never congruent with management interests with the underlying reason of ineffectiveness when not able to comprehend and voice the aspirations and views of the workforce. When looking at solely operational function, personnel management becomes the whole package which is concerned primarily with carrying out daily people management activities. In addition personnel management majors on the maintenance of personnel and administrative systems.

On the other hand of people management we have HRM, this is simply resource inclined focused mainly at the management, in terms of delegating the responsibility of HRM to line management and management developments. Making references to strategy and strategic concepts, HRM has a strategic nature that is, it is always centralised in assisting an organisation to gain lasting competitive advantage. More over this is more proactive when compared to the former; HRM is primarily about the anticipation of organisational needs, the incessant observation and adjustment of personnel systems to meet present and future requirements, and also the management of change.

In summary here are some similarities and differences between HRM and personnel management

SOURCE: Handbook of Human Resource Management Practice.

Similarities

Differences

Personnel management strategies, like HRM strategies, flow from the business strategy.

Personnel management, like HRM recognizes that the line managers are responsible for managing people. The personnel function provides the necessary advice and support services to enable managers to carry out their responsibilities.

The values of personnel management and at least the soft version of HRM are identical with regard to respect for the individual, balancing organisational and individual needs, and developing people to achieve their maximum level of competence both for their own satisfaction and to facilitate the achievement of organisational objectives.

Both personnel management and HRM recognize that one of their most essential functions is that of matching people to ever-changing organizational requirements- placing and developing the right people in and for the right jobs.

The same range of selection of selection, competence analysis, performance management, training, management development and reward management techniques are used both in HRM and personnel management.

Personnel management, like the soft version of HRM, attaches importance to the processes of communication and participation within an employee relations system.

HRM places more emphasis on strategic fit and integration.

HRM is based on a management and business orientated philosophy.

HRM attaches more importance to the management of culture and the achievement of commitment.

HRM places greater emphasis on the role of line managers as the implementers of HR policies.

HRM is a holistic approach concerned with the total interests of the business- the interests of the members of the organisation are recognized but subordinated to those of the enterprise.

HR specialists are expected to be business partners rather than personnel administrators

HRM treats employees as assets not costs.

SOURCE: Handbook of Human Resource Management Practice.

Table 1: Similarities & differences between personnel management and HRM

Dimension

Personnel Management

Human Resource Management

Contract

Careful delineation of written contracts

Aim to go ‘beyond contracts’

Rules

Importance of devising clear rules/mutuality

‘Can-do’ outlook; impatience with ‘rule’

Guide to management Action

Procedures

‘Business – need’

Behaviour Referent

Norms/custom &practice

Values/Mission

Managerial Task vis-à-visLabour

Monitoring

Nurturing

Nature of Relations

Pluralist

Unitarist

Conflict

Institutionalized

De-emphasized

Key Relations

Labour Management

Customer

Initiatives

Piecemeal

Integrated

Corporate Plan

Marginal to

Central to

Speed of Decision

Slow

Fast

Management Role

Transactional

Transformational leadership

Key Managers

Personnel/IR Specialists

General/business/line managers

Communication

Indirect

Direct

Standardisation

High (e.g. ‘parity’ an issue)

Low (e.g. ‘parity’ not seen as relevant)

Prized management skills

Negotiation

Facilitation

Selection

Separate, marginal task

Integrated, key task

Pay

Job Evaluation (fixed grades)

Performance – related

Conditions

Separately negotiated

Harmonization

Labour Management

Collective bargaining contracts

Towards individual contracts

Thrust of relations

Regularized through facilities &training

Marginalized (with exception of some bargaining for change models)

Job categories &grades

Many

Few

Communication

Restricted flow

Increased flow

Job Design

Division of Labour

Teamwork

Conflict Handling

Reach temporary truces

Manage climate &culture

Training &Development

Controlled access to courses

Learning companies

Foci of attention of interventions

Personnel procedures

Wide ranging cultural, structural &personnel strategies

Source: Storey 1992: 35

Table 2: More difference between Personnel Management & HRM

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Contents

1.0Introduction 1

2.0Personnel management versus human resource management 1

Nature of relations 1

Power and management relationship 2

Leadership and management role 3

Contract of employment 4

Pay policies and job design 4

Industrial relations 5

3.0Conclusion 6