Henry Ford’s assembly lines and Frederick Taylor’s time and method studies saw workers as another tool like machines. They sought to improve worker productivity by designing the way work is carried out. The problem with this approach is that humans are not machines, but individuals with personal goals and needs. Treating them like machines invariably leads to resistance and conflicts’ (1).
“Take our 20 best people away, and I will tell you that Microsoft would become an unimportant company”
Human Resource Management (HRM) and/or Personnel Management (PM) has become a very vital part of the management process in the twenty-first century, compared to the past, it is drawing considerable attention in managerial debates and strategic planning of organizations. According to Storey (1995), ‘human resource management (HRM) has been and remains highly controversial’ (p.4), a position that Keenoy (1999) has approved it while defining the contemporary situation of Human Resource Management. The HRM has emerged its significance by relying on key terms such as leadership vs. management, training and development, empowerment, flat organizational structure, motivational systems, teamwork etc. For many, they are nothing but a nice expression, but in the dog-eat-dog market they seem to play a vital role, winning competitive advantage for industry players (Wright et al, 1992). Seemingly, the variety of different understandings of key differences between HRM and PM, if any at all, exists among professional managers. Some people believe it is the same old wine in a new bottle holding a fancy label; it is just a contemporary word.
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Some experts state that there is no difference between HRM and personnel management. They declare that the two terms can be used interchangeably. They assert that the only evident change is merely condensed into the “re-labelling process” (Legge, 1989). Another advocator of the “change of label” philosophy was Torrington (1989), not to forget about the fact that there was and there is no valid statement defining to what extent PM and HRM differ. However, Sisson (1990) believed that the fancy name of HRM may at least release personnel management from its welfare hindering intension and thus far, assist the weak function of personnel management. In response to that, Armstrong (1987) and Guest (1989) ascertain that a new bottle for the old wine at least serves the marketing purposes appropriately. Furthermore, HRM has worthy contributions to people, recognizing them as core competencies of an organization buying attention and trust for traditional personnel management. (Armstrong 1987).there is no doubt that the story of HRM stems from the traditional PM, however it is yet to be proven whether it is a profound concept or just a ornamental label decorating the rusty structure of PM.
In this paper, to address the question: “To what extent, if at all, is HRM a “new” or different from personnel management or other forms of managing the employment relationship?”, the transformational development of HRM will be explained in order to identify and compare various models of HRM from inception, and to discuss the extent of differentiation, regarding the theoretical and practical perspectives, similarities and differences between PM and HRM are outlined, but previous to drawing them, soft and the hard models of HRM will be prefaced. Ultimately, a brief conclusion would summarize the discussion clarifying whether or not HRM is the story of old wine in new bottles.
FROM INDUSTRIAL RELATIONS TO HRM
With the purpose of explaining and comprehending the term Human Resource Management and how possibly it differs from PM, it is important to trace its origins back in history. The roots of managing people can be found in the late eighteenth and early nineteenth century, during the Industrial Revolution (Bratton & Gold, 2007), when improvement of working conditions was a common mood of the society, early attempts to welfare policies commenced by labor unions, and it has been known as the movement toward industrial betterments. Torrington et al. (1991) say that the primary responsibilities of the pioneer labor welfare societies were mostly regarding ‘distributing bonuses to the worthy and helpless workers’ (Torrington et al., 1993:3). The same concept of industrial relations was about to take a modern shape. ‘The term industrial relations generally depict the schematic connection of managers and worker associations and related institutional agreements’ (Tyson 2006).
‘World War II was the kick start of extended PM professions in war factories mostly in terms of personnel viewpoints, and for trembling organizations that were struggling in the red ocean of intense competition; it appeared in terms of unionizations. It was providing assistance to organizations in negotiations and other institutional consultations as such’ (Bratton & Gold 1999 2003)
After World War II, personnel management emerged in efficiency of the entire company, the focal point of it, from dealing with workers has been redirected to employers’ (Tyson and York 2000). . To define PM, it refers to managing human resource with organizations, which includes recruitment and selection, training and employee development, appraisal and reward, discipline and dismissal (Heery & Noon, 2001) .Keenoy (1990) observed PM in a state of blurriness since it was striving for allocating a state of stability and equilibrium between organisational demands and employee demands. Therefore, the strategic HRM was turning toward running away from this vagueness, by stating that proliferation of employee satisfaction and loyalty would highly serve organizational goals.
In the late 1980s the term Human resource management emerged in Britain. As Torrington et al. (1991) says there is a “change of emphasis and attitude” into it. In better words, According to Mackay and Torrington (1986), HRM is “directed mainly towards management needs for human resources (not only employees) to be provided and deployed. It stresses on monitoring and control along with proper planning rather than on problem-solving and mediation. It is totally identified with management interests and is relatively distant from the workforce as a whole.”
PERSONNEL MANAGEMENT vs. HRM
Subsequent to sketching a brief background of managing people in organizations and the process of emerging various models and definitions, the controversial topic of PM vs. HRM has become the focal point of discussions among HR academics.A number of them, Legge(1989) for instance, advocate the view of “not many” differences between the two approaches, though the divergence of various aspects under this topic is inevitable.
Torrington (1989) regards personnel management as a consistent procedure of upfolding and development, through which more expertise are requested. ‘In the frame of this developmental procedure, HRM is rasping another facet for the traditional PM’ (Torrington, 1989, cited by Armstrong, 2000), and is not at all a disruptive or radical concept.
From another point of view, HRM is referred to as a ‘thoroughly different approach to people management in the workplace’ (Storey 1989: 4). According to this viewpoint, ‘HRM presents an entirely different framework of PM, thus it is considered to be a divergence from traditional personnel management’ (Storey 1989)
An outstanding aspect of HRM, which is its strategic integration, draws a line of distinction between HRM and PM (Beardwell and Holden, 2001). ‘The vertical integration is aimed to achieve a close relationship between business strategy and people management strategy at the same time horizontal integration is aimed to ensure that personnel and development activities are mutually reinforcing, in other words, the pursuit of a business focus to people management which creates and sustains competitive advantage’ (Pilbeam and Corbridge, 2002).
Traditional personnel management view workers as robots, but HRM sees employees as human beings, as crucial business assets. By predicting aptitude gaps and needs, planning for motivational and promotional structures, and get a productive team by teaming up the employees, HRM strives for merging workforce and organizational objectives.
As the concept of HRM annex value and integration to the concept of PM, it is not of a same kind but is composed of various philosophies and theories, for the sake of a better understanding, the two main spectrum of HRM, ‘soft’ and ‘hard’, will be further elaborated.
‘SOFT’ AND ‘HARD’ MODELS OF HRM
‘On one side of the coin, there is the claim of the strong marching on of HRM’ (Storey 1995; Walton 1985) as well as the attractive idea of soft Human Resource Management (for example, people is the source of change; your labor is your asset; workforce are the source of sustainable competitive advantage or edge.) (Sisson & Storey 2000) ‘The other side of spectrum is the concept of Hard model, the slow diffusion of ‘soft’ HRM practices’ as Legge 2005 and Storey & Sisson (1990, 2000) suggested, ‘and the greater stress would be on the focus point of fundamental value of the business’ (Keenoy 1990; Legge 1995), ‘and likewise the improper execution of strategic HRM’ (Keenoy 1999).
Truss (1999) states that ‘soft’ and ‘hard’ models of HRM are “diametrically opposed along a number of dimensions.” At the same time other authors, like Armstrong (2000), claims that there no clear cut difference between the two approaches. This seems to be true for at least some theoretical dimensions such as strategic integration. In ‘hard’ HRM models people are regarded as human capital in which the organisation invests, and from which the organisation expects return on its investment to achieve competitive advantage. Employees are seen as a resource to be utilized and, perhaps, as a cost to be minimised. ‘Hard’ models are strongly focused on the strategic integration of HRM with business goals (Legge 1995). Therefore, people are strictly directed and controlled through quantitative performance management and HR databases. Whereas ‘soft’ models emphasise the strategic and quantifying management aspect of HRM, ‘soft’ models stress the human resource aspect (Legge 1989: 26, Guest 1989), to recap, Truss (1999) states, in ‘hard’ models the term ‘resource’ is underlined, while in ‘soft’ models it is the term ‘human’.
In ‘soft’ HRM employees are “valued assets” and a “source of competitive advantage.” (Legge 1995) They are regarded as capable and worthy of development, and experience considerable job autonomy and a high level of trust from management (Truss 1999).
Organisational culture and its promotion by management is highlighted. Direct and individual communication, employee involvement, motivation, and identification with missions and goals are regarded as crucial for organisational success. The commitment of employees is strongly desired as a precondition for increased effort and performance. At the same time, commitment is expected to facilitate self-regulated behaviour and, thus replace direct forms of supervision, pressure and control as they are typical for ‘hard’ HRM models and conventional personnel management (Truss 1999; Guest 1991).
FINDINGS AND DISCUSSION
Soft and hard model of HRM are contradictorily different in terms of basic concepts; however Guest (1989) proposed the integration of the two approaches into one theory of HRM. Outlining the similarities and differences between personnel and HRM may draw the discussed theories and philosophies into a comprehensible close.
Analysing and comparing definitions of both personnel and HR management, Legge (1989) finds that “there are clear similarities between the two.” In both models the strategies for managing personnel are derived from the business strategy and integrated with organisational goals. Especially Guest (1989) believes that the strategic orientation of ‘hard’ HRM models reconfirms the concept of personnel management, therefore, according to Guest (1989) there is no, or marginal differences between HRM and PM.
To name one similarity, Armstrong (2001) sees similar approaches in HRM and PM regarding Recruitment and Selection activities, Compensation programs and performance management.
A further similarity between personnel and HR management found by Legge (1989) is that in both concepts the management and development of personnel acquire professional expertise and lies under the responsibility of management team. Despite of tremendous similarities, still many points of difference exists in the eyes of other HR professionals.
The outstanding strategic character of HRM is claimed to be one of the differences in emphasis between personnel and HR management. The formulation of HRM policies should explicitly take place at a strategic level within the organisation (Storey 1989). In better words, HRM needs to be implemented by senior managers, due to its heavy strategic nature, while conventional personnel management has always been known as a source of extra cost for many companies rather than being a source of competitive advantage. Based on Torrington (1989), this is aligned with strategic and “demand -driven” approach of hard HRM, which -again- focuses on organisational needs and bottom line.
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A crucial requirement of soft HRM approach is the creation of organisational culture and values. The culture should be designed for gaining the employees’ commitment. Commitment is a prominent goal of HRM, as it is seen as a crucial precondition for high performance (Guest 1989). Besides high trust and commitment, another part of organisational culture as promoted by HRM is a more direct form of communication. HRM advocates a turn from collectivism to individualism (Sisson 1990). It neglects collective bargaining and unions, and promotes individual relations with direct forms of communication between management and employees (Storey 1989; Keenoy 1990). Storey and Sisson, along with Guest (1989) discuss that “employee relations” are persistently taking over “industrial relations”.
While personnel management often finds itself in an intermediate position between organisational demands and individual needs, soft HRM models maintain a coinciding relationship of organisational and individual interests. HRM policies and practices that are desirable for the employee are also beneficial to the achievement of organisational goals. Consequently, training and other means of development gain more importance and managerial attention than in personnel management (Torrington 1989). At the same time, soft HRM models grant more autonomy and self-responsibility to individuals (Torrington 1989), because a higher degree of autonomy is regarded as prerequisite for the organisation’s adaptability to change, i.e., the organisation’s flexibility (Guest 1989).Over all, the table below summarize the comparisons between the HRM and PM in various dimensions. [Appendix A]
Source: Compiled by various case writers
HRM IN PRACTICE
Sisson (2001) and Hoque and Noon (2001) studied the practical implementation of HRM. Sisson as well as Hoque and Noon discovered that HR managers are more involved with strategic management procedures and the formulation of strategic business plans than personnel managers. In addition to that, evidence suggests that wider devolution of authority has occurred in workplaces with an HR specialist, as opposed to a personnel specialist. (Hoque and Noon 2001). All in all, Sisson’s conclusion is clear: although there are some rays of hope like the development of strategic competence, the impact of HRM on the personnel function has only been partial (2001). Hoque and Noon (2001) are a little more optimistic and stress the difference that HRM makes. They propose not to “use the HR and personnel labels as synonyms (or interchangeable terms-as mentioned in the introduction) because empirically they represent specialists who are operating in distinct ways”.
7. PAUSE FOR THOUGHT
Whichever perspectives, HRM or PM, do managers deal with more beneficially? Mostly the differences are not clear: labels and terms, do not give us any hints. It has become evident that in many companies, both concepts of HRM and PM are followed concurrently.
HRM encompass two different models, soft and hard. The hard approach stresses and treats people as resources and core competencies of a company while in soft approach, the humanistic side of HR is highlighted and the role of training and development, commitment and communication, culture and etc. comes to play. In theory, HRM shares many similarities with PM, interestingly enough, in practice; it is still not easy to point the differences, thus, it can be stated that it is a subjective topic and there is no clear cut answer to the question of ” to what extent, HRM differs from PM?”
The adaptation of HRM or PM differs from one company to another, depending on the managers understanding and organizational needs. The case in point is that the strategies must be adopted upon own organizational aims, thus as time marches on, it varies from company to company, and the patterns should differ. Defining the roles would be relatively different, addressing the requirements. Industrial Relation Management is still the best option for some; subsequently there would be no clear-cut line between HRM and PM in such companies. In spite of that, there are companies being active in the fields of labor advancements, cultural developments, motivational factors, etc., hence, rather than the traditional PM, they can claim for being HRM based.
Managing people is always dynamic, demanding consistent change in managing styles, theories and practices, and will continue in future to demand the changing management style, philosophy, actions and answers, that best address the solutions for ever challenging career of organizations.
One thing is sure; this function is certainly no old wine in a new bottle – whether one calls it Personnel, or Human Resource Management!
Word count (excluding abstract, tables, and headings): 2941
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