Critically Contrasting Personnel Management and Human Resource Management

Critically Contrasting Personnel Management and Human Resource Management 1. INTRODUCTION Over the last few decades with the onset of the industrial revolution, the work place has seen a change in stance with respect to its people working in organizations. The key theme resonates around the ever increasing importance being given to the employees or the human resource. It started with what theorists referred to as personnel management. Some theorists believe that personnel management evolved in to what is now called human resource management while others draw significant strategic and operational differences between them (Torrington et al. 2005). The basic difference that the researchers find between these two is their area of focus within the organisation. Personnel management looks primarily into administrative aspects of the organisation while, Human resource management, on the other hand, looks after developing, retaining and growing the human aspect the organisation. In most organisations today we see a growing importance given to this function at strategic levels. In this essay, the theory that exists for personnel management and human resource management will be critically contrasted and analysed to come to a conclusion in the debate mentioned in the previous paragraph. A number of theorists look at each of these as independent elements as well as relational elements and this essay explains the establishment of the context of each of the elements i.e. personnel management and human resource management, the change or the perceived transformation of personnel management to human resource management and drawing differences and similarities found in the existing literature to conclusively define whether there is a difference between the two or is Human Resource Management a term which is purely an evolution of personnel management. 2. THEORY AND PHILOSOPHY OF PERSONNEL MANAGEMENT AND HUMAN RESOURCE MANAGEMENT There has been a significant amount of literature that has been critical of personnel management of being low on organisational status in the recent years. The perception is widely held that the function of personnel management is limited in a reactive and administrative position and fails to hold relevance to the aims of the organisation. To elucidate this perception it should function at a strategic level (Lundy, 1994). Authors such as Drucker (1968), Watson (1977), Legge (1978) and Rowland and Summers (1981) relate personnel management to an administrative role. This could include payroll, maintaining practices with respect to regulation and other such activities. Torrington and Hall (1987) noted that personnel management looks towards the line manager for the as a key driver for the integration to the overall organizational goals. However the lack of strategic direction sometimes causes a conflict with the overall role of the manager which is more strategic in nature. Lundy (1994 ) noted that the establishment of the trade unions in UK along with the subsequent welfare movement that began with the onset of the industrial revolution in the early 19th century became the underlying cause of this conflict. Trade unions meant the workers were represented, were informed and could now demand and fight for their rights while line managers and governments considered labour as commodity. This lack of strategic composition in personnel management began to see the emergence of Human Resource Management as a replacement term. The pitfalls that were once faced with the administrative outlook of the personnel management were being eliminated by extended the boundaries to generate a more strategic role within the organization. Hence, human resource planning became aligned and was getting integrated with the overall organizational strategy. HRM, according to Bratton and Gold (2003), is a strategic approach to managing employment relations which emphasizes that leveraging peoples capabilities is critical in achieving competitive advantage. Torrington et al (2005) describe human resource management as a philosophy that deals with the carrying out of organisational activities that are people oriented and that extends to those who are not employed in the organisation. Human resource management is now, in the English speaking world, the most extensively used term that describes the activities of the management in terms of employment relationship (Boxall and Purcell 2003). A significant number of changes took place around 1994 with relation to trade unions, organisational restructuring. There was also a rise in the atypical forms of employment. With respect to these changes Beardwell and Holden (1994) suggest that: Any assessment of the emergence of Human Resource Management has, at least, to take account of this changing context of employment and provide some explanations as to the relationships that exist between the contribution HRM has made to some of these changes on one hand and, on the other hand, the impact that such changes have had on the theory and practice of HRM itself (p. 5). The human resource management can be looked at in the light of five aspects. First, the senior management considers the people problems at a more serious level. The overall delegation of responsibility lies with the line manager. Second, team work, communicating, and empowerment within employees is given a high level of importance. Third, employee development through the facilitation of training allows the employee to contribute more substantially to the organization. Fourth, every employee is considered as an individual. His or her needs are carefully assessed and emphasis is given to them. Lastly, the overall fit is considered to be around the greater strategic fit of the organization. 3. PERSONNEL MANAGEMENT VERSUS HUMAN RESOURCE MANAGEMENT Personnel management is conventionally believed as having little focus over the business links that are broader in nature and it is believed that it concentrates more on the activities of the personnel professionals and also on the operational techniques within the organisation. Thus the function of it is seen as low administrative record keeping and maintenance of people. In contrast to this function, human resource management is considered to concentrate more on the business linkages and also in comparison to personnel management it is usually labelled as an established and good people management practice (Redman and Wilkinson 2006). Legge 1995 (in Beardwell and Claydon 2007: 9), lists out three significant points that show that human resource management differs from personnel management. First, HRM is concerned with the responsibility of the top managers for the management of the culture. Secondly, she states that personnel management appears to be something performed on subordin ates by managers rather than something that the latter experience themselves. Finally, she says that human resource management defines the role of the line- managers rather than personnel managers. She further argues that the three differences stated above emphasize on human resource management, in theory, of being more of a central strategic management task as compared to personnel management. Armstrong (2006) states that human resource management lays more emphasis on the strategic fit and integration and its philosophy is management and business oriented. He contrasts Human resource management from personnel management on the basis that achievement of commitment and the management of the organisation culture are given more emphasis by HRM than personnel management. Storey (1992) and Guest (1987) each carefully differentiate personnel management and human resource management. The approaches considered by both also vary. Storey (1992) looks at the differences in light of the practical aspect; Guest (1987) draws more on the psychological aspects between the two. Points of difference between Personnel management and HRM as noted by Storey (1992) Dimension Personal Management HRM 1. Beliefs and assumptions Contract Behaviour Referent Conflict Careful delineation of written contracts Norms/ customs and practice. Institutionalized. Aim to go beyond contract. Values or mission. De emphasized. 2. Strategic aspects Key relations Initiatives Corporate plan Speed of action Labour management. Piecemeal. Marginal to. Slow. Customer. Integrated. Central to. Fast. 3. Line Management Management role Key managers Communication Standardization Transactional leadership. Personnel specialists. Indirect communication. High (e.g. parity an issue). Transformational leadership. General/business/line managers. Direct communication. Low (e.g. parity not seen as relevant). 4. Key levers Selection Pay Job design Training and development Foci of attention for interventions Separate, marginal task. Job evaluation (fixed grades). Division of labour. Controlled access to courses. Personnel procedures. Integrated, key task. Performance related. Teamwork. Learning companies. Wide ranging cultural, structural and personnel strategies. TABLE: Difference between Personnel Management and Human Resource Management. Source: Storey, 1992: 35 In the table above, Storey (1992) lists possible differences that are present between personnel management and human resource management. These differences describe the strategic aspect of personnel management as labour management and of Human resource management as customer management. Conventional personnel management focuses more on rules and norms, customs of the organisation and the practices which have already been established, whereas the human resource management tends to be more inclined towards giving importance to the values and mission that are set for the organisation. The personnel management approach is particular about the establishment of policies and procedures within the organisation and it enforces conformity of employees to these rules through careful delineation of written contracts. In contrast to this aspect of personnel management, Human Resource Management tends to go by the spirit of the contract. The structure of job design followed by personnel management is division of labour i.e. different people are assigned to different areas of expertise, where as Human resource management involves teamwork in which a group of people are assigned to accomplish a goal. Points of difference between personnel management (PM) and human resource management (HRM) as noted by Guest (1987) Personnel Management Human Resource Management Psychological Contract Fair days work for a fair days pay Reciprocal commitment Locus of control External control Internal control Employee relations Pluralist approach Collective Low Trust Unitarist approach Individual High trust Organizing principles Mechanic Forma/defined roles Top down strategy Centralized Organic Flexible roles Bottom up strategy De-centralized Policy Goals Administrative efficiency Standard performance Cost minimization Adaptive work force Performance improvement Maximum utilization Table: Difference between personnel management and human resource management. Source: Guest, 1987 In the above table, Guest (1987) examines the main differences between personnel management and human resource management. Like Storey, Guest also analysis a number of segments of the organisation to draw the main differences between the two debated terms. The psychological contract, which is the mutual agreement reached between the employee and employer, was the first element of difference. While personnel management considered it as obligatory from both parties to remunerate according to work and vice-a-verse. The control in case of personnel management was an external entity while the human resource management stemmed from within. Another key factor was trust. Guest believes that the personnel management failed to generate employee trust which in the case of human resource management was the key. The mechanistic approach of personnel management meant a formal, top down and centralized approach to managing employees. Human resource management on the other hand is considered to be m ore flexible originating from employees and de-centralized. The overall aim of personnel management, according to Guest, looked at drawing the most bang from the buck while minimizing the cost. However the goals for human resource management have taken on a role of improving performance by adapting the workforce to maximize the output. Painting the overall scenario, the differences cited by Guest (1987) and Storey (1992) reflect the fact that there lie differences between personnel management and human resource management on both practical as well as psychological fronts. The overall difference in its application has been considered to draw a clearer understanding of the differences cited above. However, literature also considers a number of key similarities which underlie both aspects of employee management. 4. SIMILARITIES Strategies of both Personnel Management and Human resource management flow from the business strategy. Both have the view that managing people is the responsibility of the line managers. Soft HRM and Personnel management have identical values with regard to the respect of the individual, develop people to achieve and facilitate their own satisfaction and the organisational objectives to the maximum level (Armstrong, 2006). Poole (1999) notes that despite the differences stated there are a number of factors that provide for a number of clear similarities between human resource management and personnel management. Emphasis on integration: Poole (1999) notes that both these models emphasize on their integration with the overall organizational goals. Line management as the driver: He notes that once again human resource management and personnel management look to the line management to deploy the human resource practices and policies. Individual development: Poole (1999) considers the model of Personnel Management and contrasts it with the models of Human resource management and concludes that both state the significance of developing the individual employee to the level of his highest abilities within the organization. Also while considering work in this field he found similarities in context laid down regarding the dependent nature of the employees. Importance of selection and job allocation: Poole finds that the correct allocation of jobs to the appropriate people is an important factor in the integration with the organization. It is worth noting that the integration with the organization was the basic similarity between human resource management and personnel management. 5. RHETORIC OF HUMAN RESOURCE MANAGEMENT Keenoy and Anthony (1992: 235) consider the relation between the employment relationship and human resource management as rhetoric and metaphors. HRM its self is shown in a positive light when words such as nurturing and organic are brought into the picture. However, other terms which described personnel management were reactive, monitoring and bureaucratic provided a negative connotation. In relation to the dominant emergence of HRM, Legge (1995) argued: The importance of HRM, and its apparent overshadowing of personnel management, lies just as much (and possibly more so) in its function as a rhetoric about how employees should be managed to achieve competitive advantage than a coherent new practice (p. xiv) Legge (in Storey 1995) further notes that there has been hype due to the existence, assumptions and epistemology of soft and hard models of HRM. This according to Bach and Sisson (2000) can be done to achieve a state of control over the workforce. The hard model of HRM deals with the employees in a less humanistic approach by referring to the more quantitative nature of reducing costs, managing head count and the overall need of the hour. While the soft model of HRM deals with the development of the employees and an overall well being of the employee. Bach and Sisson (2000) noted that the soft HRM camouflages the negative aspects of the hard HRM to paint a positive picture. In practice, both the elements of hard and soft HRM exist together and impacts the employee directly. Critiques of HRM such as Keenoy find that ambiguity in the term Human Resource Management is a remarkable feature in itself. (Beardwell and Claydon 2007) 6. CONCLUSION Human Resource Management has become the most widely used term which refer to the activities of the management of the organization towards its employees. There are a number of debates surrounding the meaning, definition and scope of HRM and personnel management. Some critics find a number of similarities between the two while others find significant contrasts between the two. Legge (1995) sets forward the view that there is no major difference between the principles and values of the two but Storey (1992) found a number of aspects that differentiate the two. To summarise, personnel management is widely observed as having an operational schematic to people management with the aim at achieving efficiency within the norms of providing justice to the employees work. From the literature, conclusions can be drawn that the difficulty faced by personnel management in obtaining credibility in the eyes of the employees paved the way for the rise of Human Resource Management. The concern about the difference between personnel management and the extent to which HRM represented a positive or negative phase in peoples management gave rise to the debate relating to the differences and similarities of HRM and conventional Personnel Management. In summary, it can be noted from the literature that the inevitable evolution of personnel management was fuelled by the lack of trust with employees and gave rise to the emergence of Human Resource Management. The hard and soft models of Human Resource Management lay evidence to this evolution by displaying characteristics of the more mechanistic aspects of personnel management.