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Human Resource Management and Personnel Management have become a very important part of the management process in the twenty-first century, and are getting vital attention in management discussions, or in the business strategy of most organizations. Some people find 2 methods as jargons, but to serious minded people they seem to make a lot of sense, even if there are differences of opinion. It also seems that even professional managers often differ in their understanding of the role differences between HRM & PM. Many feel that it is the same old wine in a new bottle with a different label, or that HRM is only a more modern terminology.
The management philosophy was undergoing changes, and it showed that most people working not only by supervision and fear, but generally they performed better on their own if they were given the freedom of decision making, adequate skills training, broad guidance and knowledge of the plans - these factors motivated people to perform. There should be creation of a more positive and far greater level of interaction between the management and employee in a prevailing environment of trust and dependence, as well as in an open organization culture. The personnel function had to be pioneer and encourage this kind of environment creation in the organization, and to provide the plans & developmental inputs to increase competency across the organization, as well as generate motivation.
Limited function role that was required from the P.M's in the past should be expanded to a far more professional manner to meet the organizational goals, rather than the limited functional objectives. These could be in the areas of strategic manpower planning, organization development, competency analysis and identified training and development of employees, organization culture and employee motivation & morale, team building, career planning, appraisal and incentive or reward system management, key employee retention, counselling, responsible labour & management attitude building, labour productivity improvement, environmental management etc., and not just the welfare issues, recruitment and employee records. By these, PM will be no more an individual working solo in the organization but interacting with other functions in the organization, and not remain limited to the earlier functional boundaries. It is important for personnel management to change and become increasingly necessary for the need of being able to achieve organizational excellence in the highly challenging and competitive environment of the twenty-first century.
Human resource management
Human resource management (HRM) is the strategic and coherent approach to managing employment relations which emphasizes that leveraging people's capabilities is critical to achieving sustainable competitive advantage, this being achieved through a distinctive set of integrated employment policies, programmes and practices. The terms "human resource management" and "human resources" (HR) have largely replaced the term "personnel management" as a description of the processes involved in managing people in organizations.
The Human Resources Management (HRM) function includes a variety of activities, and key among them is deciding what staffing needs you have and whether to use independent contractors or hire employees to fill these needs, recruiting and training the best employees, ensuring they are high performers, dealing with performance issues, and ensuring your personnel and management practices conform to various regulations. Activities also include managing your approach to employee benefits and compensation, employee records and personnel policies. The Human Resource team must also be a good judge of morale and realize when morale boosting incentives are needed.
According to John Bratton and Jeffrey Gold, (2003), Human resource management functions are:
Planning: Prepare forecasts of future HR needs in the light of an organization's environment, mission and objectives, strategies and internal strengths and weaknesses, including its structure, culture, technology and leadership
Staffing: Obtaining people with the appropriate skills, abilities, knowledge and experience to fill jobs in the work organization. Key practices are human resource planning, job analysis, recruitment and selection.
Developing: Analysing learning requirements to ensure that employees posses the knowledge and skills to perform satisfactorily in their jobs or to advance in the organization. Performance appraisal can identify employees' key skills and "competencies"
Motivation: The design and administration of reward systems. HR practices include job evaluation, performance appraisal, pay and benefits.
Maintaining: The administration and monitoring of workplace safety, health and welfare policies to retain a competent workforce and comply with statutory standard and regulation.
Managing relationship: Encompasses a range of employee involvement/participation schemes in non-union or union workplace. In a union environment, this includes negotiating contracts and administrating the collective agreement.
Managing change: This involves helping others to envision the future, communicating this vision, setting clear expectations for performance and developing the capability to reorganize people and reallocate other resources
Evaluation: Designing the procedures and processes that measure, evaluate and communicate the value-added component of HR practices and the entire HR system to the organization.
Model of Human Resource Management
Human resource management focuses on congruence and commitment instead of compliance and control. In the present day turbulent reality, there is a need to develop industry specific human resource management policy and practices to remain competitive and to develop committed workforce. The role of the human resource manager is to act as a catalyst, focusing on facilitation and co-ordination.
Picture 1: Four Roles and Modes of Human Resource Management
Source: (1993). European Develpment in Human Resource Management. In C. a. Brewster, Human Resource Management in Europe (p. 126).
The matrix shown in Picture 1 identifies four modes of human resource management, based on two key dimensions: how well human resource management is integrated with business strategy, and to what extend human resource management is devolved to line management. Therefore it can be said here that the human resource management is fully integrated with business strategy and extensively devolved to line management
Human Resources Management vs. Personnel Management
It should be clear by now that an important part of the debate on HRM centres on the question: "How does HMR differ from the deeply root personnel management model". The traditional version of human resources management, personnel management is a concept that can be conveniently related to the old model of organization, is bureaucratic in nature, with less flexibility, and higher degree of centralization and formalization, for example, adherence to rules and regulation. Human resources management, on the other hand, is compatible with the organic design of new organization. Such organizations have cross-functional and cross hierarchical teams. They are decentralized and flexible, with low formalization and somewhat looser control.
The new look human resources management focuses more on commitment than on mere compliance. With the high costs involved in employee selection and recruitment, companies are increasingly concerned with retaining employees. Generating employee commitment is an important consideration for large and small organizations. Commitment is one of the factors of human resources management policy for an effective organization.
Some experts assert that there is no difference between human resources and personnel management. They state that the two terms can be used interchangeably, with no difference in meaning. In fact, the terms are often used interchangeably in help-wanted advertisements and job descriptions:
Personnel management is traditional, routine, maintenance-oriented, administrative function whereas human resource management is continuous, on-going development function aimed at improving human processes.
HRM is, in theory at least, integrated in to strategic planning, as Hendy and Pettigrew (1990, p.36) state, "the strategic character of HRM is indeed distinctive".
For those who recognize a difference between personnel management and human resources, the difference can be described as philosophical. Personnel Management is built on a legally constructed exchange, dealing with payroll, complying with employment law, and handling related task. Human resources management, on the other hand, emphasizes the importance of the "psychological contract". HRM attempt to build a cognitive construct concern with developing a "reciprocal commitment" and an obligation between each of the parties. In this sense, concept of the employee commitment lies at the heart of any analysis of HRM.
Personnel management is an independent function with independent sub-functions. Human resource management follows the systems thinking approach. It is not considered in isolation from the larger organization and must take into account the linkages and interfaces.
HRM is described as much broader in scope than personnel management. A primary goal of HRM is to enable employees to work with a maximum level of efficiency. The HRM paradigm explicitly emphasizes the importance of learning in workplace.
The theoretical models conceptualize HRM as a proactive central strategic management activities, it involve the continuous development of functions and policies and ongoing strategies to manage and develop as organization's workforce. That is different from personnel management which can be described as reactive. It implies passive connotations, providing a response to demands and concerns as they are presented.
Personnel management is often considered an independent function of an organization. Human resource management, on the other hand, tends to be an integral part of overall company function. Personnel management is typically the sole responsibility of an organizations personnel department. With human resources, all of an organization's managers are often involved in some manner, and a chief goal may be to have managers of various departments develop the skills necessary to handle personnel-related tasks.
HRM overall focuses heavily on the individual and the way in which individuals might be motivated and managed to achieve individual and organizational goals. Human resource management considers work groups, challenges and creativity on the job as motivators. Personnel management typically seeks to motivate employees with such things as the simplification or work responsibilities, compensation, rewards and bonuses.
Human resource management holds that improved performance leads to employee satisfaction. The role of workplace trade union representatives and the collective aspects of relations between the workforce and management are marginalized. In the other hand, personnel management considered that satisfaction was the cause improved performance.
Three of the HRM models make explicit reference to performance outcome, one compelling claim for HRM being that if organizations adopt this distinctive approach to employment management, the organization's financial bottom line will improve.
Nowadays people do care more about their occupations. The markets become wider and more competitive. People take working environment, benefits, personnel strategies or policies of a company into account when they are considering for their jobs. Personnel Management may be very profitable for the company but people working in that company or organization then suffer and the thoughts of jumping will come. The cost of turnover and training the new one will automatically go up. Employees feel unhappy, unsatisfied with their jobs, their company then the effectiveness will go down. Human resources management, on the other hand, will help the company to be more ethical and sustainable than Personnel Management does. 21st century is the period in which there have been many changes in Human Resource Management. Ethics and Sustainability have now become very important factor in a business success of a company. Big companies around the world have been using soft method of HRM in their business and build their mission, vision based on their employees; make employees the core to company's success. Good example is Google. From the beginning, they were a small company and they had been developing through years and when they became one of the biggest technological companies on earth, made a profit of billions per year, then they started to shine their image and brand by adopting soft method of HRM into business. People now look at them as the best place to work, look at the places they built for their employees, every corner, every spaces they used all the creativities to boost their staff's potential abilities and improve their imagination, creativities therefore maximize the daily business's effectiveness.
One thing that those companies had in common was an extremely strong culture of caring that places great emphasis on the importance of the people working there. For example, the philosophy of Wegmans, a Rochester, New York-based supermarket chain and ranked fifth of Fortune's Best Companies to Work For, states: "The values at Wegmans are not just something you see hanging on the wall. They are values our people every day and help guide the decisions we make." All policies, initiatives, and decisions are linked to this philosophy. In addition, Wegmans promotes a positive, quality-focused work environment by providing employees with comprehensive training and development opportunities, a long list of financial and family-oriented benefits and perks, and regular feedback regarding individual, store, and company-wide performance. The results are obvious. Wegmans enjoys an amazingly low employee turnover rate of 8 percent in an industry that average 50 percent. Clearly, this culture of caring is not only good for employees, but it is also good for business. Employee retention is directly related to profitability (Simons and Hinkin 2001), and the costs associated with employee turnover can be significant (Hinkin and Tracey 2000; Tracey and Hinkin 2007)
Human Resource Management actually is the specialization of personnel management due to the changes of society and the labour market. Every company, organization having HR department or division means that they already practice the personnel management. It depends on each company that which way and how they want their image to be. Human Resource Management is now playing a role of both personnel management and marketing. By creating the good impression for the workforce, people will respect and know more about the company. Especially in the hospitality industry where people interact through services, employees will serve the guests better if they themselves get well treated from the company. In the words of Bill Marriot "If we take care of our people, they will take care of our guests." Or the motto of Ritz Carlton "We are ladies and gentlemen serving ladies and gentlemen" by which the company highlight their treatment with their own staff, putting them to equal level as guests and customers. This is fundamental reason why Marriot is on the list of best employers for years.
Personnel Management and Human Resource Management are both methods of labour force management. Even though they have obvious differences in practicing but people still get confused of using these terms. It depends upon the strategies and policies of the organization to decide adopting Personnel Management or Human Resource Management into their business. It is obvious that these days, with rapid changes in social and people psychologies, companies and organizations which have been using personnel management are shifting to human resource management. Some of them are changing totally to other method but some just change their name to Human Resource Management in order to practice marketing. Nevertheless, Human Resource Management are proving its advantages against the Personnel Management in terms of people management, in this case employees as well as managers, management.
In conclusion, Personnel Management is the basis, fundamental of Human Resources Management. In the results of changes in social life and human psychologies, personnel management has been developed with many more approaches compared with the past into this current form which is now usually called human resource management. Of course it is still being changing and now a new method is being formed and is called Strategy Human Resource Management (SHRM). Therefore, it is still debatable about this topic between Personnel Management and Human Resource Management.