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Our group had decided to choose the topic related to the phrase "the same wine, different bottles" for our research paper. It's a comparison between Human Resource Management and Personnel Management since there is quite a lot of confusion in understanding these two terms. Hence, in this research paper we will try to explain clearly what is meant by the term Human Resource Management (HRM) and Personnel management (PM) and clarify the differences and similarities between both of them.
At the beginning of our research paper, general definitions regarding to related terms in this field will be brought up as following: Management, HRM, PM. Subsequent to those definitions will be our critical evaluations of the difference and also the similarities between HRM and PM so that it will meet the research paper's requirements. Our argument in favor to one of the approach to managing employees will be brought forward right before moving to the conclusion. On top of that we have clear and simple examples to strongly back up and justify our perspective along our research paper.
Human resource or workforce is undeniably an organization's most important asset. It is the factor of production that can determine the success of a corporation. However, how human resource could be managed in a proper and efficient way in order to maintain and improve its quality is also a vital key for the corporation. Therefore, we would like to make some basic conceptions by giving out the definitions on the subject of managing people in organization:
What is Management?
It is difficult to give any general definitions of management, as its scope is quite large and various within personnel, jobs and organizations. Management can be looked from the simple view that is to get things done through others (resources) or also refer to the planning, controlling, and decision-making functions within organizations. However, the term Management will be ideally embraced if we divide management functions into personnel or people functions, task functions and system functions.
Selection and recruitment
Training and development
Counseling and advice
Performance appraisal and assessment
Pay and bonus assessment
Supervision and delegation
The definition of work roles and tasks
Marketing and selling
Communicating and informing
Budgeting and costing
Evaluation and review
No matter what kind of functions in which the managers are involved, they are all designed for the purpose of achieving a certain goals if they are applied effectively.
PM is considered as an independent function of an organization. It is defined to have the responsibilities of administrative concerns. PM is a concept that can be conveniently related to the old model of organization - bureaucratic. It is run with less flexibility, and higher degree of centralization and formalization. Regarding to administrative concerns, their main functions are resolving conflicts and communicating with employees, setting personnel needs, recruitment, orientation, training, conducting job analysis, deal with the wages and salaries, provided the welfare and incentives for all employees as well. However, the main role of PM somehow is said only about "hire and fire" to end up with suitable employees rather than paying and training issues, hence it becomes lack of support and credibility to the employees, "It is not surprising then that personnel management has an enduring problem of establishing credibility. In the decade of the enterprise culture and into 1990s HRM is being presented as a model of managing people at work that is more credible than Personnel Management." (Legge, K, 1995, p28)
Human Resource Management
Back to the late of 1980s when HRM was gradually replacing PM, this development had raised a lot of attentions since an impressive number of companies were apparently taking HRM as the approach to managing employees. The same as Management term, HRM has variety of definitions:
"Human resource management involves all management decision and practices that directly affects or influence the people, or human resources, who work for the organization. Human resources management is a significant strategic lever and the sources of sustained competitive advantage." (Barney, 1995)
In HRM, human resource is greatly emphasized as valuable assets of the organization and the manager must have strategic plans to not only keep up the quality and productivity but also to improve the conditions and working environment, make them as motivators to reach the evaluation criteria "maximum utilization".
Moreover, to make sense of the meaning of HRM, there are two dimensions of HRM that we can consider. The first is a "soft-hard" dimension depending on if the central point is on human resource and individual talent utilization or on management with the strategies and quantification, "Human Resource Management has its hard and soft dimensions. What is striking is that the same term is capable of signaling diametrically opposite set of message. The hard face of Human Resource Management emphasizes the quantitative, calculative and business strategic aspects of managing the human resources in as rational a way as for other factor while the soft face emphasizes communication, motivation and leadership."(Storey, J, 1987 cited by Storey, J and Sisson, K, 1996, p8). The second is a "loose-tight" dimension depending on whether the definition is general or precise.
A theory of HRM
Re-titling of personnel department
The goals of HRM are fully integrated into strategic planning, which are commitment (brings the employee through the goal of organization and to gain behavioral committed), flexibility (on the point of adaptive and receptive), and quality (high quality of services, staff, goods). HRM counts people as the most important asset of the organization and focus on fulfilling their needs to improve the organization performance, "The notion of human resource management is used in this book to refer to all those activities associated with the management of the employment relationship in the firm. The term "employee relations" will be used as an equivalent term as will the term "labour management". (Boxall and Purcell 2003)
In general, even professional managers in management field have their own different perceptions in the role between HRM and PM. Many of them have the opinions that those two types of management are actually the "same wine, only different bottle" as they are both concerned with the same function of "obtaining, organizing, and motivating human resources required by organization" (Haslinda, A., 2009), but there are also some who believe that HRM is totally a new term compare to PM, thus these two terms should not be used interchangeably. As a result, HRM and PM are defined in many different ways according to writers (Beer and Spector, 1985). We are going to analyze each attitude in the following paragraphs.
The differences between Human Resource Management and Personnel Management
It is said that the difference between Human Resource Management and PM is basically on philosophy. Human Resource Management is more concerned with how people (employees) should be managed to attain the organization's goals, not only limited to certain specific duties. In contrast, PM focuses more on administrative discipline, obligations and compliance from the employees.
Organic form is Human Resource Management's preferred structure. It is flexible, adaptable and individual in a flat structure with only one or two levels of management whereas the PM's preferred form of organization as bureaucratic/mechanistic which emphasize on formalization and "characterized by rational, goal-directed hierarchy, impersonal decision-making, subdivision into managerial positions and specialization of labor" (Minh, D., 2007).
Focus only on administering people, the range of PM is relatively narrow compare to the range of Human Resource Management since it outlooks the organization as a whole and put the central point in forming a positive and active environment.
A human resource manager should be able to anticipate and identify the potential problems that might arise in the producing and planning process, encourage high employee involvement in decisions in order to rapidly respond to changes in the business environment and the customers' needs. He/She focuses on conformity and looks for commitment instead of compliance and control. More than likely, the human resource manager has the tendency to have a more personal relationship with his or her employees in order to conduct a high productivity. At the same point, PM is generally depicted as reactive by only providing the necessary responses once problems come up. It does not work with specific strategic plans to prevent the problems from happening but more of a waiting for and solve them out. In this manner, PM results in somehow creating confusion, frustration for the employees and as a consequence, an invisible hurdle between employees and management team will be made as well. And it also relates to the control system called self-control of Human Resource Management. They get themselves involved; interact directly with employees to come up their own decisions instead of seeking "external control" that exists in PM.
The human resource manager is considered as catalyst by creating the environment that can motivate the employees by recognition and challenging. By contrast, PM is perceived as putting a brake on employees' innovations and creativity because it motivates the employees with reward, job simplification and so on (Tripathi, P. C., 2002).
In PM, the evaluation criterion is to minimize your cost and expenses. By contrast, HRM aims to maximize as much as possible the utilization of employees
Personnel Management is considered not to be influenced by the organization, in other word it is run as an independent part from organization function while HRM is taken into account as a built-in part. PM duties are the only territory of Personnel Department. Nevertheless, HRM involves all the key managers (senior) with different activities to develop the capabilities of all line managers to carry out the personnel functions.
The similarities between Human Resource Management and Personnel Management
Since it comes to the phrase of "The same wine", HRM and Personnel Management are considered as "Human Resource Management is simply a re-titling of the personnel department. As old wine in new bottles, this may serve the useful function of giving a somewhat jaded personnel department a new and more contemporary image."(Guest, Personnel and HRM: can you tell the difference?, 1989). With this point, it is said that HRM it just new name of PM which means HRM is adaptation on PM with some other improvements. This happened in USA during the time of change from blue collar to white collar during 1980s. In simple explanation, HRM is "good" PM and described in a "fashionable way".
The question is: Are they really similar? "HRM is regarded by some personnel manager as just a set of initials or old wine in new bottles. It could indeed be no more and no less than another name for personnel management."(Amstrong, 1987).
The list of similarity between HRM and PM:
HRM strategies have the same thing as PM strategies, such as flow the business strategy.
PM and HRM has same task on managing people, giving advice and support to manager to carrying their job.
The soft version of HRM and the values of Personnel having the same values, such as respect, balancing individual and organizational needs, developing people, achieve satisfaction of organizational and individual, and to achieve organizational objective.
They are both having the same function on matching people into organizational or dealing with "placing and developing right people for the right jobs as an essential process." (Legge, 1995).
They have the same range of selection, analysis, training, rewarding, performance management, and management development
PM and soft version of HRM have the same view of having important communication within an employee relations system.
"The same wine, only different bottles" and argument in favor of one approach to managing employees
Take the differences and similarities between PM and HRM into account, we have agreed that PM and HRM actually have got the same core content, which refer to "the same wine". However, this wine is put in different bottles for a reason. The reason is that it has got different tastes from different "vintage year" and "fermentation process". Nowadays HRM has its own images, HRM can be deccribed as a "perspective on personnel management and not personnel management itself." (Henry and Pettigrew, 1990). HRM has effectively fit the needs and brought up new ideas and pratices on using people to achievie the goals which PM could not. As "HRM is to be taken seriously, personnel manager must give it away"Â (Guest, 1989) and during 1970s, people believe "personnel managers are still poor at managing change"Â (Guest, 1989), HRM was taking over, slowly but inevitably. In the HRM functions, as mention above, there are three essential components to brings HRM better than PM, which are supported from key leadership, a strong culture (formed by the founding father / mother or present leadership), conscious/ aware strategy to pursue success and effective utilization of human resource. With these three components, HRM was readily available for the companies to apply. Apparently, the taste of the consumer has changed and so does the wine. With all its key features presented in a more useful and suitable way, we strongly put our belief in HRM that it is the better form to control the people within the organzization and company.
There is no doubt about applying HRM is more valuable and powerful way for the manager to direct the whole organization through employees compared with PM. HRM presents a new perspective on arranging a range of organizational objectives in a strategic way to intensify the performance of employees in the achievement of every goals.
In general, HRM is a broader extent of PM, which covers all the breaches and sustains the basic points that existed in PM. In reality, nowadays the term PM was no longer used in any companies and organizations due to its outdated features. HRM has come and conquered.
However according to David Lewin, (2003) nowadays since globalization occurred, there have been many countries where high-involvement HRM practices apparently don't fit because they encounter the difficulties of cultural values, custom, history and legal constraints. HRM has had its previous life as PM as it is for certain that another transformation process is taking place. Human resource departments are too internal to the organization and too unconnected to marketplace rules to run their activities as profitable businesses. And whatever might be the next form of management in terms of people or personnel function, it is likely articulating the gains to be made by leveraging the similarities.
"Fully engaging of the 21st century workforce is the only way leaders can drive their organizations to their goals and missions"(Hank McKinnell, Chairman and CEO, Pfizer Inc.)