Traditionally the term personnel management was used to refer to the set of activities concerning the workforce which included staffing, payroll, contractual obligations and other administrative tasks. In this respect, personnel management encompasses the range of activities that are to do with managing the workforce rather than resources. Personnel Management is more administrative in nature and the Personnel Manager's main job is to ensure that the needs of the workforce as they pertain to their immediate concerns are taken care of. Further, personnel managers typically played the role of mediators between the management and the employees and hence there was always the feeling that personnel management was not in tune with the objectives of the management.
Human Resource Management
With the advent of resource centric organizations in recent decades, it has become imperative to put "people first" as well as secure management objectives of maximizing the ROI (Return on Investment) on the resources. This has led to the development of the modern HRM function which is primarily concerned with ensuring the fulfillment of management objectives and at the same time ensuring that the needs of the resources are taken care of. In this way, HRM differs from personnel management not only in its broader scope but also in the way in which its mission is defined. HRM goes beyond the administrative tasks of personnel management and encompasses a broad vision of how management would like the resources to contribute to the success of the organization.
Personnel Management and HRM: A Paradigm Shift ?
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Cynics might point to the fact that whatever term we use, it is finally "about managing people". The answer to this would be that the way in which people are managed says a lot about the approach that the firm is taking. For instance, traditional manufacturing units had personnel managers whereas the services firms have HR managers. While it is tempting to view Personnel Management as archaic and HRM as modern, we have to recognize the fact that each serves or served the purpose for which they were instituted. Personnel Management was effective in the "smokestack" era and HRM is effective in the 21st century and this definitely reflects a paradigm shift in the practice of managing people.
It is clear from the above paragraphs that HRM denotes a shift in focus and strategy and is in tune with the needs of the modern organization. HRM concentrates on the planning, monitoring and control aspects of resources whereas Personnel Management was largely about mediating between the management and employees. Many experts view Personnel Management as being workforce centered whereas HRM is resource centered. In conclusion, the differences between these two terms have to be viewed through the prism of people management through the times and in context of the industry that is being studied.
From Wikipedia, the free encyclopedia
TheÂ resource-based view (RBV)Â is a basis for aÂ competitive advantageÂ of a firm lies primarily in the application of the bundle of valuable resources at the firm's disposal (Wernerfelt, 1984, p172; Rumelt, 1984, p557-558; Penrose, 1959). To transform a short-run competitive advantage into a sustained competitive advantage requires that these resources areÂ heterogeneousÂ in nature and not perfectly mobile (:p105-106; Peteraf, 1993, p180). Effectively, this translates into valuable resources that are neither perfectly imitable nor substitutable without great effort (Barney, 1991;:p117). If these conditions hold, the firm's bundle of resources can assist the firm sustaining above averageÂ returns. TheÂ VRIOÂ and VRIN (see below) model also constitutes a part of RBV. There is strong evidence that supports the RBV (Crook et al., 2008).
The key points of the theory are:
Identify the firm's potential key resources.
Evaluate whether these resources fulfill the following criteria (referred to asÂ VRIN):
ValuableÂ - A resource must enable a firm to employ a value-creating strategy, by either outperforming its competitors or reduce its own weaknesses (:p99;:p36). Relevant in this perspective is that the transaction costs associated with the investment in the resource cannot be higher than the discounted future rents that flow out of the value-creating strategy (Mahoney and Prahalad, 1992, p370; Conner, 1992, p131).
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RareÂ - To be of value, a resource must be rare by definition. In a perfectly competitive strategic factor market for a resource, the price of the resource will be a reflection of the expected discounted future above-average returns (Barney, 1986a, p1232-1233; Dierickx and Cool, 1989, p1504;:p100).
In-imitableÂ - If a valuable resource is controlled by only one firm it could be a source of a competitive advantage (:p107). This advantage could be sustainable if competitors are not able to duplicate this strategic asset perfectly (Peteraf, 1993, p183; Barney, 1986b, p658). The termÂ isolating mechanismÂ was introduced by Rumelt (1984, p567) to explain why firms might not be able to imitate a resource to the degree that they are able to compete with the firm having the valuable resource (Peteraf, 1993, p182-183; Mahoney and Pandian, 1992, p371). An important underlying factor of inimitability is causal ambiguity, which occurs if the source from which a firm's competitive advantage stems is unknown (Peteraf, 1993, p182; Lippman and Rumelt, 1982, p420). If the resource in question is knowledge-based or socially complex, causal ambiguity is more likely to occur as these types of resources are more likely to be idiosyncratic to the firm in which it resides (Peteraf, 1993, p183; Mahoney and Pandian, 1992, p365;:p110). Conner and Prahalad go so far as to say knowledge-based resources are "â€¦the essence of the resource-based perspective" (1996, p477).
Non-substitutableÂ - Even if a resource is rare, potentially value-creating and imperfectly imitable, an equally important aspect is lack of substitutability (Dierickx and Cool, 1989, p1509;:p111). If competitors are able to counter the firm's value-creating strategy with a substitute, prices are driven down to the point that the price equals the discounted future rents (Barney, 1986a, p1233; sheikh, 1991, p137), resulting in zero economic profits.
Care for and protect resources that possess these evaluations, because doing so can improve organizational performance (Crook, Ketchen, Combs, and Todd, 2008).
What constitutes "competitive advantage"?
AÂ competitive advantageÂ can be attained if the current strategy is value-creating, and not currently being implemented by present or possible future competitors (:102). Although a competitive advantage has the ability to become sustained, this is not necessarily the case. A competing firm can enter the market with a resource that has the ability to invalidate the prior firm's competitive advantage, which results in reduced (read: normal)Â rentsÂ (Barney, 1986b, p658). Sustainability in the context of aÂ sustainable competitive advantageÂ is independent with regard to the time frame. Rather, a competitive advantage is sustainable when the efforts by competitors to render the competitive advantage redundant have ceased (:p102; Rumelt, 1984, p562). When the imitative actions have come to an end without disrupting the firm's competitive advantage, the firm's strategy can be called sustainable. This is in contrast to views of others (e.g., Porter) that a competitive advantage is sustained when it provides above-average returns in the long run. (1985).
Priem and Butler (2001) raised four key points of criticism:
The RBV isÂ tautological, or self-verifying. Barney has defined a competitive advantage as a value-creating strategy that is based on resources that are, among other characteristics, valuable (1991, p106). This reasoning is circular and therefore operationally invalid (Priem and Butler, 2001a, p31). For more info on the tautology, see also Collis, 1994
Different resource configurations can generate the same value for firms and thus would not be competitive advantage
The role of product markets is underdeveloped in the argument
The theory has limited prescriptive implications
However, Barney (2001) provided counter-arguments to these points of criticism.
Further criticisms are:
It is perhaps difficult (if not impossible) to find a resource which satisfies all of the Barney's VRIN criteria.
There is the assumption that a firm can be profitable in a highly competitive market as long as it can exploit advantageous resources, but this may not necessarily be the case. It ignores external factors concerning the industry as a whole; a firm should also considerÂ Porter's Industry Structure AnalysisÂ (Porter's Five Forces).
Long-term implications that flow from its premises: A prominent source of sustainable competitive advantages is causal ambiguity (Lippman & Rumelt, 1982, p420). While this is undeniably true, this leaves an awkward possibility: the firm is not able to manage a resource it does not know exists, even if a changing environment requires this (Lippman & Rumelt, 1982, p420). Through such an external change, the initial sustainable competitive advantage could be nullified or even transformed into a weakness (Priem and Butler, 2001a, p33; Peteraf, 1993, p187; Rumelt, 1984, p566).
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Premise of efficient markets: Much research hinges on the premise that markets in general or factor markets are efficient, and that firms are capable of precisely pricing in the exact future value of any value-creating strategy that could flow from the resource (Barney, 1986a, p1232). Dierickx and Cool argue that purchasable assets cannot be sources of sustained competitive advantage, just because they can be purchased. Either the price of the resource will increase to the point that it equals the future above-average return, or other competitors will purchase the resource as well and use it in a value-increasing strategy that diminishes rents to zero (Peteraf, 1993, p185; Conner, 1991, p137).
The concept of rarity is obsolete: Although prominently present in Wernerfelt's original articulation of the resource-based view (1984) and Barney's subsequent framework (1991),Â the concept that resources need to be rare to be able to function as a possible source of a sustained competitive advantage is unnecessary (Hoopes, Madsen and Walker, 2003, p890). Because of the implications of the other concepts (e.g. valuable, inimitable and nonsubstitutability) any resource that follows from the previous characteristics is inherently rare.
Sustainable: The lack of an exact definition of sustainability makes its premise difficult to test empirically. Barney's statement (:p102-103) that the competitive advantage is sustained if current and future rivals have ceased their imitative efforts is versatile from the point of view of developing a theoretical framework, but is a disadvantage from a more practical point of view, as there is no explicit end-goal.
TheÂ relational viewÂ is an extension of the resource-based view for considering networks and dyads of firms as the unit of analysis to explain relational rents, i.e., superior individual firm performance generated within that network/dyad.
AlAMO: A Model of Individual, Team and Organizational Performance
By David Bracken, Ph.D. - Senior Consultant, Kenexa
Models are often mathematical or graphic expressions of a concept that guide discussion, research, and (hopefully) action.Â For example, in the January issue of Connection1, my articleÂ 360Â° Feedback: Change is Comingreferenced the Congruence Model of organizational performance introduced by Nadler and Tushman (1989), which is used to guide organization interventions through a systems perspective.Â This model is designed to apply to groups, such as organizational units or teams, but is not useful for guiding individual performance.
One of the earliest models for directing individual performance was offered by Lewin, and holds that individual performance is a function of ability and motivation, or
P = Æ’(A,M)
This model may be considered a modest attempt to propose a systems view of human behavior. If we try to look back, it may have been proposed to influence social scientists to think broadly about human behavior and not propose interventions without considering multiple factors that determine behavior. In fact, some would call Lewin the first change management consultant/psychologist, as evidenced by his observation, "If you want to understand something, try to change it."
Vroom took the concept one step further, using mathematical operations to forcefully state that, not only do ability and motivation interact to determine performance, but each is sufficiently powerful alone that major deficits in either one can single-handedly drag performance down to low (or zero) levels:
P = (Ability x Motivation)
Vroom has proposed many variations on this theme (e.g., Expectancy Theory) that cannot be reviewed here, but suffice it to say that they continue to guide thinking and research with mixed success and acceptance.Â One possible problem with a model is that it is so complex that it loses its intuitive appeal and usefulness for use by business audiences.Â A "simple" model that can be easily remembered can create a language within a community (leaders, researchers, teams) that can guide problem solving and action.
I would like to offer a performance model that builds on the work of Lewin and Vroom, maintains simplicity (and intuitiveness), and can be applied to diagnose and direct individual, team and organizational performance. As you will see, the model maintains the concepts of ability and motivation and then adds two equally powerful determinants of performance, i.e., opportunity and alignment, or:
Performance = Alignment x (Ability x Motivation x Opportunity)
P = Al x (A x M x O)
TheÂ AlAMOÂ model uses the following definition of its component variables:
Alignment: Extent of clarity and understanding of the purpose (e.g., goal, objective, strategy, vision, mission) of the task.
Ability: Extent of capability to perform the task based on knowledge, skills, and competencies.
Motivation: Extent of drive to perform the task, determined by both external factors (e.g., real/perceived outcomes) and internal factors (e.g., needs, values).
Opportunity: Extent of real and perceived restrictions on performance based on factors such as role, resources (time, equipment, funding), policies, and culture.
In its simplest incarnation (and simplicity is important), the A, M, and O variables are intended to "bottom out" at zero, and obviously at zero will drive the equation to zero. So what can be worse than that?Â How about the situation where those three variables are maximized (within the parentheses) and a ton of activity is being generated BUT in the wrong direction (i.e., not consistent with the goals of the entity).Â None of us would have to think very hard to come up with examples (for ourselves and/or coworkers) of instances where, intentionally or unintentionally, someone has spent a great deal of time, energy and company resources doing the wrong thing.Â Those are painful cases where resources are being drawn away from the organization both in terms of costs and also lost opportunity.Â Therefore, Alignment can be viewed as having both positive and negative values, and thus it is possible to have "negative performance."
Like the Situational Theory of Leadership (Hersey 1985),Â AlAMOÂ is also situationally specific.Â This means that the equation must be "recalculated" for each task and, for overall performance, summed across tasks.
The interaction between the variables can be more complex than the simple multiplicative relationship the equation implies.Â For example, Alignment as applied to strategy certainly includes clarity of purpose that can drive personal/team/organizational (PTO) objectives that, in turn, should drive action. For strategies to be optimally effective, a motivational component is needed. Our research on Engagement across organizations consistently shows that employees look to their leadership for an inspiring message that they can personally relate to and adopt in order to gain comfort that the organization is moving in the right direction.
Similarly, motivation is defined as having both internal and external causes. Some determinants of motivation can be viewed as characteristics of a person, such as needs and values, that are difficult (if not impossible) to change.Â An example could be Need for Achievement that might be so critical for some tasks/jobs that require "self-starters" that it becomes a selection criterion and, therefore, an Ability in our equation.
While the Lewin and Vroom models of performance were intended to describe individual performance, theÂ AlAMOÂ model seems to work well describing and dissecting team and organization performance.Â Space does not permit providing a full set of examples showing how the variables might be operationalized for all three levels, but we suspect that most questions would be directed toward definitions at the organizational level.Â Here are some examples of performance determinants at the organization level:
Alignment:Â Strategy, market research, customer needs, economic forecasts
Ability: Core competencies, intellectual capital, core processes, talent
Motivation: Competition, shareholder expectations
Opportunity: Resources, regulations, assets (tangible and intangible)
Models are guides. To be useful, they must be relevant and accessible.Â This means that a model should be intuitively valid and easy to recall; to paraphrase the bestsellerÂ The Tipping Point, it must be "sticky." The intent is to create a common language that forms the foundation for problem solving.Â More importantly, the model must be sufficiently robust and comprehensive so that it accurately describes the drivers of performance. A performance model should force problem solvers to consider all aspects of performance causes, giving each equal weight and suspending preconceptions and beliefs until each is examined.
I recently heard someone say, "Nothing explains everything."Â How true.Â This model doesn't explain everything. In fact, it explains nothing. As a model, it is designed to guide the discovery process. Only through such discovery will you be able to explain why suboptimal performance is occurring and then create a focus on those causes that are having the most detrimental effect.
So try using theÂ AlAMOÂ model the next time things aren't going as planned, whether it be with you, your work, your team, your life and/or your organization. Share your analysis with someone and see if it makes sense to others. And see if it doesn't expand your thinking and your options, hopefully creating more insight than you've had before.
Contact David Bracken (email@example.com) for a list of the references.
About the Author:
David W. Bracken, Ph.D., is a senior consultant at Kenexa. He specializes in employee surveys, 360°-degree feedback and organization effectiveness, and is the Kenexa practice leader for 360° feedback. He has over 25 years of industry and consulting experience, including positions with Xerox, BellSouth, National Computer Systems, Personnel Decisions International, Towers Perrin and Mercer Delta. He is the senior editor and contributor to The Handbook of MultiSource Feedback (Bracken, Timmreck, and Church, 2001). Dr. Bracken holds a B.A. degree from Dartmouth College and M.S. and Ph.D. degrees from Georgia Tech in industrial/organizational psychology. He is a member of the American Psychological Association, the Society of Industrial/Organizational Psychology, and the Society of Consulting Psychology.
Examples of Human Resources Goals & Objectives
by Ruth Mayhew, Demand Media
Human resources goals and objectives focus on recognition of human capital as the resource that drives organizational success. More specific human resources goals are the inclusion of HR leaders in overall business decision-making and the ability to demonstrate that investment in HR activities and strategy has a tremendous impact on the company's bottom line.
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An invitation to join the C-level suite is one of the most elusive yet sought-after objectives of human resources. C-level leadership refers to an organization's highest level of management, which includes positions such as chief executive, chief operating, chief information and chief financial officers. The chief human resources officer is a coveted role for many HR professionals whose primary work involves strategic management and departmental decision-making that affects the organization's viability as a profitable enterprise.
Consistent employee engagement is what human resources strives for in its goals for the workforce. Creating a work environment where employees are enthusiastic about their jobs all the time -- not just when annual bonuses are due -- is a top priority. Human resources inches toward this objective through strategic planning. Such planning improves the likelihood of creating the right match between employee skills and job assignments, as well as coordinating promotional opportunities and workforce capabilities.
Compliance may appear to be a very static goal for human resources; however, aligning company policies with federal and state employment laws ensures the workplace is a safe environment that has all the necessary support for productive relationships. Human resources achieves this goal through regular employment file audits to assess the equity of compensation practices. Audits also ensure diversity throughout the workforce, proving that the company represents its client base and the markets it serves.
Turnover and Retention
Ask any human resources leader what is the greatest challenge, and many will say "keeping employees happy." HR can measure this quantitatively with respect to turnover and retention. Human resources goals concerning turnover and retention are marked, respectively, by the words "reduce" and "increase." Attracting qualified applicants, motivating the existing workforce and inspiring long-term commitment are realistic factors for attaining goals regarding turnover and retention.
Employer of Choice
Human resources has everything the company needs to improve its image; therefore, creating an employer of choice is a goal that's well within the capabilities of a focused human resources department. An employer of choice is the company employees are happy to be a part of and the company for which others want to work. Strengthening employer-employee relationships, offering innovating compensation and benefits packages and investing in employees' are ways human resources can achieve this goal.
Line manager: is the one who is responsible for getting effective performance, for ensuring adequate training and development, for welfare and discipline, counseling, and hiring, and firing; responsible for the planning, control and organization of work, for motivating staff and generally for getting the job done through people [source:human resource management]
Line managers are responsible for recruiting people who will fit in with the company's cultureÂ
Intensive coaching and guidelines are provided to help line managers understand their HR duties and perform them wellÂ
The HR department closely monitors policy and procedures to ensure successful outcomesÂ
Two-way performance appraisals enhance communication between managers and staffÂ
HR team can concentrate on its role as a consultant and strategic partner
The human resource department's main function is to support the workforce needs of the organization. HR and line managers should communicate regularly and frequently to determine the skills and qualifications required for seamless operation of department functions. Whenever there's a vacancy in a line manager's department, an HR recruiter or employment specialist and the line manager review the job description for accuracy and completeness. During the recruitment and selection process, HR advises line managers on how to identify qualified candidates and existing department staff capabilities.
Strategic planning between HR and line managers involves reviewing projections concerning future business demands to determine whether to train current employees to prepare them for promotion or to recruit candidates with higher level skills to augment the current employee knowledge base. By working together on immediate and future staffing needs, HR and line management benefit from reduced cost per hire and turnover. In addition, the organization benefits from appropriate succession planning and adequate staffing.
Training and development is an HR function that prepares line managers for a number of leadership tasks. One such task is conducting employee performance appraisals. Human resources trainers develop learning objectives based on line managers' understanding of the organization's coaching philosophy. Leadership training topics include how to provide employees with constructive feedback and how to conduct fair and unbiased assessments of employee performance. HR and line managers should therefore work together to ensure the organization maintains a consistent approach to performance management. Inconsistencies within an organization's performance management system negatively impact employee job satisfaction, which is another reason HR and line managers should work collaboratively.
Workplace conflict is inevitable whenever department employees represent different cultures, work styles and personalities. When conflicts arise, line managers typically seek the advice of HR in resolving issues between employees or issues between employees and their managers. If there is already dissention between HR and line management, it can be difficult for human resources to determine what underlies the conflict and how to resolve it. A positive working relationship between HR and line management facilitates easier handling of workplace investigations and mediating differences between staff. When HR and line management work together, it's easier for HR to investigate workplace issues because the human resource staff may have greater confidence that line managers document their employment actions and decisions appropriately and according to company policy.
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The Harvard Map of HRM
Adapted from Human Resource Management in a Business Context, 2nd edition (2004)
Beer et al (Managing Human Assets by Michael Beer, Richard E. Walton, Bert A. Spector, 1984) argue that when general managers determine the appropriate human resource policies and practices for their organizations, they require some method of assessing the appropriateness or effectiveness of those policies. Beer et al devised the famous Harvard Map (sometimes referred to as the Harvard model) of HRM.Â
This map is based on an analytical approach and provides a broad causal depiction of the 'determinants and consequences of HRM policies.' It shows human resource policies to be influenced by two significant considerations:Â
Situational factors in the outside business environment or within the firm such as laws and societal values, labor market conditions, unions, work-force characteristics, business strategies, management philosophy, and task technology. According to Beer et al these factors may constrain the formation of HRM policies but (to varying degrees) they may also be influenced by human resource policies.Â
Stakeholder interests, including those of shareholders, management employees, unions, community, and government. Beer et al argue that human resource policies SHOULD be influenced by ALL stakeholders. If not, 'the enterprise will fail to meet the needs of these stakeholders in the long run and it will fail as an institution.'Â
The authors also contend that human resource policies have both immediate organizational outcomes and long-term consequences. Managers can affect a number of factors by means of the policy choices they make, including:Â
- the overall competence of employees,Â
- the commitment of employees,Â
- the degree of congruence between employees' own goals and those of the organization, andÂ
- the overall cost effectiveness of HRM practices.Â
Beer et al state that these 'four Cs' do not represent all the criteria that human resource policy makers can use to evaluate the effectiveness of human resource management, but consider them to be 'reasonably comprehensive' although they suggest that readers may add additional factors depending on circumstances. And various authors have done so.Â
Beer et al argue that: "In the long run, striving to enhance all four Cs will lead to favorable consequences for individual well-being, societal well-being, and organizational effectiveness (i.e., long-term consequences). By organizational effectiveness we mean the capacity of the organization to be responsive and adaptive to its environment. We are suggesting, then, that human resource management has much broader consequences than simply last quarter's profits or last year's return on equity. Indeed, such short-term measures are relatively unaffected by HRM policies. Thus HRM policy formulation must incorporate this long-term perspective."Â