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People are commonly considered to be an organisations' greatest asset simply because they have the power as individuals to decide. They decide on strategic, tactical and operational levels to obtain the most favourable results from whatever situation arises. It is therefore extremely important to train and develop the human resources as it determines a company's success.
Over the past few decades, a growing awareness of the importance of the HRM process has lead to continual improvements in the field; thus causing more competence.
In order to create efficiency in communication, training and general management, individuals were put in charge especially to manage the people within an organisation. Slowly this progressed and became a common department in any common organisation.
The development of personnel management can be categorised in four stages; the welfare tradition, the industrial relations tradition, control of labour tradition and professional tradition. Each of these is explained below:
This tradition dates back to the nineteenth century when the working conditions of workers improved to increase motivation. Workers were offered several benefits for being employed; such as company housing, basic health care, canteens and education.
These facilities created a sense of social welfare which was adding to the quality of life of the employees.
Industrial Relations Tradition
With legislation slowly being added, the managers needed to solve disputes and issues over a framework for efficiency. This created a more formal relationship between the managers and employees. With the emergence of the labour party in 1900, the National Insurance scheme was established as a fixed welfare for all workers.
Control of Labour Tradition
With the increasing pace of organisational growth, there was a need for personnel managers to have a more fixed job role. The job was partitioned into several processes; job allocation, performance, time-keeping, pay, benefits, attendance, training and promotion. The personnel manager's role became a lot more difficult and concentrated.
The Professional Tradition
With the huge development of personnel management, the Institute of Personnel management (The Chartered Institute of Personnel and Development), developed a programme specifically to train and develop personnel managers, which lead to a specific qualification. Due to this new qualification, requirements for personnel managers in many organisations became a lot higher.
1.2 From 'personnel management' to 'human resource management'
Personnel management was known to manage the employees within an organisation in many aspects; such as recruitment, selection, evaluation, motivation, general management and termination. One can argue that not much has changed and it is still the same as HRM, but from comparing the process over the past few decades, we can see that the process has actually evolved quite significantly.
Human resource management, unlike personnel management, has become a process that is very closely linked with the other departments of an organisation. This helps the HRM department to foresee and prepare for possible circumstances; such as increased workloads and redundancies.
Below is a table of perceived differences between Personnel Management and Human Resource Management (Beer and Spector, 1985):
Human Resource Management
Reactive - deals with situations when they arise. There is a lack of preparation for future circumstances.
Proactive - interprets situations due to continual links to other departments.
Self interest conflicts between stakeholders
Control from the top
Clear and efficient communication; leading to trust and commitment
People are perceived as a variable cost
Human resources are capable of development
Table 1 - Beer and Spector (1985)
Evidence suggests that HRM is more successful than personnel management due to its proactive nature. David Guest (1989) defined the following four principles of HRM to create more effective organisations:
Strategic integration: HRM is integrated with the organisations' strategic plans.
High commitment: management of people ensures employees are genuinely pursuing the goals of the organisation.
Flexibility: HRM policies are subject to change; meaning innovations and changes in the business fields will be anticipated by HRM and the policies thereby structured.
High quality: the process of human resource management is done with high quality to ensure high quality results. This will eventually affect the quality of goods/services provided.
2.1 Human Resource Planning
Human resource planning is a systematic series of continuing processes that determines the needs of an organisation and plans them accordingly (Bennison and Casson 1984). The reason human resources are planned is due to the simple need that any successful business needs - efficiency. Planning eliminates wasted time and resources by preparation. The planning process is divided into several stages; analysing current human resource utilisation, forecasting the demand for human resources, forecasting the supply of human resources, developing action plans and evaluating the planning process.
Analysing current human resource utilisation
With the development of technology, data collection and presentation has become much more sophisticated and efficient. HR planners can use computer technology very effectively to analyse data about the workforce. Information such as experience, length of service, qualifications, potential attendance, productivity, efficiency and personal data have all contributed to the accurate analysis of human resource utilisation.
With the use of this data it has become easy and efficient to forecast possible situations regarding specifically HR demand.
As mentioned above, the analysed data can be efficiently used to determine current conditions. It is especially important to forecast demand in time in a dynamic working environment where new products and premises are bound to increase.
Corporate plans are also projected into a shared system to co-ordinate forecasting. In some cases however there is no data that can project future requirements; these cases would be linked to general economic, political or industrial change.
Forecasting supply is more developed than forecasting demand as the data is readily available. Supply forecasting is determined by internal and external auditing. Changes in an organisation; such as technological upgrades, will determine whether or not to recruit staff internally or externally. Supply forecasting produces data of:
Existing human resources classified by organisational demography, more specifically by department, occupation, skill level, status, age, gender, aptitudes, experience, qualifications, job history, length of service and ethnicity.
Specific work history; absenteeism, commitment, involvement and disciplinary matters.
Labour turnover analysis is based on the theory that future losses of employees can be predicted from historical patterns of their length of service.
Number of leavers in a specific period of time (usually one year) x 100
Number of employees in the company over the same period
Developing Action Plans and Evaluating Planning
Action plans are based on a comparison of forecast demand and forecast supply. This will determine deficits and surpluses.
Evaluation is suggested to be based on outputs rather than inputs. Storey and Sissons have a variety of techniques such as simple audits to conclude if targets have been met, how many vacancies have been filled and how much costs were reduced.
3.1 Selection technique - Interview
There are several types of selection techniques practiced in the HRM process, one of the most commonly used being through interviews.
The interview process can be very complex method of selection; mainly due to the conduct between the interviewer and interviewee. For example, some questions can often be misunderstood and perceived as discrimination, especially when it comes to questions regarding religion or age. Interviews can be conducted one-on-one, panel or sequential.
There are typically two types of questions; closed and open ended. Closed ended questions require a simple answer whereas open ended questions often ask the interviewee to elaborate on a certain topic.
Creating an effective interview requires topics specific to what information is required. As long as the questions are clear and concise, an interview can be very successful.
Interview techniques have a fair share of disadvantages as well. Although face-to-face conduct allows plenty of observation, it can also be bias, selective or distorted. The candidate can disguise his knowledge of a certain specialist subject that the interviewer has little or no knowledge of.