The expansion and the success of any business depends and relies strongly on several factors such as strategic operations management, research and development, increased market share and improve customer management and most importantly human resource management.
Practicing and applying human resource management (HRM) and the issues that might face the organizations are among the most difficult aspects to deal with and implement for managers.
This paper will consist of two main parts. In our first part, we will try to understand the meaning of the term HRM and its evolution from the term personnel management (PR) by giving definitions, historical evolution and the different roles that both terms play within an organization.
The second part of this work will cover the growth of interest in HRM within organizations today. We will try to discover and analyze the factors that we think are central to its continued appeal within organizations and why is it so. In other words, we will discuss and discover what does the new HR consists of and what are the main aspects of it.
A theoretical overview of the term Human resource management:
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There is no generally agreed definition for the term HRM. Therefore, it is common to come across various different explanations to the term.
As mentioned in David Farnham's book (2010), Marchinington and Wilkinson (2008) defines the term human resource management as the management of employment as for Boxall and Purcell (2008) regard HRM in the English-speaking world as all those activities associated with the management of employment relationships in the firm.
Human resource management has been defined by Guest (1987) 'as a set of policies designed to maximise employee commitment, organisational integration, flexibility and the quality of work.'
Human capital is a combination of the abilities, skills and knowledge employees represent and contribute in an organisation (Hayton,2005) , while human resource management (HRM) includes all the activities related to the management of employment relationships in the organisation ( Lin et al, 2008).
HRM policies and practices are set by an organisation through setting a strategic planning that will help the organisation to adapt and adjust to their competitive environments. (Kidwell and Fish, 2007)
As examples of these practices and policies, Petrescu and Simmons (2008) mentioned recruitment and selection, training and development, and reward systems with business strategies.
When an organisation has control over developing HRM practices, it could be said that their business strategy might lead to a sustainable competitive advantage.
From these different definitions and overview we can conclude that the term HRM is a set of functions, measures and activities that aim to mobilize the human resources and develop them for greater efficiency in order to achieve better results.
We can also say that HRM covers and consists of many areas that involve the life stages of the workers in an organisation, such as recruitment, job satisfaction, career management, training and development, performance evaluation, conflict management, motivation, communication, working conditions etc...
The HRM models:
During the 1980s and 1990s, different HRM models were developed in different parts of the world. We will discuss and go through the models that consist of hard and soft approaches briefly in this section (Beer et al, 1984)
According to beer et al (1984) one of the HRM models is the Harvard model. It presents a model that emphasises teamwork and communication and also the full use of individual talents to apply a soft HRM approach (Pinnington and Edwards, 2000). In this model, it was proposed that HRM policy decisions and choices are determined by a combination of stakeholder interests and factors that result in: human resource outcomes that have long consequences and HRM policy choices. It was suggested by Bearwell et all (2004) that this model acknowledges the legitimate interest of several groups and changed into a human resource strategy.
This model was criticised by many and especially by Sisson and Timperly (1994) that observed as that the elements of strategic choice has a strong prescriptive quality and the model suggests that there is in effect one favoured and preferred set of HR policy choices.
In contrast, the Michigan model presents a hard approach to HRM and introduces the concept of strategic human resources (Storey, 1992).
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HRM policies are linked to the formation and implementation of strategic and corporate objectives (Pinnington and Edwards, 2000). This model represents both the external and internal factors of HRM and the link between business strategy and HR strategy (Beardwell et al, 2004).
According to Guest (1987), there have been a number of HRM models that have been developed in the UK. Guest's (1987) model included strategic integration, flexibility, high quality and high commitment as factors and sets that are important to achieve an effective organisation.
In contrast, human resource roles are very diverse and it is difficult for only one model to explain the term completely. (Sisson and Storey, 2000)
For example in small businesses, there will be man human resource managers who will monitor all the aspects of HRM but in larger firms there may be a higher degree of specialisation and mostly will use business partners, that we will go through in our part B , as the ones that will adopt a shared services approach. The survey the changing HR function led by Reilly (2007) showed the wide variety of roles being adopted as HR departments tasks. Organisations are using these set of new roles given to the HR department to insure an added value to the business and to create a competitive advantage that will help to achieve the strategic objectives. (Sisson and Storey, 2000)
This will continue as organisations find it the most efficient way to achieve success in response to the economic ups and downs in which they find themselves and as ways of leadership and motivation to their employees. (Sisson and Storey, 2000)
The evolution of personnel management (PR) to human resource management (HRM):
The historical evolution:
The personnel department that used to be headed by a director of personnel management has gradually given way in companies from the 1980s to service human resources, led by a director of human resources.
This semantic change is also accompanied by a change in the role and position of human resource management in the organisations. These transformations of the HR functions are both quantitative and qualitative:
Quantitative because the size of the HR functions has steadily increased.
Qualitative because the problems and tasks assigned to the HR functions has gradually expanded along with the influence of functions that are developed in the strategic decisions process. (David Farnham, 2010)
This shift from a personnel management to HRM started primarily in the economic crisis. Organisations were forced to rethink and restructure their unproductive labour to adapt to an open economy that increasingly opens up several international opportunities. (David Farnham, 2010)
Distinguishing between Personnel management (PR) and HRM:
As defined and mentioned earlier in this paper, HRM is the evolution of personnel management.
Personnel management is a term that used to refer to the set of activities relating the workforce which usually consist of staff, payroll, contracts and other administrative tasks. (managementstudyguide, 2012).
To analyse this section, we will go through the different roles and missions that both a PR director used to perform and compare them with some of the modern tasks of an HRM director. According to David Farnham' book (Human resource management in content, 2010) and the information we combine we can make a comparison at the different roles of Personnel management and HRM:
A PR director used to support and take charge of some of the recruitment stages; keeps track and follow up any changes that the personnel department team make in terms of recruiting and administrating tasks (salary, contracts etc...).
While an HR director has to define the recruitment procedures, coordinates other recruitment decisions managed by a senior specialist and makes strategic outsourcing decisions.
Training and development
The main roles that a PR director used to play are to set a training plan and monitor its progress and also select providers and trainers to carry on the training program.
In the other hand, the HR director is responsible of producing and setting up a training plan and policy , controlling it and delegate a person to be responsible of the training and development program.
Back in time, PR directors had few roles in the career management section. For example they used to establish annual interviews and manage the requests' changes as they main tasks and missions.
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It is different for the HR directors nowadays because they keep close track to careers and manage carefully the development of all the projects that the organisation want achieve at the careers management role.
While the main remuneration role of a PR director back in the days is an administrative and supervisory payroll role, an HR director mission is more than just that. It is more about setting and defining wages policies, supervising compensations and benefits and last but not least establishing incentive and variable systems.
Personnel directors focused in managing closer relations with their social partners and also managing all the individual disputes within the organisation. While today, Human resource directors focus more in supervising the negotiations and implementing the agreements. They also start more sensitive negotiations and separation process such as transactions.
In this section, personnel management directors had a limited and little involvement. In contrast, human resource directors define the organisation's fields of study and implement and analyse these studies, both the quantitative and the qualitative.
David Farnham (2010) mentioned further differences between personnel management and human resource management using this table:
The personnel management tradition
The human resources management tradition
employer needs to treat people
fairly in organisations
employer needs for competitive
advantage in the marketplace
Operates in a stable market conditions
Operates within competitive markets
An approach that consist of managing
people, with a strong administrative
a distinctive approach to managing people,
with a strong strategic purpose
an ad hoc perspective in a short term
strategic time perspective in a long term
Conduct Negotiations with trade unions where they are recognised
Manages employees individually rather than
Is delivered, monitored and policed by
Is delivered by HR professionals in
collaboration with line managers
As a conclusion of this section, we can clearly realise and conclude that the differences between personnel management and human resource management. While personnel management roles were mainly focused on administrative activities such as recruitment, labour relations management and payroll, the development of resource management function gradually led the strategic development of human resources. HRM is no longer just about managing the human resources but it is more about contributing to the development of the human capital within a company. Therefore, the mission of HRM widen to cover various sectors such as workforce management, training and development, compensations, career development and many more aspects that personnel management didn't cover or partially did.
It was mentioned in managementstudyguide.com (2012) that human resource management is a more beneficial approach because it concentrates on the planning, monitoring and controlling the various aspects of resources. As opposed, personnel management was mainly focusing on intervening between the employees and the management of the organisation.
With the help of the general management of the organisation and the operational departments, the human resources teams contribute to assist the organisation to develop and achieve better results.
Today, human resource departments have gradually become an important strategic partner in the organisation as they have a strong impact in the executive committees of organisations.
The growth of interest in HRM within organisations:
Stephen Byers, the former UK government minister, mentioned in 2002 that organisations are experiencing a fundamental shift and that is because of the changes in the economies and societies all over the world. These changes are caused by the globalisation, technology and innovation as well. It is certainly changing the style of work, the workplace and the workforce itself. (Beynon et al, 2002).
Organisations nowadays are changing their management processes and strategies at the human resource department. That applies for both the private and the public organisations all over the world. These changes are mainly made to change the roles of the HR department in order to improve the organisation's performance.
Setting up various customised roles and plans started to play a crucial role in facilitating the achievement of the targets and goals that the organisation want to achieve.
There is certainly a big move in terms of the growth in applying better HRM strategies. Organisations' main aim after applying this system is to get the best outcomes and the best efforts from their workforce to pursue and achieve the corporate goals. (David Farnham, 2010)
Accounts are given to the strong desire that organisations have in today's economy. Organisations with the strongest and most efficient HR department continue to improve and be the leader in their industry.
Businesses are growing faster due to the adoption and practice of an effective human resource management strategy. According to Vincent and Rowena (2011), there are two approaches to understanding growth which value the importance of HR and effective HRM.
The first approach is based on managing the challenges that face the firm's lifecycle. A firm can't move forward or can't develop faster when there are issues at the human resources department. Only the organisations that successfully overcome their issues at the HR level will be a leading firm in their market. (Vincent and Rowena, 2011)
If we take a small business for example, we might say that it was the hardest at the starting -up stage because the key problem might most probably be at the human resources department and especially at the hiring and recruitment process. It is very important to get the right people to fill in the right spot.
The second approach that was highlighted by Vincent and Rowena is that the role of HRM have been always very important in contributing to the organisation's growth and that is in the case of having a strong HR competitive advantage.
Leading organisations are usually successful because of their rare skilful employees and workforce, employees that contribute wit h a lot of knowledge and help with their great skills are rare in the market.
These leading organisations will always keep their employees and do whatever it takes to not lose them because they are rare in the market and the competitors can't imitate them.
The new HR
The next generation HR models are a bit different than the old models, organisations started to treat their employees as business partners since their focus on a strategy that rely on the human capital an organisation has.
Organisations are building and changing their HR strategy by training, developing or hiring people that are competent and have a strong personality to make decisions. Most of the organisations make sure that their employees, who are business partners as we mentioned earlier, are in charge of every day to day operations. The new HR strategy has to be involved in every aspect of the business including the business issues and not only the human resources matters.
These business partners are chosen and certainly have certain skills, knowledge and experience that other employees don't have. They are usually innovative and capable of dealing with the day to day activities, resolving people issues, ensuring that the roles given are performed well, supporting organisational changes and many more.
Another critical role that business partners play nowadays is interacting in a very effective way. They are involved into shared services and aware of every single activity and issues and that is because of the power they are given to lead the organisation's reports.
Today's business partners have to understand the trend of the organisation and apply them to achieve the best results because that is their main role. They have to insure that they are positive changes between the work and the relationship with the employees.
In fact, there are organisations that are struggling when it comes to choosing the right business partners. We suggest that it is important to start the selection with the people within the organisation and preferably the ones with great competencies and a focused career path so that it becomes easier to build a new strong strategic HR.
Organisations should involve people that are good in consulting, networking, collaborating. These people will perfectly suit the task of performing an efficient strategic HR and perform a good job as business partners to the business.
It is also suggested that organisations make use of their strong leaders and managers within the business. Those employees are experienced and have been managing people for years so they can be moved to take place to build the new HR business partnership strategy.
Bringing and hiring business partners from the outside are also a good idea. Organisations have to target the right people to fill in some specific gaps that the organisations need to fill in order to succeed.
In conclusion, to be effective in today's economy, organisations must have an effective human resource management strategy. Organisations surely acknowledge the importance of human resources more than any time before.
HRM today represents the most important role of a successful business. Organisations are taking human resource management as the key to an organizational success. (Banfield et al, 2012)
It is strongly believed that contribution of the workforce to the organisation can make the critical difference between success and failure. (Banfield et al, 2012):
It is by adopting an efficient human resource strategy that organisations succeed to create a competitive advantage in the market place, that is why organisations have to focus more on recruiting the right people, training and developing the new stuff and the senior ones, rewarding and appraising the employees etc...
All these will certainly have a great impact on the organisation's progress and will lead to a business success and a competitive advantage in the market.