Evolution of Human Resource Management: The Personnel Management Phase

Evolution of Human Resource Management: The Personnel Management Phase
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To understand the evolution of Human Resource Management, one must first understand its basis.

The origins of workforce management lies in the arrangements made for the welfare of apprentices working with the master craftsmen in the putting out system that prevailed during the medieval ages. The industrial revolution that led to the establishment of factories displaced the putting out system.

The workers in the early factories faced long hours of works under extremely unhygienic conditions, and mostly lived in slums. This soon resulted in several labor riots, the most famous being Ludds riots of 1811 in Nottingham, England, precipitated by reduced wages. The government soon intervened to provide basic rights and protections for workers, and the need to comply with such statutory regulations forced factory owners to set up a formal mechanism to look into workers wages and welfare, and redress other issues concerning labor. This led to the emergence of Personnel Management as a distinct profession.

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The Personnel Management Approach

The Personnel Management approach that remained in vogue for much of the 20th Century remained administrative in nature. Arising out of the need to enforce statutory compliance, it concerned itself primarily with

  • employee record keeping
  • adherence to the stated policies while implementing functions such as recruitment, training and wage administration
  • taking welfare oriented measures such as providing medical care, vaccinations, housing facilities and the like
  • attempting to increase productivity through wage increases and training, and enforcement of standards derived from work studies influenced by the scientific management approach promulgated by Frederick Taylor and the like
  • dealing with trade unions and trying to solve industrial disputes through collective bargaining and other industrial relations approaches.
  • conducting performance appraisals or report card of past performance to determine pay and promotions

The Personnel Management approach tried to convince workers of the business interests, and convince management of workers interest and social obligations. It rarely had a direct say in the company’s strategy and did not involved itself with operations aspects, remaining a purely staff function.

The Traditional Human Resource Approach

The latter decades of the twentieth century saw the winds of change starting to affect the personnel management profession. Elton Mayo’s Hawthorne Studies had debunked Taylor’s Scientific Management approach toward productivity increase, and established that the major drivers of productivity and motivation were non-monetary factors. A host of new theories emerged based on this new behavioral perspective. Some of the popular theories that struck ground was Douglas McGregor’s Theory X and Theory Y, Abraham Maslow’s hierarchy of needs theory that recognized the concept of individuals aspiring to reach a state of self actualization, Victor Vroom’s Expectation Theory, Alderfer’s ERG Theory, and more. Government interventions led to the enactment of new legislations that guaranteed workers more rights.

All these changed soon led to the transition from the administrative and passive Personnel Management approach to a more dynamic Human Resource Management approach. This new approach considered workers as valuable resources, a marked improvement from the earlier approach of considering them as mere cogs.

While Personnel Management was a strictly staff function, Human Resource management began to become an increasingly line management function, directly interlinked to the core business operations.

Evolution of Human Resource Management

The major changes in approach from Personnel Management vs Human Resource Management manifested in many ways.

  • The recruitment and skill enhancement of the workforce having a direct bearing on organizational profitability, efforts began to increase worker’s commitment and loyalty.
  • Motivation took the shape of challenging work environment, free holidays, creating an active social community within the workforce, fringe benefits and the like, besides monetary incentives.
  • Training acquired a new “Training and Development” dimension with the focus on behavioral training to change attitudes and develop basic skills rather than remaining limited to inculcating work-related skills.
  • Wage and Salary Administration became more complex with the introduction of performance related pay, employee stock options and the like
  • The report-card based performance appraisal systems become more proactive with new techniques such as Management by Objectives, 360 degree appraisals and the like
  • emphasis on leadership instead of managing

Image Credit: N Nayab

The Strategic Human Resource Approach

The evolution of Human Resource Management took a new turn at the end of the century. Increased free market competition at global level and the proliferation of technology and knowledge based industries raised the importance of human resources, and from an obscure role a century ago, human resource management rose to become the most critical function of an enterprise.

The workforce, hitherto considered as “resources” now became “assets” and a valuable source of competitive advantage. The thrust of human resource management now lies in trying to align individual goals and objectives with corporate goals and objectives, and rather than enforce rules or dictate terms, act as a facilitator and promotes a participative approach.

These changes influenced Human Resources functions in many ways.

  • Increased reliance on performance based short term contracts instead of long term employment
  • Direct linkage of compensation to the profitability of the enterprise and the employee’s contribution towards such profitability
  • New dimensions for training and development function by encouraging and facilitating innovation and creativity
  • Motivation through enriching the work experience
  • Performance and Talent Management displacing performance appraisals

Strategic Human Resource Management blurs the distinction between a specialized Human Resource Management function and core operational activity, and very often, Human Resource Management drives interventions such as Total Quality Management and the like.