Thursday, February 23, 2012

Personnel Management and Human Resource Management

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Personnel Management

Personnel Management with its narrow focus on administration, reactive behavior and severance from the management mainstream - lacked top management support and made itself vulnerable to irrelevance amidst the business and organizational changes. From its traditional association with provision of welfare, policy interpretation and corporate police function, it thus justifies the notion of personnel managements image as a bureaucratic nuisance.

What Is Human Resource Management?

Human Resource Management (HRM) involves the productive use of people in achieving the organizations strategic business objectives and the satisfaction of individual employee needs. As HRM seeks to strategically integrate the interests of an organization and its employees, it can be a major contributor to the success of an enterprise because its positional influences can affect customers, business results and ultimately shareholder value. Effective HRM stays relevant to the business as a function by aligning its objectives with the organizational business goals and rewarding through achievement of performance based objectives.

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Definitions of Human Resource and Personnel Management

David Guest, a British academic, in his 18 Personnel Management (January) journal, questioned the difference between HRM and personnel management. An answer to this question was provided by Torrington and Hall (11) who suggested that personnel management is workforce centered and therefore directs itself to employees, while HRM is resource centered and concerns itself with the overall human resource needs of the organization.

An early comment on this question was made by Armstrong (187)

HRM is regarded by some personnel managers 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, but as usually perceived, at least it has the virtue for emphasizing the virtue of treating people as a key resource, the management of which is the direct concern of top management as part of the strategic planning processes of the enterprise. Although there is nothing new in the idea, insufficient attention has been paid to it in many organizations. The new bottle or label can help to overcome that deficiency.

HRM could be described as an approach to, rather than as an alternative to, traditional personnel management. When comparing HRM and personnel management, more similarities emerge than differences. However, concepts such as strategic integration, culture management, commitment, total quality, and investing in human capital, together with a unitary philosophy (the interests of management and employees coincide), are essential parts of the HRM model. And this model fits the way in which organizations have to do business and manage their resources in the environments in which they now exist. This realism of the HRM model increased the popularity of the usage of the term HR as an alternative to personnel management.

Increasingly, human resources have been seen as the competitive edge essential for a company to be successful. Managers adopt a strategic management of human resources by moving their human resource needs in line with the business needs of the future, i.e. they support the companys strategies.


HRM, in contrast to personnel management, is characterized by

q emphasis on employees as valued resource and a critical investment to increase the competitive edge of each organization

q integration and alignment of HRM objectives with the overall organizational business objectives and strategies

q a proactive stance towards HRM challenges especially in the arena of change management amidst business changes

q an emphasis on a direct approach to satisfying the individual needs of each employee

q stress on the importance of organizational culture and values in promoting cohesiveness and unity of employees, of creating and maintaining a culture which is consistent with organizational objectives

q the assumption of a unitary model of industrial relations instead of a pluralist model underpinning traditional personnel management

q a shift and sharing of responsibility for HRM with line managers, with HRM adopting a role of service provider rather than staff specialists

The 1st century human resource imperative is to raise the companys human capital to sophisticated levels which produce competitive advantages for the enterprise. Human resources can accomplish only if it dramatically redefines itself from administrator, reactor, and bureaucrat to strategist, businessperson, and marketer.


While HRM professionals and line managers are responsible for ensuring that employees are managed in such a way as to facilitate achievement of organizational objectives, the policies and practices they initiate will be affected by the organizations values and philosophy - and by the values and beliefs managers have about employees. There are two organizational approaches to managing staff instrumental (or hard) approach that stresses the rational, quantitative and strategic aspects of managing human resources; the humanistic (or soft) approach, which emphasizes employee development, collaboration, participation, trust and informed choice in order to generate resourceful employees/contributors to the organizations strategic business objectives. The hard approach essentially views employees as cost which needs to be used efficiently. This performance oriented hard approach creates industrial conflicts due to the emphasis on individual performance. The soft approach views employees as an asset which needs to be invested in and developed.

In some organizations, both hard and soft approaches guide the development and implementation of HR policies. These organizations have identified core employees (for example, employees who deliver the essential service or product of the organization) who are likely to be offered security of employment, attractive compensation and benefits, and career development opportunities. Non-core employees have limited, if any, job security, compensation held to minimum levels, and limited, if any, career development opportunities. Non-core employees are likely to be unskilled or semi-skilled workers (that is, employees who can fairly readily be replaced) or workers who may undertake activities which can be outsourced.

Both hard and soft approaches to HRM are unitarist in nature. In other words, HRM posits a relationship between the organization (employer) and employees as one characterized by one locus of power (management), shared objectives (that is, managerial and employee objectives are congruent or if not congruent, compatible), and conflict is aberrant. In other words, management knows what is best for employees - even when it hurts.

HRM Types


Personnel administrator safeguarding company interests through corporate policing.

Welfare Worker

Relationship based with concentration on social, welfare and clerical activities, leaving all key HRM activities for line management.


Concerned with the professional status of HRM through emphasis on theories and professionally interesting activities.


Business driven, change catalyst, concentrates on value added HR activities that enhances competitive advantage.

HRM and Industrial Relations

The business oriented, proactive and unitarist HRM approach contrasts with the traditional industrial relations approach, which seems narrow, pessimistic and static.

A New Mandate for Human Resources

It has been stated by Ulrich (18) that ‘The activities of HR appear to be and often are disconnected from the real work of the organization’. He believes that HR ‘should not be defined by what it does but by what it delivers’. According to Ulrich, HR can deliver excellence in four ways


Strategic Partner

HR should become a partner with senior and line managers in strategy execution, helping to improve planning from the conference room to the marketplace. Consequently, the HR manager must develop business acumen, a customer orientation and an awareness of the competition to be able to link business strategy to HR policies and practices.

Administrative Expert

It should become an expert in the way work is organized and executed, delivering administrative efficiency to ensure that costs (efficiency) are reduced while quality (effectiveness) is maintained. HR professionals must be able to re-engineer HR activities through the use of technology, process engineering and total quality management.

Employee Champion

It should become a champion for employees, vigorously representing their concerns to senior management and at the same time working to increase employee contribution, that is, employees’ commitment to the organization and their ability to deliver results. To enable employees to successfully perform their jobs, HR professionals must be able to represent their interests and find new resources (e.g. become involved in decision making, increase commitments, share in economic gains, etc.

Change Agent

Being a catalyst for change within the organization, the HR manager should lead change in the HR function and develop problem-solving communication and influence skills. It should become an agent of continuous transformation; shaping processes and a culture that together improve an organization’s capacity for change.

HRM and Management

Although management as a whole encompasses HRM, HRM is related to all other aspects of management. This is so because the purpose of HRM is to improve the productive contribution of people to the organization in ways that are strategically, ethically, and socially responsible. In order to provide a more value-added role, HRM must evolve from a maintenance role to one, which is more proactive in providing services to enhance competitiveness. The HR department exists to support managers and employees as they pursue the organizations strategies. However, to guide its many activities and support the managers who operate other parts of the organization, HR departments must have objectives.

The Objectives of Human Resource Management

Managers and HR departments achieve their purpose by meeting objectives. Objectives are benchmarks against which actions are evaluated.

Organizational objective

The HR department exists to help managers achieve the objectives of the organization. For example, Hewlett-Packards HR department implemented sophisticated information systems that assisted the department in cost savings of $5 million a year.

Functional objective

To maintain the departments contribution at a level appropriate to the organizations needs. Resources are wasted when HR management is more or less sophisticated than the organization demands.

Societal objective

To be ethically and socially responsive to the needs and challenges of society while minimizing the negative impact of such demands on the organization. Government has legislated some areas of societal concern The Employment Act, The Central Provident Fund Act, The Workmens Compensation Act, The Trade Unions Act, etc.

Personal Objective

HR department that assist employees in achieving their personal goals which in turn enhance the individuals contribution to the organization, thereby increasing the organizations ability in attracting and retaining the capable employees. Many aspects of human resource management contribute to a good quality of working life, for example, providing training and development to improve the employees skills and knowledge; management practices encouraging greater employee empowerment through decision-making, etc.

The Relation of Activities to Objectives in Human Resource Management

Management Objectives Supporting Activities

Societal Objective 1. Legal compliance

. Benefits

. Union-management relations

Organizational Objective 1. Human resource planning

. Employee relations

. Selection

4. Training and development

5. Appraisal

6. Placement

7. Assessment

Functional Objective 1. Appraisal

. Placement

. Assessment

Personal Objective 1. Training and development

. Appraisal

. Placement

4. Compensation

5. Assessment

The Service Role of a Human Resource Department

Whenever possible, responsibility for people management is devolved to the line managers, the role of personnel professionals is to support and facilitate line management in this task, not to control it.

Krulis-Randa, J. (10)

As members of a service department, HR managers and specialists do not have authority to manage other departments. Instead, they have staff authority, which is the authority to advise, not direct other managers. Line authority is the right to direct the operations of departments that make or distribute an organizations products or service. Line managers have line authority to make decisions about production, performance, and people.

Functional authority is the right given to specialists to make the final decision in specified circumstances especially in highly technical or routine decisions. When the cost of not following the HR departments counsel is high, top management may replace staff or advisory authority with functional authority over specific issues.

The use of line, staff and functional authority results in a dual responsibility for human resource management. Both line and HR managers are responsible for employee productivity and the quality of work life.

Proactive versus Reactive Human Resource Management

Reactive human resource management occurs when decision-makers respond to HR problems. Proactive human resource management occurs when HR problems are anticipated and corrective action begins before a problem arises.

Managers adopting a reactive approach to problem solving are usually faced with inappropriate and costly consequences. This is what Storey (1a) refers to as the non-interventionary role in which HR people merely provide a service to meet the demands of line managers.

Effective and efficient HR departments anticipate impending problems and challenges before they arise so as to proactively tackle them. Strategic human resource management demands HR department to proactively provide a competitive advantage through human resources. At a more strategic level, HR specialists take on a proactive role. They act as business partners, develop integrated HR strategies, intervene, innovate, and act as internal consultants and volunteer guidance on matters concerning upholding core values, ethical principles and the achievement of consistency.

Strategic Management

To achieve its objectives, every organization must ensure all its resources and functions are well managed and fully and appropriately utilized. Strategic management identifies the strategic goals of the organization and translates them into specific objectives and defines the mechanisms and resources required to achieve those objectives.

Strategic management is concerned with identifying the organizations business, defining its market, and developing the appropriate approaches to that market.


It is the responsibility of Human Resource Management (HRM) to ensure that the organization manages and utilizes its employees - its human resources -efficiently and effectively to achieve the organizations strategic goals.

To do so, HRM operates at three levels

1. Operational

ð the short-term

ð day-to-day function

ð service delivery

ð administrative

1. Managerial

ð the medium-term

ð development, establishment and implementation of activities, processes and practices by which the organization obtains and allocates the resources required to achieve objectives.

1. Strategic

ð the long-term

ð policy formulation

ð goal setting

ð organizational planning

The operational and managerial levels of HRM are undergoing change within the organizations. Increasingly, as organizations recognize the need for, and actually undertake strategic planning, HRM is seen as a vital part of that level of functioning of the organization as well. Also, increasingly, the operational aspects of HRM are devolved down the line, away from personnel administrators.

At the managerial level of HRM - the level at which HRM policies are implemented, HRM practitioners often operate as either internal or external specialist consultants. They work with line managers to develop, implement, and monitor the implementation of HR practices which give life to HR policies and advise line managers regarding specific HR issues and challenges.

HRM is responsible for developing and implementing personnel policies and practices, which facilitate an organizations ability to recruit, select, utilize, and develop staff to meet current and future organizational requirements. For HRM to be effective, it must address the strategic objectives of the organization.

Need for HR Strategy

Ever-increasing pressures have forced managers to critically rethink their approaches to HR management. Managers thus must adopt a strategic mindset or way of thinking about the management of people. By ensuring that HRM is strategically aligned with the organizations overall business objectives, HRM utilizes the workforce as a competitive advantage for long-term business success.

Aims of HRM Strategy

HRM strategies outline the organizations people objectives and must be an integrated part of the organizations overall business strategy. HRM strategy aims to enable the organization to achieve its strategic objectives by

ü ensuring that all business planning processes emphasize people as its main competitive advantage

ü all involved in strategic planning have an understanding and appreciation of HR concerns

ü aligning the corporate business objectives and the objectives of the HR function

ü designing and managing the culture, climate and organizational processes of the business to ensure that every employee contribute effectively and efficiently

ü identifying the core competencies and the expertise (people) needed to build and maintain those competencies

ü ensuring the resourcing activities of the organization contribute to the development of competencies in the short-and long-term

ü assessing the performance requirements needed to reach the organizations strategic business objectives, and deciding how the requirements should be satisfied.

ü reviewing and improving the overall commitment of the organization

Strategic HRM Objectives and Plans

Strategic HRM objectives can be linked to strategic organizational objectives such as

Ø cost containment

Ø customer service

Ø social responsibility

Ø organizational effectiveness


If an organization is to grow and remain competitive, its HR objectives and strategies must achieve the best alignment or fit between external opportunities and threats and the internal strengths and weaknesses of the organization.

Assessment of Influences

Organizations and their HR departments are open systems that are affected by the environment in which they operate. In order for managers and HR departments to respond proactively, they must have an awareness of the external and internal or organizational influences in which they operate.

External Influences

Externally, organizations are affected by economic and social trends, changing technologies and government interventions. The external environment is constantly changing and may be turbulent, even chaotic through the forces of competition in national, European and global markets.

Technological Challenges

The introduction of computerization/automation into the workplace may result in considerable changes to systems and processes. Different skill sets are required as new methods of working are developed. The result may be an extension of the skills base of the organization and its employees, including multi-skilling (ensuring that people have a range of skills which enable them to work flexibly on a variety of tasks, often within a teamworking environment). But it could result in obsolescence of skills and a reduction in the number of jobs (downsizing). New technology can therefore pose a great threat to employees. The evolution of the knowledge-based economy also demands staffing of different kinds of employees and people management where intellectual capital is the leading edge in such an economy.

Economic Challenges

Changes in the business cycle and the subsequent changes in organizations’ business plans create changing HR needs especially in manpower utilization. Staff shortage during boom times and redundant workforce during economic downturn are some of the issues that HR has to tackle. Proactive HR practices are seen in the usage of peripheral workers (subcontractors, temporary staff) and outsourcing work to external service providers, thus reducing employment costs and enabling the enterprise to be nimble enough to adopt to fluctuating business activity. Tele commuting (working from home through extensive use of information technology) for office executives is another trend towards flexible HR practices.

Government Challenges

The Singapore government adopting an active role in the revisiting and updating of labor legislations in order to remain competitive as a developed country. Amendments to the Retirement Act to accommodate an aging workforce and changes to the Central Provident Fund to maintain cost effectiveness of labor are some recent government involvement in ensuring the relevance and competitiveness of the laws in the employment relationship. For managers and HR specialists, government involvement requires compliance and proactive efforts to minimize the organizational consequences.

Internal Influences


Unions represent an actual challenge to unionized companies and a potential challenge to companies that are not unionized. The collective agreement limits the HR activities of supervisors and HR department. The challenge to achieve company objectives without violating the agreement is created. For some companies such as Motorola, the HR challenge is to discourage unionization of the company by offering benefits similar to those unionized companies, thus resulting in a spilling effect.

Information Systems

Information Systems improve the efficiency and effectiveness of information retrieval from the HR Information Systems for employees’ data. Such data storage also creates another issue of safeguarding of employee privacy as increasing computer security is emphasized within the profession.

Organizational Culture and Conflicts

In the light of increasing incidents of mergers and acquisitions, HR department also have to deal with culture integration of two companies and stabilize the changes that resulted from the merger or acquisition. Otherwise, in order to stay competitive, successful companies advocates strong values, beliefs, assumptions and symbols that define who the organization conducts its business. It tells employees how things are done, what is important, and what kind of behavior is rewarded. Thus, it is important for management to foster a culture that promotes the achievement of the organizations strategic business objectives.

Organizational structure

The effective implementation of an organizations strategy requires management to ensure that the organizations design helps achieve its strategic objectives. HRM is particularly concerned with the organizational structure because it can directly affect employee productivity and behavior.

Evaluating HRM Objectives, Strategies and Policies

Þ commitment

Þ competence

Þ cost effectiveness

Þ congruence

Þ adaptability

Þ performance

Þ job satisfaction

Þ employee motivation


As Dave Ulrich (18) points out, environmental and contextual changes present a number of competitive challenges to organizations, which mean that HR has to be involved in helping to build new capabilities. These challenges are

Ø Globalization requires organizations to relocate people, ideas, products and information around the world to meet local needs. New considerations for relocations are volatile political situations, contentious global trade issues, fluctuating exchange rates and unfamiliar cultures.

Ø Profitability through growth � creativity and innovation are key qualities that organizations want to utilize as competitive advantages in order to gain greater revenue growth.

Ø Technology � the challenge is to integrate technology and utilize it to improve productivity in the workplace.

Ø Intellectual Capital � The challenge to organizations is to attract and retain talented individuals to drive a global company that is responsive to changes and sensitive to customer needs.

Ø Change, change and more change � the greatest challenge companies face is adjusting to � indeed, embracing � non-stop change. They must be able to ‘learn rapidly and continuously, and take on new strategic imperatives faster and more comfortably’.

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