1. INTRODUCTION TO HUMAN RESOURCE MANAGEMENT

MEANING OF HUMAN RESOURCE MANAGEMENT
Human resource management is defined as a strategic and coherent approach to the management
of an organization’s most valued assets–the people working there who individually and
collectively contribute to the achievement of its objectives. Storey (1989) believes that HRM can
be regarded as a ‘set of interrelated policies with an ideological and philosophical underpinning’.
He suggests four aspects that constitute the meaningful version of HRM which are:
1. A particular group of beliefs and assumptions;
2. A strategic thrust informing decisions about people management;
3. The central involvement of line managers; and
4. Reliance upon a set of ‘levers’ to shape the employment relationship
Aims of HRM:
The overall purpose of human resource management is to ensure that the organization is able to
achieve success through people. ‘HRM systems can be the source of organizational capabilities
that allow firms to learn and capitalize on new opportunities.’ Specifically, HRM is concerned
with achieving objectives in the following areas:
ii) Organizational effectiveness:
Distinctive human resource practices shape the core competencies that determine how firms
compete. HRM strategies aim to support programmes for improving organizational effectiveness
by developing policies in such areas as knowledge management, talent management and
generally creating ‘a great place to work’. This is the ‘big idea’ as described by Purcell et al
4(2003), which consists of a ‘clear vision and a set of integrated values’. HR strategies can be
concerned with the development of continuous improvement and customer relations policies.
iii) Human capital management:
Human capital can be regarded as the prime asset of an organization and businesses need to
invest in that asset to ensure their survival and growth. HRM aims to ensure that the organization
obtains and retains the skilled, committed and well-motivated workforce it needs. This means
taking steps to assess and satisfy future people needs and to enhance and develop the inherent
capacities of people – their contributions, potential and employability – by providing learning
and continuous development opportunities. It involves the operation of ‘rigorous recruitment and
selection procedures, performance- dependent incentive compensation systems, and management
development and training activities linked to the needs of the businesses. It also means engaging
in talent management – the process of acquiring and nurturing talent, wherever it is and wherever
it is needed, by using a number of interdependent
iv) Knowledge management:
Knowledge management is ‘any process or practice of creating, acquiring, capturing, sharing and
using knowledge, wherever it resides, to enhance learning and performance in organizations’.
HRM aims to support the development of firm-specific knowledge and skills that are the result
of organizational learning processes.
v) Reward management:
HRM aims to enhance motivation, job engagement and commitment by introducing policies and
processes that ensure that people are valued and rewarded for what they do and achieve and for
the levels of skill and competence they reach.
vi) Employee relations:
The aim is to create a climate in which productive and harmonious relationships can be
maintained through partnerships between management and employees and their trade unions.
5vii) Meeting diverse needs:
HRM aims to develop and implement policies that balance and adapt to the needs of its
stakeholders and provide for the management of a diverse workforce, taking into account
individual and group differences in employment, personal needs, work style and aspirations and
the provision of equal opportunities for all.
viii) Bridging the gap between rhetoric and reality:
The research conducted has found that there was generally a wide gap between the sort of
rhetoric and reality. Managements may start with good intentions to do some or all of these
things but the realization of them is often very difficult. This arises because of contextual and
process problems: other business priorities, short-termism, limited support from line managers,
an inadequate infrastructure of supporting processes, lack of resources, resistance to change and
lack of trust. An overarching aim of HRM is to bridge this gap by making every attempt to
ensure that aspirations are translated into sustained and effective action.
1.2 EVOLUTION OF HRM
The history of HRM can be divided into six distinct stages namely the welfare stage, personnel
administration stage, personnel management stage, personnel management maturity stage,
personnel management maturity stage, personnel management entrepreneurial stage and human
resource management stage.
a) The welfare stage:
This covers the period 1900-1920 during which workers in Europe formed individual welfare
groups which were concerned with their needs at work. These groups fought for the
improvement in working conditions. During the First World War (1914-1918), many
organizations were faced with acute shortage of labour but there was need to increase
productivity. Governments in USA and Europe therefore encouraged systematic study of
employee and employer relationships.
b) Personnel administration stage (1920-1929):
During this period, neo-classical theorists carried out studies that improved the employee
employer relationship. The main contributors were Abraham Maslow, Elton Mayo, Douglas
6Macgregor. The services that were provided to workers during this period included transport
facilities, canteens, sporting facilities etc. Systematic procedures relating to personnel such as
recruitment and training also began during this period.
c) Personnel management stage (1940-1950):
During this stage, the procedures introduced in the earlier stage were refined and other activities
related to employees were introduced. These include salary scales and administration, industrial
relations, training and development etc.
d) Personnel management maturity stage (1950-1970):
Specialization developed during this period and personnel department was recognized as a unit
that was independent from the others in an organization. There was also a continuous
introduction of systematic training programmes, performance appraisal etc.
e) Personnel management entrepreneurial stage (1970-1980):
During this period, there was intense business competition. This made many organizations
introduce new management techniques. HR managers were therefore expected to be
entrepreneurial in their approach to business. More studies were carried out in HR with the aim
of giving an organization a competitive advantage over others. Employees became highly valued
resource and were considered as the most strategic asset in an organization.
g) Human Resource Management stage (1980-date):
In this period, there was more involvement of HR specialists in management of an organization.
The HR manager began to be involved in making top level decisions relating to employee and
formulation of corporate strategy.
1.3 DIFFERENCES BETWEEN PERSONNEL MANAGEMENT AND HUMAN
RESOURCE MANAGEMENT
A debate about the differences, between HRM and personnel management went on for some
time but has died down recently, especially as the terms HRM and HR are now in general use
both in their own right and as synonyms for personnel management. But understanding of the
7concept of HRM is enhanced by analyzing what the differences are and how traditional
approaches to personnel management have evolved to become the present day practices of HRM.
Some commentators have highlighted the revolutionary nature of HRM. Others have denied that
there is any significant difference in the concepts of personnel management and HRM. Personnel
management has grown through assimilating a number of additional emphases to produce an
even richer combination of experience. HRM is no revolution but a further dimension to a multi
faceted role.
The conclusion based on interviews with HR and personnel directors is that 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 it has the virtue of
emphasizing the treatment of 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 similarities between HRM and personnel management are summarized below;
1. Personnel management strategies, like HRM strategies, flow from the business fit and
integration.
2. Personnel management, like HRM, recognizes that line managers are responsible for
managing people. The personnel function provides the necessary advice and support services
to enable managers to carry out their responsibilities.
3. The values of personnel management and at least the ‘soft’ version of HRM are identical
with regard to ‘respect for the individual, balancing organizational and individual needs, and
developing people to achieve their maximum level of competence both for their own
satisfaction and to facilitate the achievement of organizational objectives.
4. Both personnel management and HRM recognize that one of their most essential functions is
that of matching people to ever changing organizational requirements i.e. placing and
developing the right people in or for the right jobs.
5. The same range of selection, competence, analysis, performance management, training,
management development, and reward management techniques are used.
86. Personnel management, like the ‘soft’ version of HRM, attaches importance to the processes
of communication and participation within an employee relations system.
The differences between personnel management and HRM are:
1. HRM places more emphasis on strategic fit and integration.
2. HRM is based on a management and business orientated philosophy.
3. HRM attaches more importance to the management of culture and the achievement of
commitment (mutuality).
4. HRM places greater emphasis on the role of line managers as the implementers HR policies.
5. HRM is a holistic approach concerned with the total interests of the business; the interests of
members of the organization are recognized but subordinated to those of the enterprise.
6. HR specialists are expected to be business partners rather than personnel administrators.
7. HRM treats employees as assets not costs.
1.4 UNIQUE FEATURES OF HUMAN RESOURCE MANAGEMENT
Generally, HRM possesses the following unique features;
a) It is a diverse field.
The characteristics of HRM are by no means universal. There are many models and practices
within different organizations are diverse, often only corresponding to the conceptual version of
HRM in a few respects. A distinction is made between the ‘hard’ and ‘soft’ versions of HRM.
The hard version of HRM emphasizes that people are important resources through which
organizations achieve competitive advantage. These resources have therefore to be acquired,
developed and deployed in ways that will benefit the organization. The focus is on the
quantitative, calculative and business-strategic aspects of managing human resources in as
‘rational’ a way as for any other economic factor The drive to adopt HRM is based on the
business case of a need to respond to an external threat from increasing competition. It is a
philosophy that appeals to managements who are striving to increase competitive advantage and
appreciate that to do this they must invest in human resources as well as new technology.
The soft version of HRM traces its roots to the human-relations school; it emphasizes
communication, motivation and leadership. It involves ‘treating employees as valued assets, a
9source of competitive advantage through their commitment, adaptability and high quality (of
skills, performance and so on)’. It therefore views employees, as means rather than objects. The
soft approach to HRM stresses the need to gain the commitment – the ‘hearts and minds’ – of
employees through involvement, communications and other methods of developing a high
commitment, high-trust organization. Attention is also drawn to the key role of organizational
culture.
b) It’s strategic in nature.
Perhaps the most significant feature of HRM is the importance attached to strategic integration,
which flows from top management’s vision and leadership, and which requires the full
commitment of people to it. Scholars believe that this is a key policy goal for HRM, which is
concerned with the ability of the organization to integrate HRM issues into its strategic plans, to
ensure that the various aspects of HRM cohere, and to encourage line managers to incorporate an
HRM perspective into their decision-making.’
c) HRM is commitment-oriented.
HRM model is composed of policies that promote mutuality – mutual goals, mutual influence,
mutual respect, mutual rewards, and mutual responsibility. The theory is that policies of
mutuality will elicit commitment, which in turn will yield both better economic performance and
greater human development. HRM attempts to create behavioural commitment to pursue agreed
goals, and attitudinal commitment reflected in a strong identification with the enterprise’. It is
believed that human resources may be tapped most effectively by mutually consistent policies
that promote commitment and which, as a consequence, foster a willingness in employees to act
flexibly in the interests of the “adaptive organization’s” pursuit of excellence’.
d) People are regarded as ‘human capital’.
The notion that people should be regarded as assets rather than variable costs, in other words,
treated as human capital, was originally advanced by Beer et al (1984). People and their
collective skills, abilities and experience, coupled with their ability to deploy these in the
interests of the employing organization, are now recognized as making a significant contribution
to organizational success and as constituting a significant source of competitive advantage.
10e) Applies unitary philosophy.
The HRM approach to employee relations is basically unitary – it is believed that employees
share the same interests as employers. This contrasts with what could be regarded as the more
realistic pluralist view, which says that all organizations contain a number of interest groups and
that the interests of employers and employees do not necessarily coincide.
f) It is Individualistic.
HRM is individualistic in that it emphasizes the importance of maintaining links between the
organization and individual employees in preference to operating through group and
representative systems.
g) HRM is a management-driven activity.
HRM can be described as a central, senior management-driven strategic activity that is
developed, owned and delivered by management as a whole to promote the interests of the
organization that they serve. The adoption of HRM is both a product of and a cause of a
significant concentration of power in the hands of management’, while the widespread use ‘of
the language of HRM, if not its practice, is a combination of its intuitive appeal to managers and,
more importantly, a response to the turbulence of product and financial markets’. HRM is about
the rediscovery of management. HRM policies and practices are applied within a firm as a break
from the past and are often associated with words such as commitment, competence,
empowerment, flexibility, culture, performance, assessment, reward, teamwork, involvement,
cooperation, harmonization, quality and learning.
h) Focus on business values.
The concept of HRM is largely based on a management and business-oriented philosophy. It is
concerned with the total interests of the organization – the interests of the members of the
organization are recognized but subordinated to those of the enterprise. Hence the importance
attached to strategic integration and strong cultures, which flow from top management’s vision
and leadership, and which require people who will be committed to the strategy
111.5 REVIEW QUESTIONS
1. Define the term HRM
2. Briefly discuss the history of HRM
3. Explain four aims of HRM
4. Explain the differences and similarities between HRM and Personnel management