“Personnel Management & Human Resource Management – the same wine, only different bottle”. Explain clearly, what is meant by the term human resource management, noting the differences and similarities to personnel management. Argue in favor of one approach to managing employees.
In this document we plan to assess how human resource management is different from personnel management, why companies switched from personnel management system to the well known human resource management system, how is HR Management different from Personnel management, and why we chose the HR approach to employees.
Human Resource Management
There are many definitions of what human resource management is, many people think that there is no difference between the old personnel management practices and the new human resource practices expect the new “label”, one definition that we think reflects the human resource management of today is :
“Human Resource Management is a distinctive approach to employment management which seeks to achieve competitive advantage through the strategic deployment of a highly committed and capable workforce, using an integrated array of cultural, structural and personnel techniques.”
All organisations, from small firms to giant corporations, from service companies to hi-tech organisations, engage in human resource management activities. They needs to utilise their resources effectively in order to achieve their objectives and targets. Human Resource Management is an issue of vital concern to all managers, and is the most important resource which employs all other resources to produce the desired outcome of the organisation. Thus the effective deploying of employees is a key element that adds to the competitive advantage of the firm (Molander, 1989).
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However, as globalisation and growing economic interdependence among nations emerged, along with rapid socio-economic changes and intensifying of the competition between organisations, the management of people increasingly became a critical issue for businesses. Therefore Personnel Management has to ensure that personnel policies and practices are geared to the objectives and strategy of the organisation in order to cope with the turbulent environment and respond to the new business needs and the external threats from the competitors. Consequently, this resulted in perpetual development and change of personnel management. In this respect the language of Human Resource Management has emerged to translate a new term for the management of employees in this active and changing world. However, the literature demonstrates a debate about the ambiguity of differentiating personnel from human resource management. Hendry (1995:55) states that:
“Human Resource Management has gained rapid and widespread acceptance as a new term for managing employment. It remains, however; an ambiguous concept. People question whether it is any different from the traditional personnel management, nor it is clear what it consists in practice”.
Some scholars however argue that HRM is an evolution of the process of personnel management (PM) and not a new theory of management employees, for example according to Torrington and Hall (1993:3): “… personnel management is experiencing the biggest change in its history. Many commentators believed that the arrival of human resource management was to be the greatest change in emphasis, but that was no more than re-thinking the process inside the organisation..”. Similarly Guest (1987) also supports this notion by saying that label has changed whilst the content continues to be the same.
On the other hand, other writers attempt to make a distinction between HRM and PM. Hendry and Pettigrew (1990:25) state that “HRM is then a perspective on personnel management, not personnel management itself”. Additionally, they argue that the strategic character of HRM is distinctive. Underpinning this distinction, Legge (1995) identifies three features differentiating HRM from PM where the former is concerned with managerial staff and promotes integrated line management activities, with more focus on senior management being involved in the management of culture.
The developing countries are characterised by weak economic, legal and political institutions that lead to corruption, insecurity, conflict and lack of competitiveness in labour, technology and skills. The introduction of trade liberalisation and increased international competition in such conditions can have serious consequences for the infant industries in the developing countries (Stiglitz, 2000). However it is generally claimed that opening to the global markets increases the flow of foreign direct investment into the developing countries, allows them to catch up with the latest technology without need for considerable investment or research, bring capital into the country, build expertise, induce innovation, and thus contribute to the general economic growth. Francois and Schuknecht (2000) provide some empirical evidence that openness to global markets leads to GDP growth. These findings are of course challenged by others.
The Term “Human Resource” comes from 2 different fields, in political economy and economics it is known as labor and it is one of the four factors of production for any establishment. Nowadays “human resource” is one of the most important departments in any organization, compared to the old days where human resource was seen as a marginal department, where improvement and strategic planning wasn’t needed.
The Human Resource System started back in the 19th, where two important movements occurred that changed the way companies and industries would treat their workforce, the first two companies in the 19th to do so were Cadbury and Bournville that recognized the importance of looking after their employees, and their families by offering them benefits or services that would help them in their daily work.
After the second world war, major companies in the USA that just emerged in the market, started hiring personnel from the military and thus where able to apply new, selections, training, leadership and management development.
The role of Human Resource Management shifted throughout the middle of the 20th century, when critics started saying that two different HR systems where created, the “soft” and “hard” systems, where the soft HR system focused on areas such as leadership, cohesion, and loyalty which was seen as an important role in the organization, and the “hard” side which was the old system of the human resource where organizations still viewed human resource as a marginal department that didn’t need improvement and strategic planning, and that employees would be used as commodities.
Purpose and Role
The purpose and role of human resource management is to maximize the return on investment of the organization from the human capital and to minimize its financial risk, Human resource seeks to achieve the organizations goals and objective by hiring skilled and qualified individuals and by aligning the capabilities of the current workforce, the human resource department must support and respect the workforce and take into account legal and ethical practices.
The key functions of human resource are to set strategic planning and develop policies and systems to be implemented in a whole range of areas in the organization, such as the following:
- Recruitment and Selection
- Organizational design and development
- Performance, conduct and behavior management
- Industrial and employee relations
- Management of workforce personnel data
- Compensation, rewards and benefits management
- Training and development
Trends and Influences
In order for the Human Resource function to know the business environment in which the organization operates, it needs to take into calculation three major trends.
The characteristics of a workforce or population such as gender, age or social status need to taken into consideration, the result of this trend may have an effect on the organization and its policies toward the workforce/employees, such as pension offerings, insurance packages and so on.
The diversity within a workforce or population might also affect the organization and its policies, by diversity we mean race, gender, sexual orientation and so on. As an example organizations of today might notice that the majority of the workforce is made up of “baby-boomers” or older employees, so the focus of their benefits and policies might also change.
Skills and qualifications
As today’s organizations and industries go from a manual to a more managerial focus, so does the need of organizations to hire highly skilled graduates, in a tight market, meaning that there aren’t many employees or workforce, organizations and companies might compete for employees by offering them different benefits or rewards.
Human resource development is the main structure of this function, where employees are viewed by organizations as assets rather than commodities, where developing the workforce will benefit greatly the organization, and allows its workforce for individual development, where the employee, organization and nation will benefit from this. “Human resources primary focus is in the growth and employee development…it emphasizes developing individual potential and skills”. (Elwood, Olton and Trott 1996)
This new Human resource practices and function is seen today as a more ethical approach to employee management, where the organization is trying to grow its employee’s skills and knowledge, rather than using its workforce as commodities, that can be replaced anytime.
Differences and Similarities to Personnel Management
There have been many debates about whether Personnel Management and Human Resource management is the same thing, just with a different name, but after some research into this matter people came up with some differences between the two functions.
Human resource management is focused more on long-term planning, where organizations develop and train their employees for the future benefit of the company, where Personnel management is focused on the short-term planning where employees are treated just as commodities and aren’t given any or slim training in their respective field, In the planning process human resource management focuses on a proactive and integrated strategic planning, where the department plans for the future of employees and its organization, where personnel management has a more reactive and marginal approach to planning, meaning that organizations that plan to use personnel management see this department as a marginal, not so important and doesn’t accord any strategic planning to it.
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The psychological contract of human resources is focused on commitment, where employees will become committed to their work, throw development of skills or career, thus increasing productivity within the organization, in the other hand, personnel management focuses on compliance, where employees are seen as commodities and are required to do their job and tasks as they are given by the manager without room for personal development.
The employee relation in this two workforce management systems are totally different, in human resource management the relation between the employer and the employees is seen as one of the most important in the organization, where employees are the asset of the company, there is high trust between the employer and the employees and they are treated in a unitarist and individual way; where in personnel management, employee relation is focused on a pluralist and collective system, where the organization or personnel management has low trust toward his employees, treating them in a collective perspective.
The structure and system of the two functions are different too, where human resources structure is more organic, where teamwork is the focus for the workforce, meaning that the organization takes into consideration the needs of their employees, where the main focus for the organization is the workforce and not the product or service, where in personnel management the spotlights are on the product or service and the its structure is more Bureaucratic, meaning the needs and wants of employees are not taken into consideration by the organization, with pre-defined roles for each employee, and its system is centralized, compared to the human resources individual system and its flexible roles offered to their employees.
These two functions are evaluated in different ways too, where in human resource management evaluation is done throw maximum utilization, where organization try to maximize their employee potential rather than cost minimization like in personnel management.
Our Point of View
For those who recognize a difference between personnel management and human resources, the difference can be described as philosophical. Personnel management is more administrative in nature, dealing with payroll, complying with employment law, and handling related tasks. Human resources, on the other hand, are responsible for managing a workforce as one of the primary resources that contributes to the success of an organization.
Our point of view regarding which of these two approaches to employee management is better, is that human resource management is better in the long-run, where personnel management would have an advantage in the short-term and in some industries like manufacturing where people posses no or low skills and knowledge; after reading both meaning and seeing their differences and similarities in their practices we can say that human resources has a more ethical approach to employees and that productivity and performance can be increased throw this function rather than by using personnel management.
We chose human resource management because more and more employee are looking for a workplace where their work and family can be related, where he feels needed and where the organization will help him develop his skills and knowledge, throw training and coaching.
To some people it might sound like there is no difference between the two functions, as it was said “the same wine, only different bottle”, but we don’t agree with this statement since it can be seen clearly that it’s a “new wine, in the same bottle” where the “wine” defines how the function is structured and what it focuses on and the “bottle” meaning the organizations goals and objective, as we can see from many big companies like McDonald’s or Burger King, human resource management is the way to go.
Personnel management can be simply explained as “Play by rules”. There would be some pre-determined laws, rules and regulations which are supposed to be followed by the workers. If not followed reprimands and punishments would follow. This type of management is best suited for manufacturing industries where the employee education level is low and they are in need of personnel to manage them.
On the other hand, human resource management is a type of management where the employees are considered as one of the assets of the company. They are not just considered as means of producing something but they are considered as the key role in the organization’s operation. More importance is given to the people than to the rules and regulations here. This set up works well in service based industries where creativity, customer service, knowledge, ideas are employed.
When a difference between personnel management and human resources is recognized, human resources are described as much broader in scope than personnel management. Human resources is said to incorporate and develop personnel management tasks, while seeking to create and develop teams of workers for the benefit of the organization. A primary goal of human resources is to enable employees to work to a maximum level of efficiency.
Personnel management is often considered an independent function of an organization. Human resource management, on the other hand, tends to be an integral part of overall company function. Personnel management is typically the sole responsibility of an organization’s personnel department. With human resources, all of an organization’s managers are often involved in some manner, and a chief goal may be to have managers of various departments develop the skills necessary to handle personnel-related tasks.
Cornelius, N. (2001). Human Resource Management. Cornwall: Thomson Learning.
G.N, M. (2006). Human Resource Development. New York: John Wiley and Sons.
Raffle, J. (2004). Advances in Developing Human Resources – Vol 6. Boston: HR Learning.
SHRM. (2008, August 23). Society for Human Resource Management. Retrieved March 14, 2010, from SHRM: http://www.shrm.org
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