Notes on Historical Change from Personnel Management to Human Resource Management

After reading this article you will learn about the historical change from personnel management to human resource management.

Human resource management is a new approach to personnel management which considers people as the important resource. In order to promote their commitment and identification with the organisation, it is important for the organisation to communicate well with the employees and have a well-designed acquisition, management and motivation techniques.

Personnel management helps in management of people in the organisation through establishing, maintaining and developing systems regarding framework of employment. These systems operate throughout the period for which employees remain with the organisation starting from his entry till his termination.

It includes the following:

Entry:

Recruitment and selection.

Management for employment relationship:

Rewards, appraisal, development, industrial relations, grievances and discipline.

Termination:

Retirement, resignation, dismissal.

The transition from personnel management to human resource management is explained in the following phases:

Late 1800s:

The concept of welfare personnel developed in late 1800s which focused on concerns for human beings by providing schemes for unemployment, sick pay and subsidized housing for employees. This was a change from the earlier period where workers were considered as mere tools for production and, thus, treated harshly.

Between the I and II World Wars:

With increase in size of the organisations, this trend continued till the II World War with focus on welfare personnel activities like canteens, company outings for workers and personnel administration for support of the management (recruitment, discipline, time keeping payment systems, training and maintaining personnel records).

After the II World War and Up to 1950s:

There was further increase in size of the organisations during this period and personnel management activities further included services like salary administration, training and advice on industrial relations. However, the focus remained at the tactical level rather than the strategic level. Collective bargaining also moved from the industry level to the company level which developed industrial relations specialists within personnel management.

The 1960s and 1970s:

There was increase in personnel work due to employment legislation. Up to the early 1970s, the state of the economy was characterised by full employment — there was high focus on recruitment, selection, training and compensation. There was labour shortage and, thus, focus was on retaining skilled labour and increasing the skills of existing workforce.

Training Boards were established that promoted training programmes and gave grants to companies that conducted training programmes of acceptable standards. Training specialists developed within the personnel function. Importance was also given to activities such as performance appraisal, management development and manpower planning.

The bargaining power of the trade unions increased in matters related to productivity and industrial relations issues. This increased the work load of personnel specialists in their interaction with both the management and the workers. There was need to develop negotiation skills and a movement to identify the personnel function with management.

The 1980s: Movement from Personnel Management to Human Resource Management:

Personnel management adapted to the market economy where senior personnel executives worked on issues like future of the company, analysis of existing business objectives, revising the objectives with better ways of achieving them.

There was emphasis on management of change, development of corporate culture, single union to represent the company’s work force (Japanese industrial relations practices), quality circles and total quality management (Japanese management practices). Collective bargaining was replaced by centralised bargaining where negotiations at the local level were made without the involvement of personnel managers.

Recession crept in and power of trade unions got reduced. Workers could be replaced easily and, thus, the threat of strike was also reduced. The volume of negotiations based on collective bargaining between unions and personnel specialists was reduced.

There were simpler methods of collective bargaining, conflict management and wage settlements. Changes were made in the work practices as labour was available in abundance. Focus was on increasing productivity with less number of people.

This was the beginning of change in the nature of personnel management. Personnel practitioners started to focus on human resource management to achieve organisational excellence through a committed work force.

The 1990s: Post-entrepreneurial phase for personnel management:

There was a complete change in the focus from individualism to collectivism. There was concern for teamwork, core workers with high commitment to work, flexible work hours, wages determined by market forces rather than bargain between management and trade unions.

Workers were expected to work beyond mere descriptions of their jobs. The focus changed from tactical to strategic approach to human resource management which aims to develop human potential of the organisation for organisational success.