The Transition from Personnel Management to Human Resource Management
Introduction
The main reason why business owners employ Human Resource Managers is because they want to improve the performance of the business as a whole. The Human Resource (HR) Manager has many functions in an organization; these may be summarized in the general expectation that it is their task to ensure an increment in the organization’s performance (Nel & de Wet Fourie 2013, p. 31). The HR manager usually plays their role in various ways, which may include the making of wise decisions, researching and identifying potential room for further development, analyzing risks, preventing losses, and many others. The role of the Human Resource Manager evolves frequently since there is always a constant change in the competitive market environment. This change in roles is essential if an organization needs to remain competent among the common competitors. The increase in the level of competition, both locally and globally, means that an organization must become more adaptable, resilient, agile and customer focused so as to be successful. This means that the Human Resource Manager must evolve and be a strategic partner, an employee advocate, and also a change mentor (Kim & Sung-Choon 2013, p. 94). A Human Resource Manager will experience more challenges in their line of work. This paper is going to discuss the Human Resource Functions, and how they can be expected to add incremental value to the performance of an organization as the business transits from personnel management to a rather strategic Human Resource Management. It is also going to analyze the various structures that support effective management in most sectors of a business organization. The principle research method, which will be used in this analysis, is going to feature quantitative research methods. Therefore, recorded data from previous researches will be used.
The Key Functions of Human Resource, Workforce, People and Intellectual Capital Management
Over the past few years, many new titles have been developed to describe the Human Resource Management. All these titles are based on the functions of human resource managers in the different areas of a business. In any business organisation, the total salaries may amount to up to 80% of the total organizational costs; this is especially common within the public sector. This reason is one of the many as to why the Human Resource Management domain has frequently received renewed attention (Harazin & Pádár 2013, p. 37). It has been argued that, an improved Human Resource Management system could end up facilitating the recruitment and eventually the retention of most valued staff, enhances the cost effectiveness of an organisation and finally may serve to promulgate a more performance-driven culture by adopting a strategic approach to HR (Savaneviciene & Stankeviciute 2013, p. 236). Although there has been an acknowledgement of the significance of the Human Resource Management, evidence as to whether or not any substantive changes have been recorded with regard to the role of the Human Resource function still remains partial and inconclusive (Ployhart & Moliterno 2011, p. 129).
The Role of Human Resource Management as depicted in the Public and Private Sector
In the United Kingdom, ever since the 1980s which saw to the start of Conservative reforms, public administration was closely associated the Weberian centralised, hierarchical model of public services, where rules of administration were determined by the central government and implemented by the public organisations with a relative minimal scope for strategising at the local level (Bach & Della Rocca 2000, p. 82). The values underpinning the effective management of people featured paternalism notions, standardization, job security, developmental humanism, collectivism and also the aspiration to become a model player (Matei & Lazēr 2011, p.67). After some time, this traditional approach to management came to be seen as a factor of liability which undermined the general performance of an organisation by demotivating the employees. Governments in the developed regions of the world acted as models for change for the United Kingdom’s public sector. They mirrored their moves, which were perceived as the best practice concepts of people management, which was derived from the private sector. These concepts were considered as the most ideal steps for which the public sector in the region should aspire (Bach & Della Rocca 2000, p. 82).
Some of the components borrowed from the model included the rewarding of employees depending on their performance, reducing employment costs, empowering more organisations to adopt the strategic decision making in the HR field, responding more to customer demand by having increased flexibility, an increase in individualisation of the employment relationship and lastly decentralisation (Matei & Lazēr 2011, p.69). Critical to this, was the common notion that HR functions could be anything else rather than the traditional administrative roles. It could become involved strategically in the processes of the organisation. Although this may seem to make sense, it still raises two important questions. First, precisely what does the strategic role of the HR function mean? Second, how can that be applied in the public sector to add more value to it?
The HR functional roles in the private sector have been described in a rather extensive conceptual literature. This has focused mainly on the roles mostly based on administration and others that are strategic in a specific way (Yeung & Berman 1997, p. 324). Generally, strategic roles have been seen to be more focused on the activities which will have long term implications, for example, developing integrated HR strategies, organisational strategic decision making involvement, and organisational change management. On the other hand, administrative roles are viewed as routine, reactive and tactical tasks, which are associated with HR policies operationalisation, along with employee facing roles such as industrial relations and welfare (Inyang 2011, p. 142). The prescriptive literature holds a consensus that a step toward a more strategic approach is desirable as well as essential for the future of the HR function. The empirical literature conclusion states that the HR functions role enacted in most organisations are still primarily administrative (Galbraith 1992, p. 287).
In reality, the HR function in a bigger percentage of organisations is always required to play multiple and conflicting roles. As a result, they are often torn between different norms such as the competing employee demands, employers and also professionalism. So far, no evidence has been brought forward, about any clear model of strategic HR function roles within the private sector, which can be adopted in the public sector (Inyang 2011, p. 144). Substantial contextual differences have been noted between the public and private sectors. These have significantly impacted the role that the HR function should play. When the degree of openness to the environment is increased, and the levels of public scrutiny and monitoring also increases, quite a number of the public organisations will be in a position to attract more stakeholders than the private sector counterparts.
From Personnel Management to Human Resource Management
Human Resource Management is a term which is used in two ways. The first is a rather generic term which is mainly used to describe activities involved in the body of management which have already been labelled traditionally as personnel management (Anca-Ioana 2013, p. 1522). The second way is viewed as a distinctive approach to Human Resource Management, which suggests specific philosophy towards the running of organizational activities, which are people oriented (Marler 2012, p. 9). Human Resource Management as a generic term is focused on the achievement of four objectives; staffing, performance, change management and lastly administration. These objectives within an organisation are usually delivered by the personnel/ HR specialist. The distinctive approach of Human Resource Management to the management of people, on the other hand, delivers objectives within an organisation by both the HR professional and the line managers (Taylor, Osland & Egri 2012, p. 791).
Stereotypical features have been identified, which distinguish the traditions of the personnel management from the traditions of the HR (Bos-Nehles, Van Riemsdijk & Kees Looise 2013, p. 861). Personnel management is a specialist and professional driven. The features of this include: a short term, ad hoc, time perspective; a pluralist, employment relations are managed in a collective approach’ Three Bureaucratic, organisational structures are centralised; and criteria for evaluation are cost minimal. The new HR tradition, which is being adopted by many organisations today, is mostly integrated with line management (Savaneviciene & Stankeviciute 2013, p. 236). The features of this include, One; a long term yet strategic perspective of time . Two; employment relations are managed in a unitary, individual approach. Three; the organisational structures are flexible, organic and devolved. Four; Human Resources are utilised to the maximum.
It has been perceptively observed that the delivery of HR function in the past has always featured a flexible characteristic. It has also adjusted its dominant values as macro circumstance change (Bos-Nehles, Van Riemsdijk & Kees Looise 2013, p. 863). It is argued, however that the apparent personnel management overshadowing by distinctive Human Resource Management traditions lies in the function as rhetoric about how effective employee management should be done in order for the organisation to become more competitive (Taylor, Osland & Egri 2012, p. 793). In the United Kingdom, the evolution from personnel management to Human Resource Management is described as social justice. It originated in the nineteenth century among a few enlightened employers in Britain (Savaneviciene & Stankeviciute 2013, p. 237). At the beginning, these employers sort to promote a welfare approach to people management by trying to ameliorate the employee working conditions and avoid, as much as possible, the adversarial industrial relations (Bos-Nehles, Van Riemsdijk & Kees Looise 2013, p. 863). Later on, in the first half of the twentieth century, humane bureaucracy, which was influenced by managerial observers and practitioners, became the fore front of managerial practices. Scientific management principles were used to adopt a study on the incentive based approach to people management. Later on, the human relations study was also conducted. Many other researches were carried out to foster good human relations, high morale and efficiency at work (Taylor, Osland & Egri 2012, p. 794). The current HR theme which is focused on performance management, planning, monitoring and control among many other features emerged and has grown drastically over the past years.
The Systems and Structures that Support Effective Human Resource Management in a Variety of Cultural Contexts
Lately, there is a growing consensus that the availability of an effective human capital is critical to the success of an organisation. Another statement is that the HR functions must be focused on a strategic approach. So how can the Human Resource function go beyond this want to become a strategic partner and make it a reality? How should it be organised and managed so as to enable corporations deal with and become successful in this new era? Generally, staff functions in organisations are being criticised mainly as a result of the frequent perception that it controls rather than add value to the organisation. It is also viewed as not capable for responding to the demands for change which is essential and that unit of operation need to make. They are, therefore, being requested to seek the expert support to the strategic initiatives of the company, as well as to make use of the presence of technology and other approaches so as to deliver efficient and responsive services. Historically, Human Resources executives have not been strategic partners, this is in contrast to the compelling arguments which support the assumption that Human Resource Management is the major issue in most organisations today (Mutsuddi 2012, p. 55). The HR function has always been an administrative function which is led by individuals who have a role focused on cost control and administrative activities (Mutsuddi 2012, p. 56).
A study on large corporations and another study on cross-section of firms concluded the main focus of most of the Human Resources functions is on the control of costs and on hosts of administrative issues (Ulrich, Younger & Brockbank 2008, p. 829). Factors that was noted to be absent from the list of HR focuses almost entirely were the key organisational challenges. Examples of such are; improving productivity, increasing the quality, facilitating mergers and acquisitions, and also improving the organisation’s ability to bring new products to market. It is very likely that these challenges are critical to any business; however, the reason as to why they were not considered the main important factors by human resource executives still remains a puzzle. Maybe, these executives did not consider the human resource function as a factor which could have an impact on these areas. This view may be supported by various studies, which have found that HR is most successful when it comes to administration (Savaneviciene & Stankeviciute 2013, p. 239).
With the changing situation, HR function is gradually beginning to redefine its role (Kumari, Usmani & Husain 2013, p. 137). There is a growing room of evidence that HR can indeed be a value added function in most organizations. A study carried out in the past showed a clear relationship between firm performance and HR practices. In this study, 740 corporations were considered, and among all of them, the firms with a very high level of HR practices that reinforce performance were recorded to have the highest market value per employee (Al-bahussin & El-garaihy 2013, p. 3). In the same study, it is further argued that HR practices are very essential when it comes to determining market value of a corporation. Therefore, if the HR practices are improved, the results will be a significant increase in a corporation’s market value. In conclusion, the best firms are in a position to achieve excellence in both operational and strategic options, in their HR systems.
Ulrich has always championed with his argument that the HR function must be redefined such that it operates as a business partner (Ulrich, Younger & Brockbank 2008, p. 830). Brockbank, on the other hand, has argued that HR function needs to be switched such that it features a strategically proactive approach (Ulrich, Younger & Brockbank 2008, p. 831). Another recent study carried out on the critical issues in the changing business has also brought about the realisation that the challenges of growth of a business, globalisation, and the rapid change have intensified (Marler 2012, p. 7). As a result of this, broad consensus is now obvious about the need for HR to evolve from its administrative expertise to a more strategic approach, change management and also employee advocacy (Matei & Lazēr 2011, p. 67). For many years, experts have been talking about what role should be, however, no one has ever gone beyond executing it. These researchers state that it is about time that all the talk should end, and the action should begin. Another study also found broad agreement on the level of competences needed for Human Resource Managers (Matei & Lazēr 2011, p. 68), a factor which has now confirmed the importance of strategic business partner roles. Yet, in this study, both line and human resource managers identify critical HR capability gaps in business oriented areas such as strategic assessment, organisational design, learning and development, strategic staffing and envisioning the future of the organisation.
The description of new HR roles and associated competencies is only a constitution of the first step in the transition. This is especially true, judging from the amount of attention on the importance of HR becoming a business partner and also the apparent slowness of actual progression in the past. The second step constitutes the organisation of the HR function so as to put it in a position to carry out its new role.
Therefore, it should focus more on the transfer of many Human Resource functions to the line, vendors on the outside, and also high efficiency centres for processing. It should also be exclusively focused on business consulting as well as management of an organisation’s core competencies. The changing HR roles will not only require a different mix of activities from time to time, but also require the HR function to use the Information technology more often than before. By automating the transactional aspects of the HR, more resources are freed up and hence it gives an opportunity for indulging in the new business partner activities just as it changes the relationship between the HR and employees (Kumari, Usmani & Husain 2013, p. 142). The latter is especially the case since this option empowers the employees to do some of the things which the HR used to do for them. This move toward e-HR also gives room for a rather personalised interface with each and every employee. The presence of information technology will also enable the HR to make use of the databases as well as the powerful analytical tools available online to track trends and data which is useful when it comes to determining strategic HR policies and practices (Paul & Berry 2013, p. 4). It also helps the organisation to maintain its needed talent pool.
The Systems and Tools which are used in the Various Interpretations of Management of the Labour Force
Sophisticated tools and techniques have been developed by applied psychologists intended to improve organisation effectiveness. There has been substantial evidence claiming that the value of these has been accrued (Ulrich, Younger & Brockbank 2008, p. 832). Nevertheless, employers from the United States have been slow to adopt the “best” practice, which features those commonly discussed in businesses as being the highly effective (Savaneviciene & Stankeviciute 2013, p. 241). Commentators have suggested that the contextual nature of the scientific evidence is part of the problem (Al-bahussin & El-garaihy 2013, p. 5). At the same period, a growing body of empirical evidence is starting to shed light on the relationship between contextual conditions and HRM. To understand HRM in context, it is a must that individuals take into consideration how these three HRM components are affected by the internal and external environments of organizations. Internal contextual factors discussed are technology, structure, size, life cycle stage of an organisation, and business strategy. Organizational culture is treated as inextricably bound to Human Resource Management and, therefore, will not be meaningful if separated from it. The external contextual factors feature environments of legal, social, and political; unionization; conditions of the labour market; industry characteristics; and national cultures. Perspectives basing on theories in sociology, economics, management, and psychology focus on various factors of the domain of Human Resource Management in Context (Marler 2012, p. 9).
General Systems Theory
In general systems theory, the analysis unit is understood as a complex form of the interdependent parts (Marler 2012, p. 9). An open system is mainly dependent on the environment for inputs, which are transformed during throughput in order to produce outputs that are exchanged in the outer areas. Open systems models rarely address organizations or larger units within organizations. The Social Psychology of Organizations, a book by Katz & Kahn’s (1978) are an exception since it treats Human Resource Management as a subsystem within a larger organizational system. The open systems image of Human Resource Management has been developed a step further by other researchers who used it to describe a competence management model of organizations (Anca-Ioana 2013, p. 1524). Skills, as well as individual abilities, are treated as inputs from the outer environment; behaviours of employees are treated as throughput, and satisfaction and performance of employees are treated as outputs. In this particular model, the Human Resource Management subsystem functions to acquire, utilize, retain, and displace competencies. In contrast to this, another description of Human Resource Management as a control system is based on open systems theory (Anca-Ioana 2013, p. 1525). A more narrow discussion presented an approach featuring multilevel organizational systems for understanding the implementation of training and transfer. Many of the other theories used to understand HRM in Context rather assume that organizations normally function like open systems (Marler 2012, p. 10).
Role Behaviour Perspective
Another theory is focused on roles as the components of interdependence that make up an organization system. Instead of relying on specific behaviours and job performances as the fundamental components in an organisation, this perspective focuses more from individuals to social systems, which are characterized by multiple roles, multiple role senders, and multiple role evaluators (Anca-Ioana 2013, p. 1526). The role behaviours are defined as “the recurring actions of an individual, appropriately related to the repetitive activities of others so as to yield a predictable and expected outcome.” Human Resource Management is the organization’s sole means for conveying role information through the organization, support behaviours which are desirable, and evaluate role performances; it is, therefore, highly effective, when it communicates internally consistent expectations and also evaluates performances through methods that are congruent with the system’s requirement for behaviours (Mutsuddi 2012, p. 56). On the other hand, system requirements are presumed to be solely dependent on factors of context such as business strategies and the industry’s nature. Role theory clearly recognizes that the behavioural expectations of all role partners are in a position to influence the organizational behaviour of members. By implication, effective Human Resource Management influences employees to meet the expectations of role partners within a business organization (for example, supervisors, peers, subordinates), at organizational boundaries (for example, customers and clients), and beyond. Thus, the role partner’s expectations must be incorporated into a clear understanding of Human Resource Management in the context.
Institutional Theory
A role theory perspective assumes individuals respond to normative pressures as they work at gaining approval for their performance in socially defined functions. Equally, institutional theory looks at organizations as social entities that work toward gaining approval for their performances in environments which have been socially constructed. Organizations facilitate survival by conforming to gain legitimacy and acceptance (Kumari, Usmani & Husain 2013, p. 138). Since multiple constituencies control the required resources, legitimacy and acceptance are sought from quite a number of stakeholders. Institutionalization research focuses on pressures emerging from the internal and external environments (Marler 2012, p. 10). Internally, institutionalization comes out of structures and processes which have been formalised, as well as the more informal or emergent group and organization processes. External environment forces include those related to the state and its activities (for example, laws and regulations), the professions (for example, licensure and certification), and other organizations especially those within the similar industrial sector.
Without paying much attention to the source of institutional pressures, two central assumptions of this perspective are (a) institutionalized activities are resistant to change and (b) organizations in institutionalized environments are pressured to become similar (Yeung & Berman 1997, p. 331). Thus, in this theoretical perspective, context can be used as the major explanation for both change resistance and the adoption of new Human Resources Management approaches. The first assertion indicates that activities of the Human Resource Management have deep historical roots in the business, so they cannot be clearly understood unless the organisations past are analyzed. From the second assertion, it is stated that Human Resource Management activities may be adopted by an organization only because some other organizations are doing the same. As a result, managerial fads and fashions ebb and flow in part because a certain legitimate organization which is also their competitor has become a fashion leader, and therefore, is imitated by many organizations that view imitation as a form of the low-risk way to gain greater acceptance (Galbraith 1992, p. 290). It is further shown, for example that imitation based institutionalization has partially explained the rate at which reforms in the civil service selection procedures spread throughout the country at the turn of the century.
The Evolution of HR Management and the Related Challenges Facing Organisations
A proper understanding and advancement of HRM in Context requires an integrative perspective that recognizes and incorporates a number of relationships. Within the discipline of psychology, however, a number of links involving the macro-level internal and external environments have been greatly ignored. Fortunately, there has been a sudden realization which is now emerging that this state of affairs should cease immediately. Much research is required for individuals to understand how internal and external environments affect (a) the human resource philosophies, policies, and practices; (b) the employee behaviours as well as attitudes that should be valued, and which are likely to be shown; (c) the criteria that define effectiveness of employees and the achieved levels of employee effectiveness; (d) the criteria that defines effectiveness of an organisation and achieved levels of organizational effectiveness. Additionally, researchers in the future need to recognize that contexts may moderate the observed relationships between HRM and various outcomes.
This review of the literature has revealed just how seldom research addresses the horizontal links among Human Resource Management activities, although such linkages are used by most of the theories reviewed and, it would be argued, by most psychological theories about the attitudes and behaviours of employees. Employees will never respond to specific isolated human resource policies and practices. They view and interpret the entire array of available information, and from this they discern cultural values and behavioural norms. Unfortunately, what is known is surprisingly minimal about how various combinations of human resource policies and practices may be interpreted by employees, nor is it known how complex HRM systems influence the attitudes and behaviours of current and potential organizational members. The understanding of vertical linkages between Human Resource Management and the various contexts cannot proceed without explaining the horizontal interdependencies that exist among human resource policies and practices.
Conclusion
In overall, this paper has shown the relative strength of the relationships between HR functions and how it is effective in an organisation. Incremental value is expected if the HR function is well organised and manipulated in the right way. This is because, so far the transition from personnel management to strategic human resource management has proved effective judging from the findings of this research. Although there are many challenges along the way, such as employees who are not cooperating, or the poor understanding of technology, the HR function is still the best alternative for any business which needs to grow and become competent for a very long time.
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