Department of Management Principals of Human Resource Management. Course Material. Semester One

Transcription

1 Department of Management Principals of Human Resource Management Course Material Semester One 2008 Paper Co-ordinator: Paul Toulson

2 CONTENTS Week One: HRM/PM Function of the Department...01 The Development of Personnel Management Human Resource Management s Point of Difference...10 The Role and Function of Human Resource Management...23 Human Resource Management in New Zealand Week Two: Human Resource Planning Human Resource Management and the Labour Market...52 Week Three: Human Resource Information (HRIS)...56 Week Four: Job Analysis Week Seven: Recruitment Week Seven: Selection Week Eight: Interviewing Skills Week Nine: Ethical Behaviour and Managing Diversity in Organisations Week Ten and Eleven: Employee Reward Systems Week Twelve: Managing Discipline Week Thirteen: Individual Performance Management Systems

3 STUDY GUIDE (The study guide for this paper was written by Barrie Humphreys) WEEK ONE HRM/PM FUNCTION OF THE DEPARTMENT Introduction There is a wide spread tendency to view Personnel and Human Resource Management as interchangeable terms. In fact Personnel and Human Resource Management can be defined quite differently. A debate is taking place in the literature (and has been for nearly 20 years), as to whether one has developed from the other, or whether the two are quite different. Any study of the area(s) of Personnel and Human Resource Management needs to be based on an understanding of these points of difference and overlap between the two areas. From the outset we need to look at the definitions put forward for each area, and then address the debate, and the significance such a debate has on management studies. Definitions The key point of difference is one of focus: Personnel starts with the people in the organisation and looks at their needs; Human Resource Management starts with the needs of the organisation and then turns to people to fulfil those needs. Torrington D. and Hall L (1995) 1 have provided the following useful definitions of the two areas. Personnel Management "Personnel management is workforce centred, directed mainly at the organisation's employees, finding and training them, arranging for them to be paid, explaining management's expectations, justifying management's actions, satisfying employee's work related needs, dealing with their problems and seeking to modify management's actions that could produce unwelcome employee response. The people that work in the organisation are the starting point, and they are a resource that is relatively inflexible in comparison with other resources such as cash or materials". Although Personnel is a management function it is never totally identified with management's interest, there is always some degree of being between the management and the employees mediating between the two parties (Torrington and Hall 1995, Page 11). Torrington and Hall see personnel as: A management function not full integrated with the interests of management. A buffer between management and employees. A department focusing on the individual and his/her needs. 1 Torrington, D., & Hall, L. (1995) Personal management: human management in action. Prentice, Hall London. 1

4 As a result the approach used by personnel can be said to be a bottom up approach. "Human Resource Management is resource centred directed mainly at management's needs for human resources (which note are not necessarily employees) to be provided and deployed. Demand rather than supply is the focus of the activity. There is a greater emphasis on planning, monitoring and control rather than mediation. Problem solving is undertaken with other members of management on human resource issues rather than directly with employees or their representatives. It is totally identified with management's interest, being a general management activity and is relatively distant from the workforce, as employee interest can only be enhanced through effective overall management" (Torrington and Hall (1995) P11). Torrington and Hall see human resource management as: Totally identified with management and distant from employees. Focusing on strategic organisational goals. Regarding human resources in the same light as every other type of resource. Regarding human resources as either the organisation's biggest cost or its biggest asset. Consequently HRM's approach can be described as top down. The Debate So it is possible to define personnel and human resource management differently - but does that mean that they are different? In the ensuing debate, two leading arguments are that: 1. Human resource management is simply the next step in the development of personnel management, probably not the last but certainly the latest. 2. Human resource management is so fundamentally different to personnel that it cannot possibly be a step in development; Human resource management is different to Personnel. Placing yourself in the debate There are perfectly logical arguments to support both of these views. You will need to familiarise yourself with both arguments and decide for yourself, which you feel most comfortable with. You will find as you progress through your studies of management that there are rarely (if ever) right answers, valid and reasonable alternatives are always available. This begs the question that, if neither answer is the "right" one, why should you have to choose one of them? The answer is your view on this debate will form the starting point for the way you approach managing people. Once you know which view you take, you will be able to understand the actions you are willing to take and the way you perceive the relationship between managers and subordinates at work. To use a hard decision as an example: Your organisation is facing inevitable redundancies. The criteria you would be prepared to use to choose the people to be made redundant would be different depending on whether you see human resource management as the way to go or personnel as the route to take. Human resource 2

5 management has, as its guide the benefit of the whole organisation, so individuals and their problems are less important in the decision making, personnel has as its focus individuals, so each individual's circumstances would be an important part of the information used to reach a decision. (In real life it is rarely as clear-cut as this but as an example of approach it is valid). You will not be able to decide which you feel comfortable with until you have heard both sides of the arguments. In this section we will look at both of the arguments. We will also look at Strategic Human Resource management and try to identify what, if any differences there are between human resource management and strategic human resource management. Finally we will look at the best approach for organizations operating in New Zealand. While you are reading these pages, think about how organisations you are familiar with operate. Remember that personnel management/human resource management is a practical subject as well as an academic one. There are people out in the real world doing what you are studying about. Relate your own experience - as well as the experience of your parents, friends, partners everyone you know - to the academic concepts and models we talk about in this book. Talk to other people who behave and act in line with one or other of the concepts we discuss and ask them why they behave the way they do. This will establish an informed, practical basis on which you can build your study and practice. 3

6 The Development of Personnel Management Objectives: By the end of this section you will be able to: Explain the historical development of Personnel Management. Outline the academic school of thought that influenced this development. Identify the social pressures that pushed this development. The emergence of personnel management and human resource management is a product of the complicated interaction of historical events, academic thought, and broader social change. Each of these threads needs to be looked at separately in order to then recognise how they interweave to produce evolving systems of people management. Chronology of development It is possible to take a chronological overview of the development of personnel management into human resource management. The broad divisions are: recognition of people as a resource personnel acknowledged as separate area of management advent of welfare officers the specialization of personnel management personnel as bargaining agent in contact with unions integration of organisation and its operations with society and the environment and tailoring employees and functions as a key profit making practice HRM is simply the next step in the development of Personnel Management, probably not the last, but certainly the latest. (Torrington and Hall, 1995) It is argued that the development of personnel can be traced right back to the Industrial Revolution. At that time we do not see a specialist function called personnel so much as the seeds of the type of behaviour by some enlightened managers that would eventually blossom into the function we now know as personnel management. Employers began building factories and gathering workers together in one place to work and produce goods, which the organisation's then sold at a profit. Conditions in these factories for the workers were generally very poor. Most owners saw employees as simply units of production to be worked as hard and as long and as cheaply as possible. Most owners of factories saw this as a perfectly reasonable way to behave. However not all owners agreed with this view of employees. Factory owners such as Robert Owen came to believe that, in order to ensure higher levels of production from their workers, it was essential to treat the 4

7 employees as human beings rather than as inanimate objects to be used then discarded. There were perfectly sound commercial reasons for the view that Owen and others took. If you treat people badly they will neither be capable nor inclined to perform efficiently and effectively, however if you treat them well the opposite is true. Owen operated his factories so that people were treated as people - and profits increased dramatically Most of the factory owners however were very slow to take on board the methods used by the early social reformers such as Owen, and it was not until the late 19 th century/early 20 th century that people were employed by owners with a specific responsibility for ensuring that workers were treated reasonably at work (bearing in mind that this was a 19 th century definition of reasonable). The first Welfare officers, (as they were known) were appointed by Rowntrees of York in Torrington and Hall (1998) 2 have produced a typology of personnel development. The social reformer The Acolyte of Benevolence The Humane Bureaucrat The Consensus Negotiator Organisation Man The Human Resource Manager More and more organisations appointed welfare officers and in 1913 the Institute of Welfare Officers was formed at York. This was the first institution dedicated to the provision of reasonable working conditions while still ensuring that the organisations were capable of operating effectively and efficiently in the market place. The institute of welfare officers marked the beginnings of the development of Personnel Management, as we know it today The next stage came as a result of the need for increasing specialisation due to the increasing size of organisations. As organisations grew, they needed to be able to produce more and more, and the only way they could increase production was to organise it effectively. The more detailed the analysis of what was required, the more rigorous were the requirements in terms of skilled people, which led to more and more time needing to be spent on making decisions about which people to use. The department used to making "people decisions" was the Welfare Department. As the requirements became more and more stringent the Welfare Department began to move away from simply ensuring that people were treated reasonably at work and more towards designing and operating systems and techniques in training and recruitment, payment and 2 Torrington, D., & Hall, L. (1998). Human Resource Management 4 th ed. Prentice Hall, Europe. 5

8 control of workers, which allowed managers to be sure that the best person was employed for each job, while still ensuring that individuals were not disadvantaged at work. The next stage in Personnel's development came about followed the Second World War. This was a period of full employment and labour moved from being freely and cheaply available to being a scarce and expensive commodity. Trade unions increased their membership and moved into a position where they rather than managers were controlling the employees. Managers quickly recognised that they would have to bargain for the services of their employees. Personnel managers moved to become the expert bargainers for the employers, and spent more and more of their time negotiating on behalf of management with trade unions about working conditions and levels of payment. Personnel was moving farther away from looking after employees, (a responsibility which was gratefully accepted by trade unions) and more towards looking after the interest of management and the organisation. Personnel took on the role of managing conflict on behalf of management and became responsible for, if not ensuring consensus at least managing and channelling conflict so that the organisation could obtain the best workers at the cheapest price and therefore remain competitive During the 1960s Personnel moved into trying to integrate the organisation and its operations with society and the environment. Personnel was not the social conscience of the organisation's but it did become the expert on how the organisation should behave towards its employees in a way that would be acceptable to a society whose values were moving in the direction of expecting organisation to be socially responsible. Personnel became responsible for ensuring that no one was damaged either inside or outside the organisations by the methods of production used by the organisation, or the processes used by the organisation to produce its goods through the effort of its employees. Personnel departments were the interface between the organisation and society The 70s and 80s saw levels of competition in the marketplace increase dramatically as international trade increased and organisations could no longer regard their home market as free from overseas competitors. Labour was recognised as the area where savings could be made quickly and effectively. Personnel moved into the position of analysing the supply and demand of labour and designing systems and plans for ensuring that the organisation achieved the best possible performance from its skilled workers while ensuring that there was as little disruption as possible either from dissatisfied workers, inefficient workers, or "bloody minded" workers. They did this by becoming Human Resource Planners. They were responsible for planning cost effective ways for organisations to ensure that they had the right workers in the right place with the right skills at the right time. In this way Personnel could demonstrate that its activities contributed to the profitability and efficient operation of the organisation. Personnel were now managing Human Resources on behalf of the organisation. 6

9 Personnel could demonstrate that its activities contributed to the profitability and efficient operation of the organisation. Personnel were now managing Human Resources on behalf of the organisation. Armstrong (1996) 3 has also suggested a similar staged development in personnel to that of Torrington and Hall: Welfare ( ) Personnel administration ( ) Personnel management the mature phase ( ) Human resource management phase 1 ( ) Human resource management phase 2 (1990-update) Michael Armstrong A Handbook of Personnel Management Practice 6 th Ed. Kogan Page London The development from welfare work in the late 19 th century through personnel management in the mid 20 th century has now arrived at human resource management at the end of the 20 th century. The route of that development is clear and easy to follow: personnel management has developed into human resource management. They are not different phenomena - one is the natural product of the other. The academic impact While it is possible to view the development of personnel management and human resource management chronologically, it is also important to recognise the impact some areas of academic thought have had on that development. While things happen in the real world of work, there are also changes in thinking in academic circles. Schools of thought produce theories and models that try to explain changes in the real world. Michael Armstrong (1999) 4 suggests that several different academic schools of thought have heavily influenced the development of personnel management and human resource management. Scientific Management The first school of thought is Scientific Management. Frederick Winslow Taylor (1911) 5 an engineer by trade was proving that designing systems scientifically meant that massive increases in production were possible. Taylor's idea was to carefully analyse what needed to be done and then select or train, people with the particular skills that were needed to do each particular job. The belief was that once the analysis was completed and we knew exactly how we wanted each task to be carried out, individuals could be selected, and then trained to operate each task very effectively. 3 Armstrong, M. (1996). A Handbook of Personnel Management Practice 6 th Ed, Kogan Page, London. 4 Armstrong, M. (1999). Handbook of human resource management Practice 7 th Edition. Kogan Page, London. 5 Taylor, F.W. (1911). Scientific management. Harper and Row, New York. 7

10 If a job were broken down into its constituent tasks it would be possible to identify the best way to perform each task, so that when they were all put back together into the whole job, the whole job would be performed the best possible way. For organisations desperately looking for better ways to operate to increase their production levels and thereby their profit levels, Taylor's ideas were extremely interesting and were pounced upon as the way to design work. Human Relations Theory The most well known piece of research in this area is that carried out at the Hawthorne Plant of the Western Electricity Company in the USA. A team of researchers led by Elton Mayo, carried out these experiments. The information about these experiments is covered in several generic textbooks but the origional reference is Mayo, E. (1933) 6. The conclusions of these experiments were that the social side of the workplace was very important in terms of productivity. If people were allowed to socialize while they worked it was likely that production levels would increase. Man is a social animal: if he is not allowed to socialize at work he will not perform to the best of his ability. The Human Relations School showed that an organization is a social system as well as an economic one, and managers needed to think not only in economic terms but also in social terms. They should design jobs and work systems that met the social needs of the workers while still meeting the economic needs of the organization. Behavioural Science The Behavioural Science School of thought and the work of academics such as Maslow, A (1954) 7, Hertzberg (1968) 8 and McGregor, D (1960) 9 showed that people at work operated and were prepared to operate more effectively if they felt a part of the process and involved in it, rather than simply being told what to do, when to do it and how to do it. Organisations began to realize that they could enable employees to participate in the design of their own jobs, and also that employees very often understood more about how to improve the operation of their own jobs than their managers did. Excellence The Excellence School Peters T.J. and Waterman R.H. (1982) 10 showed how organisations that were recognised as excellent organisations (in terms. of performance, profitability and stability) operated. Many of the things that these organisations did naturally concerned the way they interacted and related to their employees. Employees were for the first time shown to have the potential to provide competitive advantage to their organisations in the marketplace. 6 Mayo, E. (1933). Human problems of an industrial civilisation. Macmillan, London. 7 Maslow, A. (1954). Motivation and personality. Harper and Row, New York. 8 Hertzberg, F. (1968). One more time: how do you motivate employees?. Harvard Business Review, McGregor, D. (1960). The human side of enterprise. McGraw Hill, New York. 10 Peters, T. J, & Waterman R. H. (1982). In search of excellence, Harper and Row, New York. 8

11 Human Resource Management The Human Resource Management approach Beer, M., Spector, B., Lawrence, P., Quinn Mills, D., and Walton, R. (1984) 11, Fombrun, C.J., Tichy, N.M., & Devanna, M.A., Strategic Human Resource Management. Wiley, New York 12 gave academic credibility to the view that the management of people was a necessary part of the strategic decision making in an organization. This school of thought suggests that people are often the organisation's most costly resource. If this is true it is foolish for any organization to plan strategically without taking account of the biggest cost item: it's employees. The human resource management approach also suggests that employees have the potential to be the organisation's biggest asset as well as their biggest cost. Employees are the only resource that an organization has that the competition cannot copy. Organisation's can use their employees' skills knowledge and expertise to achieve more and better outcomes in the marketplace. All of these academic schools of thought have contributed to the way in which Personnel has developed. Social Factors Social factors such as the two world wars and the ways that society has changed its values have also had a major influence on the development of personnel management. Employers' ways of treating employees, which are considered acceptable by society, have changed dramatically over the years, and organisations have had to change their behaviour and the way they interact with their employees, in order to be seen as good employers by society. If organisations are not seen as good employers, the best people (the ones with the best skills, knowledge and expertise) won't choose to work for them. This will affect the organization's ability not only to compete in the market place, but also to carry on operating. Summary All of these things - historical events and industrial development, academic thought, and more general social change - have pushed and directed personnel along a particular path that has arrived at this moment in time at human resource management. The transformation from personnel management to Human resource management is not something that has been planned. It is in fact the natural outcome of several different types of pressure having been applied over a period of time. Human resource management is not something that anyone person or organization or group of individuals or organizations has decided had to be put in place to replace personnel management. No one can say for sure how personnel/human resource management will develop in the future but we would be foolish to suggest that further development will not take place. 11 Beer, M., Spector, B., Lawrence, P., Quinn Mills, D., & Walton, R. (1984). Managing human assets. The Free Press, New York. 12 Fombrun, C.J., Tichy, N.M, & Devanna, M.A., (1984). Strategic human resource management. Wiley, New York. 9

12 Human Resource Management s Points of Difference Objectives: By the end of this section you will be able to: Identify and discuss the differences between human resource management and personnel management. Decide and justify whether the differences are significant enough to say that human resource management is a different concept to personnel management. Outline the philosophy of human resource management. Define strategic human resource management and explain whether there is a significant difference between strategic human resource management and human resource management. Whereas the previous section explored the evolutionary relationship between personnel management and human resource management, this section looks the argument is that human resource management is so fundamentally different to personnel management that it is unreasonable to argue that they are different versions of the same thing. The interrelationships and differences between the two approaches are explored, as is the more recent concept of strategic human resource management. Once the parameters of human resource management are established, the chapter looks in more depth at the actual philosophy underpinning what human resource management does, and how and why. Personnel Management Tactical Short Term Focus Piecemeal Approach Maintain status Quo/Resist Change Pluralist Conflict Institutionalised Human Resource Management Strategic Long Term Focus Integrated Approach Encourage change and Flexibility Unitary Teamwork and Problem Solving Points of connection and difference Foot, M., & Hook, C., (1996). 13 have produced a list of the different approaches and emphasis of the two and this list is reproduced here. Foot and Hook go onto argue that these differences imply that personnel management has never been totally identified with the interests of management. Focus This argument is taken further by Millar (1989) 14 who says that "Personnel is different to other management functions in that it has to serve not only the employer, 13 Foot, M., & Hook, C. (1996). Introducing human resource management. Longman, London. 14 Millar, P. (1989). Strategic HRM: What it is and what it isn t. Personnel Management. 10

13 but also act in the interest of employees as individual human beings and by extension the interests of society. Human resource management on the other hand has its beginnings in strategic decision making, a purely management activity, and one in which the interests of individual employees are of little if any concern, except in as much as Fowler (1987) 15 says that effective strategic decision taking will not only serve the interest of the organisation but also that of its employees. Behaviour Those who support this view argue that human resource managers behave differently to personnel managers - their goals, procedures and philosophies are different. They do different things and they see people in a totally different way, and interact with them in a different way and on a different level. Beardwell & Holden (1997) 16 contend that the "evolutionary" explanation is highly improbable because, unlike personnel management, human resource management involves important elements of strategic management and business policy, coupled with elements of operations management. The need to manage people as a resource Their basic argument is that in the 1980s, US and UK organisations faced a deep recession, heavy competition in the marketplace and the introduction of new technology, all of which restricted the ability of organisations to make profit, and forced them to think about reducing costs. In the UK particularly there was also a drive by national government to reshape the conventional industrial relations model. Legislation, which promoted entrepreneurship amongst managers coupled with anti trade union legislation, enabled organisations to introduce new labour practices and restructure their collective bargaining arrangements. There began a move away from collective employee organisations dealing with management on behalf of individual employees towards individuals dealing with management on their own behalf began, and was encouraged by the rhetoric inside and outside of organisations Hendry & Pettigrew (1990) 17. This enabled managers to be proactive in managing people rather than reactive; human resource management could lead rather than follow developments in people management. Alongside these changes there was a growing recognition that poor management performance was at least partly responsible for the problems faced by organisations. Employers were accused of poor training and management development, which moved the debate straight into the boardroom, because of course, the provision of training and its type is a strategic decision Handy (1987) Fowler, A. (1987). When chief executives discover HRM. Personnel Management. 16 Beardwell, I. & Holden, L. (1997). Human resource management: A contemporary perspective 2 nd edit. Pitman Publishing, London. 17 Hendry, C., & Pettigrew, A. (1990). Human resource management: An agenda for the 1990 s international journal of human resource management. 1 (1), Handy, C. (1987). The making of managers A report on management education, training and development in the United States, West Germany, France, Japan and the UK. NEDO, London. 11

14 The need to work together The literature of Peters & Waterman (1982) 19 added the concepts of employee commitment and empowerment and with them the concept that change is a continuous process. Everyone in the organisation - management and employees - wants the organisation to succeed (maybe for selfish reasons), but no one can achieve that aim alone. They must combine their skills all of which are different but essential to the survival of the organisation, and pull in the same direction. This Unitarist view allows management to make hard decisions that may damage individuals but benefit the whole, with the agreement of the individuals. Even those who may be damaged agree, because even they accept that it is eventually in their own best interest that the organisation does well: it is the only way that society as a whole, and therefore all its individual members will do well. HRM s strategic role These decisions are strategic decisions. In order for them to be made there has to be a system which, recognises that there are a variety of stakeholders who have an interest in the well being of the organisation, and which designs policies and strategies which would allow all of these stakeholders to work together effectively. Human resource management came into being to do just that. Beer et al(1984) produced a map of the Human resource management territory, which shows the area of responsibility of human resource management. Stakeholder Interests Shareholders Management Employee groups Government Community Unions Situational Factors Work force characteristics Business strategy and conditions Management philosophy Labour Market Unions Task technology Laws and societal values HRM Policy Choices Employee influence Human Resource flow Reward systems Work systems HR Outcomes Commitment Competence Congruence Cost effectiveness The Harvard framework for human resource management. Reprinted with permission of The Free Press, a Division of Simon and Schuster, from Managing Human Assets by Michael Beer, Bert Spector, Paul R. Lawrence, D. Quinn Mills, Richard E. Walton. Copyright 1984 by The Free Press. Long-term Consequences Individual wellbeing Organisational effectiveness Societal well-being 19 Peters, T., & Waterman, R. (1982). In search of excellence. Harper and Row, New York. 12

15 David Guest 9 has refined the model so that Human resource management's success or otherwise can be measured. He also asserts that Human resource management will create move effective organisations. Guest's model has four elements. Strategic Integration - where organisations integrate Human resource management into their strategic plans, so that their planning is coherent, and line management incorporates a Human resource management perspective into its decision making. High Commitment - where behaviour and attitude commit to pursue agreed goals and identify strongly with the organisation. High Quality - in all aspects of management behaviour including managing people and investing in high quality employees, which in turn will have a direct bearing on the quality of goods and services produced; and Flexibility - which is primarily concerned with functional flexibility but also with an adaptable organisation having the capacity to manage innovation. HRM Aims HRM Policies HRM Outcomes For example For example For example High Commitment Quality Flexible working Selection Based on specific criteria using sophisticated tests Low Labour Turnover Allegiance to Company Source D. Guest in J. Storey New perspectives on Human resource management. London Routledge 1989 Reproduced with permission These four elements link human resource management aims policies and outcomes. Storey (1992) 20 has identified two types of Human resource management - "soft" and "hard". Soft Human resource management sees people as the organisation's greatest asset and uses Human Relations approaches to managing people. Hard Human resource management sees people as the organisations greatest cost and uses financial criteria through Human Resource planning to manage people. He goes on to identify that there are four elements that distinguish Human resource management (both hard and soft) as a separate management activity. Human capacity, capability and commitment, in the final analysis distinguish successful organisations from the rest. Human resource management needs to be incorporated into the formulation of the corporate plan, because it is so strategically important. This means that Human resource management is the concern of the organisations most senior management. Human resource management, because of its strategic nature has long-term implications and is integral to the core performance of the organisation. This 20 Storey, J. (1992). New perspectives on human resource management. Routledge, London. 13

16 means that line management must have Human resource management on their mind whenever they make any decision. The key levers (the deployment, evaluation of performance and the reward system etc) are to be used by all managers at all levels in the organisation to develop commitment among the employees rather than simply compliance. Storey says that these 4 elements create an "ideal type" of Human resource management that is fundamentally different from Personnel management. Twenty-seven points of Difference Dimension Personnel and IR HRM Beliefs and assumptions 1. Contract Careful delineation of written contracts 2. Rules Importance of devising clear rules/mutuality Aim to go beyond contract Can-do outlook; impatience with rule 3. Guide to management action Procedures Business-need 4. Behaviour referent Norms/custom and practice 5. Managerial task visà-vis labour Monitoring 6. Nature of relations Pluralist Institutionalised Values/mission Nurturing Unitarist De-emphasised 7. Conflict Institutionalised De-emphasised Strategic aspects 8. Key relations Labour management Customer 9. Initiatives Piecemeal Integrated 10. Corporate plan Marginal to Central to 11. Speed of decision Slow Fast Line Management 12. Management role Transactional Transformational leadership 13. Key managers Personnel/IR specialists General/business/line managers 14

17 Dimension Personnel and IR HRM 14. Communication Indirect Direct 15. Standardisation High (e.g. parity and issue) Low (e.g. parity not seen as relevant) 16. Prized management skills Key levers Negotiation Facilitation 17. Selection Separate, marginal Integrated, key task task 18. Pay Job evaluation (fixed Performance-related grades) 19. Conditions Separately negotiated Harmonisation 20. Labour management Collective bargaining Contracts Towards individual contracts 21. Thrust of relations with stewards 22. Job categories and grades Regularised through facilities and training Many Marginalised with exception of some bargaining for change models) Few 23. Communication Restricted flow Increased flow 24. Job design Division of labour Teamwork 25. Conflict handling Reach temporary truces 26. Training Controlled access to courses 27. Foci of attention Personnel procedures for interventions Source: Storey (1992). Reproduced by kind permission of Blackwell Publishers. Manage climate and culture Learning Companies Wide ranging cultural, structural and personnel strategies. He argues that as the approaches are so different, organisations have to make a positive decision to shift from one to the other. Personnel cannot slide into or evolve into Human resources. He produced a model of how an organisation shifts into Human Resources. 15

18 In any discussion of what constitutes human resource management, reference needs to be made to the concept of "Strategic Human Resource Management", which is also talked about in conjunction with personnel management and human resource management. Once again there is much debate about whether this management approach has developed out of the others or is quite different. Supporters of the argument for development would tend to see strategic human resource management as simply the next phase in the development process, and would use much the same evidence as is used to show personnel's evolution into human resource management. Those who suggest that strategic human resource management is different from human resource management are in a more difficult position however. It is difficult to show the same level of difference between strategic human resource management and human resource management as there is between personnel management and human resource management. It is suggested that the difference lies in the sphere of operations rather than in what strategic human resource management actually does. Strategic Human Resource Management has been defined by Armstrong (1999) 21 as: The overall direction that the organisation wishes to pursue in achieving it s objectives through people Human resource management's primary focus on the pursuit of the organisation's interest means that it gets involved with operational decision-making and behaviour. Strategic human resource management is only (or primarily) concerned with strategic decision-making. There is a clear distinction between where decisions are taken and strategic human resource management and human resource management operate in one or the other not both. 21 Armstrong, M. (1999). Handbook of human resource management practices 7 th edition. Kogan page, London. 16

19 Maund (2001) 22 suggests that the process is the same wherever the decision takes place. She says it boils down to semantics: when the decision is taken at the strategic level, human resource management is simply called strategic human resource management. There is substantial merit in what Maund says. The philosophy of human resource management as discussed below is based on the view that human resource management is at the centre of decision-making. If this is true then human resource management cannot avoid being strategic. Human resource management bases its operations at the strategic level. It tries to ensure competitive advantage that cannot be copied because the strategies effectively utilize individual employees and their skills and knowledge. It plans for the future based on the strategic business plan, and is part of the process for deciding that strategic business plan. Human resource management is in fact strategic human resource management. The word "strategic" is only added when we want to distinguish between those decisions about policies and systems that are designed to ensure the medium to long term operations of the organization, and decisions about procedures that are designed to help the day to day short term operation of the organization. At the end of the day, while it may well be the case (and the case may well be easy to make) that human resource management is significantly different to personnel management; it is substantially more difficult to make the case that strategic human resource management is different to human resource management. Regardless of one's final stance on the issue, there is no denying that human resource management has its own flavour, if not its own identity. Philosophy of Human Resource Management To use human resource management effectively, it is important to identify its underlying philosophy and understand the reasons for it existence. Several writers have produced soundly argued and justified work regarding the philosophy of human resource management. Although they are worded differently, the statements share some common themes. Human resource management: Identifies with management interest rather than employee need: Emphasizes planning, monitoring and control rather than reactive problem solving; Focuses on people as a resource not as individuals; View people as a high potential strategic resource for achieving competitive advantage; Promotes integrated personnel strategies which link to clearly defined corporate goals and culture; Emphasizes the mutuality of interests between management and employees. All the writers agree that these statements taken together determine the way human resource management operates. What they all also appear to agree on is that there are valid reasons or causes for the rise of these types of views. If they are right then the phenomena we call human resource management was inevitable, if it didn't exist 22 Maund, L. (2001) An introduction to human resource management theory and practice. Palgrave, Basingstoke. 17

20 it would have to be invented. In the end it doesn't matter how it got here, whether it developed or whether it is brand new - the important thing is that it is available. Increasing Identification with Management Interests (For a more detailed discussion see Torrington & Hall (1998) 23. Human resource management has seen a focus on management interests over personnel needs. There are two reasons for this view: the changing role of line managers the concern of personnel/human resource managers to establish their own power base with organisations. The changing role of line managers Organisations have gone through major changes over the past decade. Massively increased competition has led to the need to reduce costs and increase efficiency. This has moved the decision-making responsibility further down the hierarchy. Line managers are now responsible for minimising costs and maximising profit. To do this they need, and have been given, more control over the way the organisation operates. New systems of work such as "just in time" and "flexible working" have meant that line managers have been forced to make decisions in terms of recruiting, planning and training which were once seen as the prerogative of the personnel department. In effect line managers have taken over the day-to-day operating decisions that personnel used to make. The changing role of personnel Personnel found it was excluded from strategic business decision-making as in the past but now from the day-to-day operating decisions as well. Personnel was suffering from low status, lack of power and authority. If human resource management were to regain the power and authority that personnel has lost, it needed to remove the concerns of line managers about the aims of personnel. The only way to do this is to show that human resource management operates differently and is in fact different to personnel. The most effective way to do this is for human resource management to firmly align itself with management interest rather than employees' interest. Line managers will then begin to trust the techniques and procedures designed by the human resource management department. Once that trust is regained, human resource management can work to move manager's commonly held perception of employees as the biggest cost, towards the perception of employees as the biggest single asset. Once the line managers' perception is changed, then managing human resources effectively becomes of paramount importance. This provides the human resource department with a power base on which to build its reputation. If they design policies that manage human resources effectively and efficiently, human resource management can reasonably expect to become part of the strategic decision making process. 23 Torrington, D. & Hall, L. (1998). Human resource management 4 th Edition. Prentice Hall, Europe. 18

21 Planning Monitoring and Control (For a more detailed discussion see Beer et al (1984)). 24 The second shift has been towards a proactive management style. Whether line managers perceive employees as the largest cost or the best asset, the fact remains that employees are very expensive. Managing them effectively and efficiently can and does significantly affect the bottom line. This has shifted business emphasis onto managing risk - onto avoiding or controlling risk and pressing advantages - and away from reacting to situations as they arise. Humane resource management plays a key role in this management style. To manage risk effectively, it is essential that managers of people and designers of people management systems have access to up to date and accurate information systems. Computerised personnel information systems, not only give human resource management the information systems it needs, they also allow HR to operate 'what If' scenarios. Human resource managers can test their ideas on the computer before passing them out to line managers. This means that (all other things being equal) the systems designed by HR will usually be successful if operated properly by the line managers. This brings two advantages to human resource management. The first is that the systems they design are seen to be successful. The second is probably even more important to human resource management's quest for acceptance by senior management - if the systems do not operate successfully human resource management can usually show that the reason for the failure is line management operation rather than system design. Human resource management can't lose: if the systems work they are human resource's systems; if they fail the fault lies with the line managers because they didn't operate the systems fully or well. Focus on Human Resources not Employees (For a more detailed discussion see Armstrong (1996) 25. Over the past decade there has been a move towards increased competitiveness in the market place and a consequent drive to reduce costs. Most business people, academics and (if they are honest) employee representatives, would agree that the easiest way to reduce costs is to reduce the size of the workforce. If that is not possible, the next easiest is to change the way the workforce operates. This has seen a trend towards depersonalising the workforce, with management emphasis shifting away from individual employees and onto human resources. For personnel managers, one of whose primary functions is to ensure that every individual employee is well treated all the time, and has no reason to complain about the way management deals with him or her, then either of these easy options poses a conflict of interest. They want their firm to be successful and would be recommending strategies to achieve this aim. At the same time, they want to protect the interest of every individual worker, so the policies you have just recommended are now called into question. This conflict only arises with employees because they 24 Beer et al. (1984). Managing human assets. Free Press, New York. 25 Armstrong, M., (1996) A handbook of personnel management practice 6 th edition. Kogan Page, London. 19

22 are perceived differently to other resources. Employees are not seen as a group of people; they are perceived as individuals. The human resource approach recognises this problem. It takes a step back and says that for a business people are just another resource, in the same way as machinery is a resource. No one would be upset if one machine was replaced by a newer and better machine. The same must apply to our relationships with employees. This does not mean that employees' humanity is denied. What it means is that an organisation's decision-making process has to disregard such considerations in order to make the most rational decision for the organisation as a whole. Once this has been done, then the human resource department can re-emphasis the human factor. The human resource department can design systems to make the transition period as easy as possible for the people who are losing their jobs or who will be expected to work differently. Alternatively the human resource team can operate strategies to reduce the number of people affected by the decision making process. For example we can use humane strategies to reduce the workforce such as natural wastage (allowing individuals to leave the organisation through their own choice, and not recruiting other individuals to replace them) or voluntary severance (allowing individuals to choose to be one of the employees who will leave rather than the organisation making all of the decisions about which individual will go and which will stay). Or they can control that number with strategies that bring specific skills into the workforce at specific times for specific periods, such as contract labour, agency staff or temporary workers. In this way human resource management can achieve the best fit to the organisation's requirements while still ensuring that employees are treated with respect and not merely regarded as just another resource. People as a Strategic Resource For a more detailed discussion see Storey (1989) 26. When human resource management operates, with such an overt emphasis on tailoring policy for individual needs, there is an increased opportunity for all people to reach their full potential. Employees may become multi-skilled and flexible in their approach to work and their relationship with the organisation. This can all increase an employee's commitment to the organisation in return. Thus human resource management can enable the employees to provide the organisation with a competitive edge with their willingness to respond quickly and effectively to organisational needs and priorities. By presenting people as a strategic resource human resource management benefits the organisation by ensuring the right skills at the right time in the right numbers. Human resource management has the potential to benefit employees by enhancing their skills and making them more valuable to the organisation, and incidentally more employable by other organisations should the organisation or the employee mutually or individually decide to end the relationship. Human resource 26 Storey, J. (1989). From personnel management to human resource management. & New perspectives on human resource management. Routledge, London. 20