Human resource management and Personnel management

The relationship between human resource management and personnel management has been arguing for many years. The strongest argument among all the advocates is whether human resource management is the same as personnel management only with another name or it is different concept.

Some debates are as follow:

Approval perspectiveCritical perspective

Guest: its capacity to satisfy some key propositions such as ‘strategy integration’, ‘high commitment’, ‘high quality’ and ‘flexibility’.

Pettigrew and Hendry: HRM is characterized by its close alignment elements with business strategy.

Storey: developed a model that set out four areas for analysis: belief and assumptions; strategic aspects; line management; key levers as major determinants of HRM practice. Legge: The underling value of personnel management and HRM differ little, and that organizational constrains may well make a truly integrated HRM approach highly impractical.

Armstrong: financial orientation may well clash with HRM prescription.

Keenoy: being constructed around the highly ambiguous nature of the term.

Source: Ian Beardwell and Len Holden (2001:27-28) from human resource management

This paper will introduce some concepts of personnel management and HRM, and then will analyze the difference between them. We define personnel management in 4 models from different aspects. While defining HRM, we consider much about strategic integration and strong cultures. And the nature of HRM was described by ‘soft’ and ‘hard’ vision. I will also analyze the case of ‘Traders Hotel” in China to show the importance of introducing HRM in practice. In addition, a brief introduction of strategic HRM will be extended as well.

Part II: The differences between personnel management and HRM

1.The concepts of personnel management and HRM

A.What is personnel management?

There are four main models for defining personnel management.

Normative model

Since management aims at effective result with people, personnel administration is a basic management function or activity permeating all levels of management in any organization…personnel administration is …organizing and treating individuals at work so that they will get the greatest possible realization of their and thereby giving the enterprise of which they are a part its determining competitive advantage and its optimum results. (Pigors and Myers, 1969)

Descriptive-function model

The term personnel management is used to describe the policies, processes and procedures involved in the management as a system of employment regulation. It is also concerned with the regulation for which managers are mainly responsible. (Sisson, 1989)

Critical-evaluative model

Personnel management is concerned with assisting those who run work organizations to meet their purpose through the obtaining of the work efforts of human beings, the exploitation of those efforts and the dispensing with of those efforts when they are no longer required. Concern may be shown with human welfare, justice or satisfactions but only insofar as this is necessary for controlling interests to be met and, then, always at least cost. (Watson, 1986)

And Descriptive-behavioral model

Guest (1990a)–‘big hat, no cattle’

“Lack of influence with senior management”

“Out of touch with business”

“Promising more than they deliver”

“It has some way to go before it is really part of management”

B.What is Human resource management?

The concept of HRM has gone through three stages:

1. The initial concepts developed by American writers in the 1980s.

2. The comments take-up by British writers in the late 1980s and earlier 1990s.

3. The debate about HRM and traditional personnel management.

Torrington and Hall (1987)— Human resources management is directed mainly at management needs for human resources to be provided and deployed. There is greater emphasis on planning, monitoring, and control, rather than on problem solving and mediation. It is totally identified with management interest, being a general management activity and is relatively distant from the workforce as a whole.

Armstrong (2001)— HRM develop central, senior management-driven strategic activities. And these activities are used as a whole to promote the interests of the organization that it serves. The purpose of HRM is to be a holistic approach concerned with the total goal of the organization. Hence the importance attached to strategic integration and strong cultures, which flow from top management’s vision and leadership, and which require employee who will be committed to the strategy, who will adaptable to change, and who will fit the culture.

The ‘hard’ and ‘soft’ versions of HRM

Some aspects of the basic philosophy of ‘soft HRM’ can be traced back to the writings of McGregor (1960) who, as mentioned by Truss (1999), even used the terminology ‘hard’ and ‘soft’ to characterize forms of management control. McGregor’s theory emphasizes the importance of integrating the needs of the organization and those of the individual — the principle of mutual commitment.

The hard model stress HRM’s focus on the crucial importance if the close integration of human resource policies, system and activities with business strategy, on such HR system being used ‘to drive the strategic objectives of the organization’ as Fombrun et al. (1984,p37) put it. The ‘hard’ version of HRM emphasizes the calculative, quantitative and strategic management aspects of managing the workforce in a ‘rational’ way (Storey, 1989).

In contract, the ‘soft’ versions of HRM emphasize the importance of high motivation, high commitment, communications and enlightened leadership. Most HRM models, assert that the organization’s ‘human resources’ are valued assets, not a variable cost, and emphasize the commitment of employees as a source of competitive advantage (legge, 1989)

2.The differences between HRM and personnel management

Through comparing the concept of Personnel management and Human Resource Management, we can find that the most significant difference between them is that management and business-orientated philosophy were used as the basis of HRM’s concept. Just as Guest says: ‘HRM is too important to be left to personnel manager’.

The first difference is that HRM is integrated into strategy. The HRM policies and practices are the most variable, and the least easy to understand and control of all management resources. In terms of the utilization, the organization can get a significant competitive advantage. The corporate strategy is the core other functional strategies need to be created and linked into the overall strategic approach being adopted. Strategic HRM policies are inextricably linked to the ‘formulation and implementation of strategic corporate and /or business objectives’ (Devanna et al 1984). The Figure 2 displays how human resource management can be integrated into the core strategy.

Figure 2.

Secondly, the role of line management is given different emphases. Personnel management models highlight the view that all managers manage people. HRM place greater stress on the line managers’ responsibility of coordinating and directing all resources to generate commitment and enthuse subordinates to innovate.

Thirdly, HRM emphasizes the importance of individual developing and team management. Because team management focuses on the primacy of the individual and creating synergy by incorporating individual strengths, approaches, and opinions seems at odds with the culture of the primacy of the group or communalism.

The forth is cultural leadership in the organization. In most HRM models top management is given prime responsibility for cultural leadership. The purpose of leadership is to create a ‘vision’ and a working environment that generates worker commitment, innovation, change and ‘self-renewal’ at all levels of the organization.

These points suggest that the human resource management is a proactive central strategic management activity that is different from traditional personnel management with its implied passive connotations. Personnel management emphasizes on standardization, proceduralization, rules and regulations. HRM is concerned about flexibility, responsibility, and mutual goals and objectives, and aims to reward according to the individual’s performance.

PART III: A case of HRM in practice

ƒÜThe HRM practice in the “Trader Hotel”

‘Traders’ is a four-star hotel in Shenyang operated by Shangri-La international hotel groups. It was established in the early 1980s with more than 400 rooms and refurbished in the mid-1990s. Competition in the market has been more and more intensive since late 1980s with growing number of large hotels of same level in Shenyang.

In order to keep its leading position in the market, in 1998 its manager decided to upgrade both its hardware and software. So a quality-focused strategy was adopted, which aims at delighting the customers by providing better services to the customers beyond their expectations’. They adopted the following methods:

Improving training and career development programme:

Developing the employee’s competencies is the core part of the programme.

The program develops from the basic skill training to the full-scale cultivation, which puts more emphasis on the employee’s career development.

Communication:

“Traders” operated a ‘staff committee’ with selected representatives from each department. And all staffs are invited to quarterly general staff meetings, where the General Manager of the hotel addresses them and presents
awards.

Performance assessment: The individual performance assessment system bases on critical job success factors, key performance indicators and reward employees accordingly.

Job redesign and empowerment: work has been reorganized in all departments to allow employees with greater discretion in solving guests’ problems with more flexibility.

Key performance indicators: The index of Employee Satisfaction and Guest Satisfaction improved gradually. The number of staffs’ resignation reduced from 3.7% in 1998 to 2.5% in 2000. In 2000, Trader’s revenue reached the highest among all the star hotels in Shenyang city.

ĆDiscussion

The HRM activities used by “traders” were mainly training, communication, performance appraisal and job redesign. “Traders” improved the employee’s performance by integrating the HRM with the business strategy. However, this function couldn’t found in personnel management.

The analysis of the practices used by “Traders” is illustrated as follow:

Figure 3 Human resource management practice and policies for Trader’s service-based strategy

The new HRM policies, such as staff training programme, occupational health and safety, inspired its employees and provided them with necessary abilities and competencies. As a result, the employees devoted all their efforts and enthusiasm to the success of the hotel. Its high standard customers’ service leads to great customers’ satisfaction, which resulted in the better financial performance. In this case, proper HRM policies and practices are identified by managers as critical factors to the success of the strategy.

But how can a firm integrate effectively HRM practices with corporation strategy? Theoretically, strategic HRM is developed from HRM, which links strategic goals and objectives of the organization, improves business performance and develops organizational cultures. We usually define strategic HRM as follow:

Strategic Human resource management is largely about integration and adaptation. Its concern is to ensure that (1) human resource management is fully integrated with the strategy and the strategic needs of the firm;(2) human resource policies cohere both across policy area and across hierarchies; and (3) human resource practices are adjusted, accepted, and used by line managers and employees as part of their everyday work (Schuler, 1992)

But strategic HRM in reality is not usually a formal, well-articulated and linear process which flows logically from the business strategy. Mintzberg (1987) has emphasized that strategies emerge over time in response to evolving situations. And Tyson (1997) point out that:

Strategy is emergent and flexible -it is always ‘about to be’, it never exists at the present time;

ĆStrategy is not only realized by formulate statement but also comes about by actions and reactions;

ƒÜStrategy is a description of a future–orientated action which is always directed towards changes;

ĆThe management process itself conditions the strategies emerge.

So although the policies of strategic HRM can improve the performance of a firm, there are many problems for the organization to achieve ‘strategic fit’ in reality.

IV Conclusion

In order to critically evaluate the point of view about ‘old wine in new bottle’, this paper compares personnel management and HRM both in concepts and practices. The results of comparing suggest that One key feature of human resource management is strategic integration; in particular the need to establish a close two-way relationship or fit between the external business strategy and the elements of the internal HR strategy. Strategy HRM is about linking the HRM practices to organization’s strategy. There are two main models for making strategic HRM policies: best practice model and contingency model. In this paper, the analyzing of the case depends on the ‘best practice’ model. Although this approach may be mechanistic and over simplifies things. But it is effective in improving the organization’s performance. So HRM is different from personnel management. And in practice, Strategic HRM as the advantaged HRM integrates the HRM practices into organization’s strategy effectively.