The Impact of Different Perspectives of Human Resource Management

Chapter 2: The Impact of Different Perspectives of Human Resource Management on the Organisation and Workforce

Learning Outcomes

  • Differentiate between definitions of human resource management and personnel.

  • Explain “hard” and “soft” approaches to human resource management.

  • Summarise the role of key stakeholders in delivering a strategic approach to HR.

2.1 The Difference Between Human Resource Management (HRM) and Personnel Management

What is HRM?

  • Origin of HRM: The concept of Human Resource Management (HRM) was introduced in the USA in the mid-1980s.

  • Previous terminology: Prior to HRM, the term “personnel management” described activities like staffing, payroll, contractual obligations, and other administrative tasks.

  • Scope of HRM: HRM expands beyond administrative tasks, adopting a broader view of employees as assets to be leveraged for organizational success.

Definitions

  • According to Armstrong and Taylor (2017), HRM is defined to encompass more than just administrative duties.

  • Deakin (2001) characterized the transition from personnel management to HRM as critical, highlighting the evolution in management perspectives.

Differences Between Personnel Management and HRM

Personnel Management

  • Operates in stable market conditions.

  • Traditional approach with a strong administrative purpose.

  • Fragmented and ad-hoc policies and practices.

  • Characterized by rigidity.

  • Focus on performance measurement.

Human Resource Management

  • Operates in competitive markets and adapts to change.

  • A strategic approach to managing people, focusing on integrating and coordinating HR practices.

  • Emphasizes flexibility.

  • Focus on adding value to the organization.

Comparative Analysis of Personnel Management and HRM

BASIS FOR COMPARISON

PERSONNEL MANAGEMENT

HUMAN RESOURCE MANAGEMENT

Meaning

Concerned with workforce and relationships

Focus on effective use of manpower for goals

Approach

Traditional

Modern

Treatment of manpower

Machines or tools

An asset

Type of function

Routine function

Strategic function

Basis of Pay

Job Evaluation

Performance Evaluation

Management Role

Transactional

Transformational

Communication

Indirect

Direct

Labor Management Initiatives

Collective Bargaining Contracts

Individual Contracts

Decision Making

Slow

Fast

Focus

Division of Labor

Groups/Teams

Job Design

Mundane activities

Designed based on skills and expertise

Key Distinctions

  • Historical Context: Personnel management is considered more traditional in contrast to HRM, which represents a modernized and strategic approach.

  • Focus Areas: Personnel management prioritizes administrative efficiency and employee welfare. In contrast, HRM's focus encompasses acquiring, developing, and motivating talent, recognizing employees as critical to organizational goals.

  • Training and Development: Personnel management tends to limit employee training; HRM advocates for continuous training and development opportunities.

  • Authority and Decision-Making: Personnel management maintains a dichotomy between top management and employees; HRM encourages collective decision-making and participation.

2.2 "Hard" and "Soft" Approaches to HRM

Overview of HRM Approaches

  • The management of HR can be approached in different ways, categorized as hard and soft HRM:

    • Hard HRM treats employees merely as resources necessary for operational efficiency.

    • Soft HRM regards employees as assets crucial for competitive advantage.

Definitions of Hard and Soft HRM

  • Storey (1989) classified the two approaches:

    • Hard HRM: Focused on resource management, often neglecting employee needs.

    • Soft HRM: Focused on human aspects, prioritizing employee needs and development.

Differences Between Hard HRM and Soft HRM

Hard HRM

  • Focuses on short-term changes in employee numbers.

  • Minimal, top-down communication.

  • Salary structures are primarily to retain enough staff.

  • Limited empowerment and delegation.

  • Appraisals primarily concerned with performance judgments.

Soft HRM

  • Emphasizes workforce planning and long-term strategies.

  • Strong and consistent two-way communication.

  • Competitive pay structures tied to performance-related rewards.

  • Encourages employee empowerment and responsibility.

  • Appraisals focus on identifying and addressing training needs.

Which Approach is Best?

  • The hard approach is more cost-effective and expedites decision-making but may lead to higher employee turnover and dissatisfaction.

  • The soft approach focuses on employee satisfaction, motivation, and retention, aligning with modern employee expectations.

  • The best practice often combines elements of both approaches depending on organizational goals and needs.

2.3 The Role of Key Stakeholders in Delivering a Strategic Approach to HR

Importance of Stakeholders

  • Effective HR practices rely on strong, trust-based relationships and communication.

Key Stakeholders Identified

  • Line Managers: Deliver departmental objectives and facilitate HR policies. Their positive relationships with employees correlate with higher job satisfaction and loyalty.

  • Senior Managers: Set organizational direction, focusing on performance, efficiency, and HR objectives in line with business goals.

  • Employees: Essential for meeting organizational objectives; their opinions and concerns must be regarded, impacting overall profitability.

  • Other Business Functions: Collaborate to ensure employees have the necessary skills and compensation; accurate information from finance aids HR decisions.

  • Shareholders: Interested in management's handling of workforce costs; decisions around employee compensation directly affect dividends and company reputation.

  • Trade Unions: Represent employee interests and can significantly influence HR policies; membership levels vary across regions.

  • Government: Enforces laws that govern HR practices and influences wage policy and employment standards.

Managing Relationships with Stakeholders

  • Stakeholder influence ranges; effective HR management necessitates understanding varying expectations and potential conflicts. Successful stakeholder engagement leads to improved HR practices and organizational success.

Ethical and Responsible Approaches to HR

  • HR has the responsibility to uphold employee dignity and rights within corporate goals. Ethical HR practices include promoting fair treatment, work-life balance, and employee well-being.

Case Studies and Activities

  • Case Study: Evaluate the approach of organizations like the Bolt Company to determine if they align with hard or soft HRM principles.

  • Activity: Research trade union membership trends and stakeholder impacts on HR strategies in various businesses, highlighting the contributions of both internal and external stakeholders to strategic HR initiatives.