Foundations of Personnel Management

The Human Being as a Production Factor

• Humans + potential factors (equipment) = permanently usable, productive elements of a firm

• According to H. Ulrich (1970, p. 246 ff.) humans differ fundamentally from machines

  • Bear intrinsic meaning & self-worth, are never merely instruments ➜ demand respect & adequate environment

  • Only partially integrated into the firm; embedded in many external social contexts

  • Possess cognition, initiative, free will ➜ act as autonomous, sense-making actors

  • Exhibit a huge range of possible behaviours ➜ versatile deployment inside the organisation

  • Output depends not only on physical constitution & environment but also on will, abilities, moods ➜ performance is variable & cannot be fully controlled

  • Cannot be bought; only lend labour-power for periodic pay, co-determining entry, placement & exit

  • Appear simultaneously as individuals and social beings ➜ form groups that mutual­ly influence behaviour

Managerial Implications

• Handling the “human production factor” demands distinct decision criteria vs. handling machines or materials

• Firms need labour of defined quantity & quality, but what they receive are people with unique motivations & claims

• Organisation = social network → static view = relationship web; dynamic view = constantly changing interactions

• Understanding organisational action requires understanding human behaviour ➜ behavioural-science insights (psychology, sociology, pedagogy…) are imported

• Assumptions about “human nature” (Weltvorstellungen) shape classifications, forecasts & prescriptions; strongly value-laden & change over time

Images of Man (Menschenbilder)

Introductory Remarks

• Especially relevant in HRM, but also in all managerial decision contexts

• Serve as ideal types, enabling testable hypotheses about motivation & decision making

McGregor’s Theory X vs. Theory Y (1950s)

Theory X (traditional, authoritarian)

• $\text{Assumption 1}$ Average person dislikes work & avoids it

• $\text{Assumption 2}$ Because of this, managers must coerce, control, threaten to secure performance

• $\text{Assumption 3}$ Average person prefers to be directed, avoids responsibility, has little ambition, seeks security

• Consequences ➜ directive task assignment, tight control, minimal job demands, emphasis on authority

• Feedback loop = “vicious circle” (Teufelskreis): Low trust → control → limited scope → low motivation → manager “proves” X-assumptions

Theory Y (alternative, participative)

• Physical & mental effort at work can be as natural as play or rest

• External control & threat of punishment are not the sole means to align individual & organisational goals; commitment generates self-discipline

• Commitment depends on rewards linked to goal attainment

• Under suitable conditions average people seek responsibility

• Creativity, ingenuity & imagination are widely distributed, not rare

• Modern industry utilises only a fraction of the average person’s intellectual potential

• Managerial consequences ➜ more discretion, self-control, participation, job enrichment → reinforcing virtuous circle

Scientific Management (F. W. Taylor; late 19th – early 20th c.)

• Historical backdrop: low wages, no social security

• Human image: cheap factor, low needs, purely rational $\text{“homo oeconomicus”}$

• Core prescriptions

  • Extreme task decomposition

  • Physiologically “best” work methods via time & motion studies

  • Shorter workday with micro-breaks

  • Performance-enhancing wage systems (time-piece-rate)

  • Selection & training of one best worker for each job

  • Functional organisation with $8$ specialized foremen

• Gains: Enormous productivity & wage rises

• Critiques

  • Mechanistic, instrumental human view → degrades workers, destroys craft ethos & intrinsic satisfaction

  • Job becomes peripheral; life focus shifts to leisure

Human-Relations Movement (Elton Mayo; 1924–1932 Hawthorne Studies)

Historical Frame

• Post-WWI prosperity in U.S.; welfare state emerging; physical security needs recede, social needs (belonging, recognition) grow

Hawthorne Experiments (Western Electric, Chicago)

1. $2{,}400$ relays/week baseline (48 h, no breaks)

2. Better lighting → productivity ↑

3. Surprisingly, control group productivity also ↑

4. Series of interventions on $\text{n}=5$ women assembling telephone relays:

   • Piece-rate pay, 10-min a.m. break, 10-min p.m. break → each time output ↑

   • Six × 5-min breaks → output ↓ (rhythm disturbed)

   • Two × 10-min breaks, first incl. hot meal → output ↑

   • 45-h week → output ↑

   • 42-h week → output ↑

   • Removal of all improvements, lighting ≈ “bright moonlight” → output peaks at $3{,}000$ relays/week

Key Findings (“Hawthorne Effect”)

1. Output set by group social norms, not physiological limits

2. Non-financial incentives/sanctions strongly influence behaviour & moderate wage effects

3. Workers often act as a group, not isolated individuals

4. Distinction between formal & informal leadership recognised

5. Open communication crucial for explaining work changes

• Overall: No mechanical causal chain from conditions → performance; satisfaction hypothesised as main productivity driver (critique: one-sided)

Anreiz-Beitrags Theory (Inducement–Contribution, Barnard 1939; March & Cyert 1963)

• Every participant = autonomous decision maker with personal goals

• Decision = compare value of organisational inducements vs. cost/value of one’s contributions ➜ choose entry, continued membership, exit, level of effort

• Applies to

  • Entry decision

  • Exit decision

  • Behaviour decision (role-conform performance level)

• Organisation = political coalition of multiple interest groups; internal sub-coalitions (peer groups, hierarchy levels, sports club…)

• Contributions & inducements negotiated; equilibrium when inducements ≥ contributions

• Critiques

  • Cannot reduce diverse inducements/contributions to single utility metric

  • Assumes slowly shifting aspiration levels; ignores dynamic need changes

  • Neglects existence of organisation-level goals independent of members

Evolution of the HR/Personnel Function (Wunderer 1993)

Problem-Solving Process in HRM

1. Analysis of Initial Situation

   • Identify & evaluate employee-related problems

   • Diagnose needs of firm & staff ➜ influenced by prevailing human image

   • Consider external environment (societal values, competitor policies)

2. Goal Setting in HR Area

   • Based on human image & social norms

   • Typical social goals: job satisfaction, security, recognition, development, health protection

   • Derived Sachziel: provide all business units with required personnel

     • Quantity, quality, right time, right place

3. Definition of Goals, Measures, Means for Sub-Functions

   • Personnel demand forecasting

   • Recruitment & selection

   • Placement & deployment

   • Motivation & remuneration

   • Development (training, career)

   • Release/redeployment

   • Overarching systems:

     • Personnel-Marketing (attract & retain)

     • Personnel-Controlling (monitor cost & goal attainment)

     • HR-Information-System (data/statistics, e.g. $\text{absences}$, $\text{overtime}$)

4. Coordination of Sub-Functions

   • Resolve goal conflicts, set priorities

5. Implementation

6. Evaluation/Control

   • Compare $\text{Ist}$ vs. $\text{Soll}$ in goals, measures, means

   • Dual lens: firm performance & employee needs

Personal Management (Planning–Organising–Leading–Controlling Perspective)

• Emphasises planning as decision preparation across all HR sub-fields ➜ termed personnel planning

• Control differentiates

  • Process control (steering the HR problem-solving phases)

  • Result control (measure deviations in goals, measures, means, trigger adjustments)

Ethical / Practical Implications & Connections

• Shift from instrumental to humanistic to strategic/entrepreneurial views mirrors societal value evolution

• Choices of human image influence organisational structure, leadership style, incentive systems & ultimately competitiveness

• Cross-disciplinary borrowings (behavioural sciences) essential for understanding & shaping modern HRM