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Human resource management and personnel management - shift in focus

Evolution of personnel function
The origins of Personnel management can be traced to the concern about exploitation of people working in factories and was introduced through law of the land in most of the countries to deal with issues pertaining to grievances and welfare of the workmen.

As the dynamics in relations between trade unions and management changed the personnel management responsibilities grew beyond welfare to other areas such as ensuring amicable industrial relations and effective personnel administration.
During this period the emphasis was on formulating and monitoring conformance to rules and procedures.

The last three decades saw, the changes in the competitive environment brought about by growing competition, which resulted in availability of wide choice for customers and that in turn, gave a new dimension to marketplace – customers’ preference, which in effect drives companies to continuously innovate and provide the kind of value to customer that competition cannot match.

With this shift in business dynamics, the realization dawned on companies that people and their knowledge is the only source of sustainable competitive advantage, as other resources related to materials, equipment, technology, finances etc. have proved short lived in the absence of human capital capable of deploying these resources effectively and efficiently. Companies now bank on people's domain knowledge combined with their awareness of markets (customers' expectations & competitors' moves in particular) for develping innovative new products & services and thus creating enhanced value proposition for customers. This marked change in attitude of managements saw the emergence of concept of Human Resource Management which characterizes implementation of personnel policies to maximize objectives of organizational integrity, employee commitment, flexibility and quality (Guest, 1987).

Pardigm shift in thrust
As per the experts, this could have been a result of decline of problems in labour relations and that traditional P&IR managers have shifted their attention from fire fighting of industrial relations and monitoring compliance to procedures to issues such as employee selection, training and development, performance appraisal, performance management, employee communication and involvement.

The figure above shows the role of personnel function (on Y-Axis) at different periods of time during (X-Axis) and thrust areas in each role or period.

Personnel management traditionally is aimed largely at non-managers, where as HRM treats management development as an equally important issue. Traditionally personnel management viewed organizational culture and leadership as issues concerned with organizational development, where as HRM highlights responsibility for managing organization culture and leadership issues. HRM concerns with setting consistent HR policies which reflect and communicate “core values” of the company. It is through building culture and sharing common values among people that companies are trying to ensure that their acts and decision are based on best interest of the company rather than stressing on conventional rules and procedures, thus achieving the element of speed.
The strategic significance
However more and more companies have begun to view the issues such as organization development, employee development, direct employee communication and involvement, performance management etc. as deliverables of well conceived HR strategy.

In the industries where there is a strong correlation of intellectual capital and success at marketplace, the companies took HRM altogether to a different plane of strategic importance where the role of HR is clear in achieving overall strategic goals of the company. There are yet some other industries where companies think that industrial relations are still the major concern in people area, traces of traditional personnel management functioning can be seen in practice. However, in general across the industries, there has been a shift in attitudes of personnel / HR professionals and the aspect is gaining importance at strategic level.

The distinguishing factors
There have always been debates about whether human resource management represents a new paradigm in the evolution and development of personnel management through adoption of more strategic approach. Based on research by Warwick University’s IR Research Unit in the late 80s through a comprehensive survey of diverse companies, Storey in 1992 conducted an elaborate study to distinguish the two and his detailed conclusions under four broad categories can be shown as below:

Distinguishing factors - HRM and Personnel Management
Key AspectPersonnel managementHRM
Beliefs and assumptions
ContractCareful delineation of written contractAim to go beyond written contract – go by the spirit of the contract
RulesThrust on devising clear rules“can do” attitude – impatience with rules
Guide to management actionProceduresBusiness and customer needs, flexibility, commitment
BehavioursIn line with customs and normsIn line with values and mission
Managers’ taskMonitoringNurturing
Strategic aspects
Key relationsLabour managementCustomers
Corporate planMarginalizedCentral
Speed of decisionsSlowFast
Line management
Management roleTransactionalTransformational leadership
Key managersP&IR expertsLine managers
Key levers
AttentionPersonnel proceduresCultural and structural issues and personnel strategies
SelectionMarginal importanceIntegrated and key task
PayJob evaluationPerformance based
CommunicationRestricted flow / indirectIncreased flow / direct
Job designDivision of labourTeam work
Conflict handlingTemporary basisManaging culture and climate
Training & developmentControlled access to coursesLearning organizations

Finally it may simply be as Karen Leggy has put it a difference of emphasis that differentiates HRM from personnel management.
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