THE ORIGIN OF HUMAN RESOURCE MANAGEMENT

1. THE CONCEPT OF HUMAN RESOURCE MANAGEMENT
Human resource management has become a major component of business schools and is quickly
becoming a dominant focus of management research (Kauftnan 1993; Lewin, 1991; Storey
1992). It has almost universally displaced personnel, and in many schools is threatening to
supplant industrial relations and organizational behavior. Of late, articles in British and Canadian
journals are beginning to question what human resource management is and what impact its
normative prescriptions will have on unions, workers, and employment relationships (i.e.,
Barkin, 1989; BIyton & TurnbuU. 1992; Guest, 1987; Godard, 1991; Ichniowski, Delaney, &
Lewin, 1989).
HRM are grounded on current descriptions of HRM and do not attempt to resolve the issue by
tracing the term's history. There has been little success in clarifying the definition of HRM, in
identifying its boundaries, or in distinguishing it from related disciplines. The histories of these
related disciplines have been occasionally discussed (for example, Baron, Dobbin, and Jennings
(1986) and Ling (1965) for personnel management, Jacoby (1985) and Wren (1987) for
American management theory, and Kaufman (1993) and Adams (1993) for industrial relations),
however, the history of human resource management has not.
DRUCKER AND THE HUMAN RESOURCE
The term "human resource" was coined by management guru Peter F. Drucker (1954) in The
Practice of Management. In this seminal work, Drucker presents three broad managerial
functions: managing the business, managing other managers, and managing workers and work. It
is in the discussion of the management of workers and work that Drucker (1954:263) introduces
the concept of the worker as "the human resource": "comparable to all other resources but for the
fact that it is human" and, as such, having "specific properties" which must be considered by
managers. Drucker argues that the human resource possesses a quality that is not present in other
resources: "the ability to coordinate, to integrate, to judge and to imagine."
Unlike other resources utilized by managers, the human resource can only utilize itself. "The
human being has absolute control over whether he works at all" (Drucker, 1954:264).
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2. The concept of human resource management (HRM) has attracted a lot of attention from
academics and practitioners alike since it first emerged in the mid-1980s. The former often
suspect both the practicality and morality of Human Resource Management. The latter have
often absorbed some if not all of the Human Resource Management philosophy and attempted to
put it into effect with varying degrees of success for various good and bad reasons.
Drucker calls on managers to consider the moral and social needs of human beings in the design
of work. He calls on managers to take positive actions to encourage worker motivation, and to
create jobs that challenge and develop workers. In the process, Drucker (1954: 273-288)
disparages the personnel management discipline of his day, detailing its three basic
misconceptions: (1) it assumes people do not want to work; (2) it looks upon the management of
work and the worker as a specialist's job rather than a key part of any manager's job; and (3) its
tendency to be a "fire- fighting" and "trouble-shooting" activity, rather than focusing on the
positive and building harmony. However, Drucker (1954:287) expresses a hope for the
improvement of the managing of workers. He answers his own rhetorical question "Is personnel
management bankrupt?" with a no, choosing rather to see personnel management as temporarily
insolvent. According to Drucker, the personnel management of his day was not meeting its
promises of effectively managing workers; it had the necessary expertise and was aware of the
right approaches; but had yet to apply them.
The concept of Human Resource Management was first defined by Bakke (1966) who wrote
that: The general type of activity in any function of management is to use resources effectively
for an organizational objective. The function which is related to the understanding, maintenance,
development, effective employment, and integration of the potential in the resource of ‘people’ I
shall call simply the human resources function.
Today, many scholars define human resource management (HRM) as a style of managing people
in the workplace that emerged during the 1980s. It is defined by Armstrong (2006, p.3) as ‘a
strategic and coherent approach to the management of an organization’s most valued assets – the
people working there who individually and collectively contribute to the achievement of its
objectives’. The term ‘strategic approach’ is a key phrase in the definition of human resource
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3. management and signifies the importance of a long-term ‘game plan’ for employing and
managing people at work.
Armstrong (1999, p.3) says that Human Resource Management ‘is concerned with the
employment, development and reward of people in organizations and the conduct of
relationships between management and the workforce’.
Human Resource Management can also be defined as a strategic and coherent approach to the
management of an organization's most valued assets - the people working there who individually
and collectively contribute to the achievement of its objectives. A distinction has been made by
Storey (1989) between the 'hard' and 'soft' versions of Human Resource Management.
The overall purpose of Human Resource Management is to ensure that the organization is able to
achieve success through people. As Ulrich & Lake (1990) has remarked: 'Human Resource
Management systems can be the source of organizational capabilities that allow firms to learn
and capitalize on new opportunities'.
SPECIFICALLY, HRM AIMS TO:
To enable the organization to obtain and retain the skilled, committed and well-motivated
workforce it needs; enhance and develop the inherent capacities of people - their contributions,
potential and employability - by providing learning and continuous development opportunities;
develop high-performance work systems that include 'rigorous recruitment and selection
procedures, performance-contingent incentive compensation systems, and management
development and training activities linked to the needs of the business' (Becker et al, 1997) ;
develop high-commitment management practices that recognize that employees are valued
stakeholders in the organization and help to develop a climate of cooperation and mutual trust;
create a climate in which productive and harmonious relationships can be maintained through
partnerships between management and employees; develop an environment in which teamwork
and flexibility can flourish; help the organization to balance and adapt to the needs of its stake
holders (owners, government bodies or trustees, management, employees, customers, suppliers
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4. and the public at large); ensure that people are valued and rewarded for what they do and
achieve; manage a diverse workforce, taking into account individual and group differences in
employment needs, work style and aspirations; ensure that equal opportunities are available to
all; adopt an ethical approach to managing employees that is based on concern for people,
fairness and transparency; and maintain and improve the physical and mental well-being of
employees.
DEFINING HRM: SOFT VERSUS HARD HRM
Within the Human Resource Management view, two approaches have been identified.
Storey (1989) labelled these two approaches hard Human Resource Management and soft
Human Resource Management. The ‘hard’ approach, rooted in manpower planning is concerned
with aligning human resource strategy with business strategy, while the ‘soft’ approach is rooted
in the human relations school, has concern for workers’ outcomes and encourages commitment
to the organization by focusing on workers’ concerns. Hard Human Resource Management
Views people as a resource used as a means of achieving organizational goals.
The hard approach to Human Resource Management emphasizes the quantitative, calculative and
business-strategic aspects of managing the headcount resource in as 'rational' a way as for any
other economic factor. It adopts a business-oriented philosophy that emphasizes the need to
manage people in ways that will obtain added value from them and thus achieve competitive
advantage. It regards people as human capital from which a return can be obtained by investing
judicially in their development. Fombrun et al., (1984) quite explicitly presented workers as
another key resource for managers to exploit. As Guest (1999) comments:
The drive to adopt Human Resource Management is based on the business case of a need to
respond to an external threat from increasing competition. It is a philosophy that appeals to
managements who are striving to increase competitive advantage and appreciate that to do this
they must invest in human resources as well as new technology.
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5. He also commented that Human Resource Management 'reflects a long-standing capitalist
tradition in which the worker is regarded as a commodity'.
The emphasis is therefore on: the interests of management; adopting a strategic approach that is
closely integrated with business strategy; obtaining added value from people by the processes of
human resource development and performance management; the need for a strong corporate
culture expressed in mission and value statements and reinforced by communications, training
and performance management processes
SOFT HUMAN RESOURCE MANAGEMENT
The soft view of Human Resource Managemen, developed by Storey (2001), popularized a
distinctive approach to managing the human resource. Beer et al., (1984) proposed the Harvard
model as a means of improving managers’ methods of managing people. Walton (1985) argued
that the role of Human Resource Management was to develop strategies to gain employees’
commitment, not to be a means of controlling them.
Beer et al., (1984) suggest that managers need to be more responsible for HRM. The Harvard
model opened the debate in the 1980s and proposes four human resources.
The issues proposed by Beer et al. (1984) argue that managers need to take responsibility for
employee influence, human resource flow, reward systems and work systems, regardless of the
size of the organization. They recognize that different stakeholders have different interests and,
for an organization to be effective, managers need to take these interests into account.
The soft model of Human Resource Management traces its roots to the human relations school,
emphasizing communication, motivation and leadership. As described by Storey (1989) it
involves 'treating employees as valued assets, a source of competitive advantage through their
commitment, adaptability and high quality (of skills, performance and so on)'. It therefore views
employees, in the words of Guest (1999), as means rather than objects. The soft approach to
Human Resource Management emphasizes the need to gain the commitment - the 'hearts and
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6. minds' - of employees through involvement, communications and other methods of developing a
high commitment, high-trust organization. Attention is also drawn to the key role of
organizational culture.
The focus is on 'mutuality' - a belief that the interests of management and employees can, indeed
should, coincide. It is a therefore a unitarist approach. In the words of Gennard & Judge (1997),
organizations are assumed to be 'harmonious and integrated, all employees sharing the
organizational goals and working as members of one team'.
It has, however, been observed by Truss (1999) that 'even if the rhetoric of Human Resource
Management is soft, the reality is often hard, with the interests of the organization prevailing
over those of the individual'. Research carried out by Gratton et al., (1999) found out that in the
eight organizations they studied, there was a mixture of hard and soft Human Resource
Mangement approaches. Soft HRM encourages employers to develop strategies to gain employee
commitment.
It should be noted that Human Resource Management exists in multiple versions, reflecting the
disciplinary and ideological orientations of each version’s adherents. The lack of an effort to
resolve the definitional opacity surrounding Human Resource Management may be responsible
for the strong growth of the discipline. Human resource management's lack of specificity and its
strong institutional position within business schools, a product of its popularity as a practitioner's
philosophy, may allow academics to pursue a wide variety of research interests, while
legitimating these pursuits by calling them Human Resource Management. However, Human
Resource Management did not emerge in a fully- fledged form until the 1980s in the ‘matching
model’ and the Harvard framework, described below.
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7. THE MATCHING MODEL/ MICHIGAN MODEL OF HRM
One of the first detailed statements of the Human Resource Management concept was made by
the Michigan school (Fombrun et al., 1984). They held that Human Resource systems and the
organization structure should be managed in a way that is congruent with organizational strategy
(hence the name ‘matching model’). They further explained that there is a human resource cycle
that consists of four generic processes or functions that are performed in all organizations:
selection, appraisal, rewards and development. Mbongaya A. (2006).
It holds that people should be managed like any other resources and so obtained cheaply, used
sparingly, developed and exploited fully. It also emphasized the interrelatedness of HRM
activities. According to this model, selection, appraisal, development and rewards were geared
towards organizational performance. The notion of the environment (Cusworth & Franks, 1993)
was ignored for it ignored situational factors, stakeholder interests and the notion of strategic
choice.
It advocated a mergence of internal human resource policies with external business strategy.
The advantage of the model laid on its attachment to market performance and organizational
growth.
It also led to cost minimization for employees were regarded as any other resources to be
obtained cheaply.
However the disadvantage is the possibility of market failures due to ignorance of environments.
More so, Human Resource Management planning to ensure the current and future employment
requirements of the organization was minimal as focus was on business not on human resources.
Besides, with right- based approaches increasingly being used (Bagshaw, 2004) such a model
will disintegrate in face of group diversity and intra-group conflict (Chuang et al., 2004) leading
to organizational performance failure. Below is an illustration of the
Michigan model (Fombrun, Tichy & Devanna, 1984).
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8. THE HARVARD MODEL
The Harvard model (Beer, Spector, Lawrence, Quin Mills & Walton, 1984) works as a strategic
map to guide all managers in their relations with employees and concentrates on the human or
soft aspect of Human Resource Management. It strives at employee commitment (Wood, 1995)
not control. It also works on the premise that employees needed to be congruent, competent and
cost effective.
Human resource flows into the organization are used for recruitment, selection; through the
organization, placement, promotion, out of the organization as termination pay.
The reward system was organized to attract and motivate so as to keep employees. More so,
employee influence was tailored on controlled authority and decision making.
Jobs were also defined and not based on tasks as with classical approaches.
The advantages of such a system lay on the premise that high employee commitment led to better
job performance (Beardwell, Holden & Claydon, 2004).
Also as selection criteria were based on competence, it also embraced the element of suitability
and flexibility. Using the best employees fit for certain jobs led to effectiveness.
Also, a reward system aimed to attract and motivate held performance appraisal not evaluation as
its tool.
Pettigrew & Hendry (1990) also applaud the analytic aspect of the Harvard model as an
advantage.
However this system could be criticized by resource based perspective of labour and the
argument that soft HRM like the Harvard model may conflict with business focus of the
organization (Armstrong 1987, Legge, 1995) and also distort cost minimization and profit
maximization.
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9. Defining Effectiveness
Whilst an increasing amount of pressure is being placed upon Human Resource functions to
justify their existence through proven impact on the bottom line, Beer et al are quick to explain
that effective Human Resource policies will not focus exclusively on short-term financial
benefits. They suggest that “human resource management has much broader consequences than
simply last quarter’s profits or last year’s return on equity”.
Moving away from this narrow financial perspective, they clarify that “by organizational
effectiveness we mean the capacity of the organization to be responsive and adaptive to the
environment”. In today’s environment of ongoing change, this ability to adapt has become one of
the central priorities of the strategic approach to Human Resource.
Influencing Factors
Beer et al., (1999), identify two key considerations influencing human resource policy decisions:
situational factors and stakeholder interests.
Situational Factors
These may be external in terms of the business environment surrounding an organization, or
internal. They include the following: legal imperatives, societal values, labour market conditions,
unionization, workforce make-up and diversity, technological capacity and competitiveness,
business strategies, dominant management philosophy, and internal cultural norms.
Beer et al., (1999), note that while these factors may be a constraining influence on Human
Resource Management policies, they may also be influenced by such policies. An obvious
example here is a change in internal culture brought about by the shifting of key organizational
values, reflected in new performance review and reward processes.
Stakeholder Interests
Beer et al., (1999), emphasize the importance of taking the broad spectrum of stakeholder
interests into account when designing the policies and practices of human resource management.
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10. If these perspectives are not taken into consideration, they warn, “the organization will fail to
meet the needs of these stakeholders in the long run and it will fail as an institution”. Such
stakeholder interests include: employees, employee unions, management, shareholders,
community and government.
Outcomes and Consequences
Beer et al., (1999), contend that Human Resource Management policies and practices can have
immediate effects on the organization, as well as long-term consequences. This is the key reason
why a long-term strategic view of the implementation for such practices is essential for success
and competitive advantage over time. By making choices in people policies, managers can affect:
the competence of employees, the commitment of employees, the degree of congruence achieved
between the goals of the employee and those of the organization at large the overall cost-
effectiveness of Human Resource Management policies and practices in the long term.
The consequences of people process choices are varied and far-reaching. Beer et al do not claim
that their ‘4 Cs’ model covers every possible area of these effects, but they hope that it will
provide a useful framework for analysis. Other thinkers have added their own aspects for
consideration, in order to broaden an appreciation of these potential impacts.
Three Levels of Evaluation
The ‘4 Cs’ model has become a high-profile approach to analyzing the consequences of people
policies and processes at the following three levels:
Individual
The well-being of employees, argue Beer et al, should be considered as a separate entity, as well
as in conjunction with organizational decisions. Human Resource Management policies will have
economic, physical or emotional effects upon employees, but these consequences will considered
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11. differently by employees and their managers. Considering employee well-being in isolation
offers the opportunity to assess policies while placing people first.
Organizational
Contribution to business goals and ongoing organizational competitiveness will obviously be an
aspect of the assessment of the value of human resource policies. Impacts can occur with regard
to: short-term results, long-term results, levels of service performance, operational efficiency and
adaptability in the face of change.
Societal
Wide societal consequences can occur from people policy decisions. Beer et al.,(1984) contend
that the social implications of these decisions, external to the company, should be taken into
consideration. They offer the example of stress placed on local government and state resources
when a large number of workers are laid off with no further employment opportunities in the
area.
A closer look at the ‘4 cs’
The key questions associated with the ‘4 Cs’ model, and which address the organizational
outcomes at the three levels detailed above, are as follows:
Commitment
Do Human Resource Management decisions develop and support the commitment of the
workforce to their particular position, and to the organization as a whole? If so, the benefits may
include not only better performance, but higher retention levels of skilled employees, as well as
the personal psychological benefits of job satisfaction and a sense of self-worth for the
employee, which can further benefit the surrounding society.
Competence
Do Human Resource Management policies serve to identify, attract, retain and develop
employees with valuable knowledge and skills? If so, the organization benefits from flexibility in
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12. response to the market, and, again, employees may benefit from a sense of self-worth, value and
increased financial security.
Cost-effectiveness
Are the Human Resource Management policies cost-effective in terms of outlay for
implementation versus the costs derived from such things as absenteeism and turnover? If so, the
financial benefits are felt by the increased market value of the organization going forward, and
by the financial security felt by all employees.
Congruence
Are the Human Resource Management policies congruent with the actual practices of the
organization in the experience of managers and their employees, the various employee groups,
the organization and its community, and employees’ families? Are the organization’s goals
understood consistently throughout its workforce? If there is a lack of congruence between
policies and practices time, money and energy will be wasted, and trust and commitment can be
lost and replaced by stress and dissatisfaction.
Further ‘cs’ to consider
Several thinkers have added further aspects to the model, in an attempt to create a more
comprehensive consideration of the impacts of Human Resource Management policies and
practices. Alan Price, author of Human Resource Management in a Business Context, has added
six further Cs to the model as follows:
Credibility
Do employees place their trust in the senior management team,
Communication
Is the level of internal communication such that objectives are understood by all employees, and
barriers to information and understanding are overcome?
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13. Control
Are performance levels constantly monitored and brought in line with the wider business
objectives?
Creativity
Are unique and forward-thinking strategies used to create competitive advantage?
Comprehensiveness
Do the Human Resource Management strategies used take a comprehensive view of the varied
aspects of people management?
Change
Do the Human Resource Management strategies employed increase organizational adaptability,
and allow for continuous improvement and development in response to internal and external
change?
While the Harvard Model takes a systematic approach to the inputs and consequences of people
policies and practice that is certainly valuable, Price’s revisions demonstrate that these are
varied, complex and problematic to measure.
Beer et al., (1999) original text goes on to discuss the issues of measurement for the outputs
involved, and discusses just these complexities. However, the original three levels of impact, and
‘4 Cs’ which may affect them, offer an interesting starting point for any Human Resource
professional aiming for a more comprehensive view of the people strategy system.
THE HARVARD MODEL IN PRACTICE
The human resource management function or personnel function has a strong tradition in
industrial relations, working conditions and employee welfare issues. These are all areas that
appear to have received less (strategic) attention over the past decades. In an era of globalization
and increased competition the practitioners of Strategic Human Resource Management focused
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14. on adding economic value. These developments, for example, explain the popularity of Strategic
Human Resource Management practitioner literature on human capital valuation, Human
Resource Management scorecards and human resource analytics. Good old stakeholder
management and industrial relations is ‘old’ school in Strategic Human Resource Management,
and even the activities related to working conditions have been downgraded in favor of strategic
Human Resource Management and the economic valuation of the human factor.
From an updated Harvard approach, however, a rather wider view of these areas takes a central
position in pursuing the Human Resource Management contribution to employee well-being and
societal well-being – and indeed to long-term organizational success. Contemporary stakeholder
management is of high strategic importance in times of organizational change. Without good
stakeholder involvement and agency there is no basis for solving long term employment issues.
Important and relevant lessons from the past can be learned from industrial relations. The
existing models and approaches with regard to working conditions are expected to gain
importance in times of work intensification, high levels of job stress and risks of employee
burnouts. We do not have to reinvent the wheel, instead we need to go back to the crossroads and
take the road that leads us to past and present lessons beyond the exiting business paradigms.
The administrative role of the human resource function is often downplayed in favor of Human
Resource Management’s contribution to change and organizational performance (though not, it
should be added, by Ulrich himself). But organizational change and performance can only take
place when the basic administrative foundation of Human Resource Management is optimal. The
translation of new legislation to Human Resource Management policies and practices is still a
key area for the Human Resource Management function’s overall activities. Whether Human
Resource Management practitioners like it or not, the majority of time in Human Resource
Management is spent on administrative and or compliance tasks. On top of that is the necessity
of business knowledge, knowledge and skills of Information Technology, and the knowledge and
skills for delivering the basic functional areas of Human Resource Management including
recruitment, selection, training and pay? Boselie. P & Brewster. C (2013).
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15. APPLICATION OF THE HARVARD MODEL IN DEVELOPING COUNTRIES
Organizations develop and implement Human Resource Management (HRM) policies which are
a reflection of their philosophy on how they intend to manage people. The factors outlined in
existing Human Resource Management models, especially the Harvard as influencing Human
Resource Management policy development and practice, fall within the political, economic,
social, technological, environmental and legal domains as well as what the Harvard model
describes as organizational situational domain. This model was however developed in the North
American contexts. The question arises as to whether this model hold true in the context of
developing countries. A cross-sectional survey was conducted in Ghana to identify the factors
which influence the development of Human Resource Management policies of large construction
organizations operating within the Ghanaian Construction Industry. The data was analyzed using
narrative and thematic analysis techniques. The results indicated that, the factors identified by
respondents can be regrouped under the domains identified in the existing Human Resource
Management model, suggesting that the factors to consider in the development of Human
Resource Management policies in the North American context does hold true for the Ghanaian
construction industry. However, further research is recommended to validate the factors
identified in this study. Sena A. et al., (2010).
ORIGNS AND DVELOPMENT OF HUMAN RESOURCE MANAGEMENT
Human resource management has changed in name various times throughout history. The name
change was mainly due to the change in social and economic activities throughout history.
The origin of Human Resource Management (HRM), as is known today, date back to ancient
times. One finds a reference of Human Resource policy as early as 400 B.C., when the
Chaldeans had a sound incentive wage plan. All that has changed over the years is the status of
the employees, their roles and relationship-inter personal and inter-group. The status of labour
prior to industrial revolution was extremely low and the relationships were characterized by
slavery, seldom and guild system. The slaves performed manual tasks to agricultural, military
and clerical responsibilities. The efficiency levels were low due to over-dependence on negative
incentives and negligence of positive incentives.
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16. The slavery structure was replaced by seldom, were neither slaves nor hired labourers. The
structure was related to rural and agrarian pursuits. Workers were offered positive incentives
which resulted in enhanced productivity and reduced need for supervision. Seldom disappeared
during Middle Ages with growth in manufacturing and commercial enterprises. It was replaced
by the Guild System.
The guild system involved the owners, the journeyman and the apprentice. It was here that real
Human Resource Management started. One noticed, proper selection procedures being adopted,
workers being imparted training and collective bargaining being adopted to settle issues
pertaining to wages and working conditions.
With the advent of Industrial Revolution, the guild system disappeared. The doctrine of laisser-
faire was advocated and the cottage system got transformed to factory system leading to
enhanced specialization. But this period was dominated by many unhealthy practices like
unhealthy work environment, long working hours, increased fatigue rate, monotony, strains, and
likelihood of accidents and poor work relationship. Progressive entrepreneurs like Owen
believed that healthy work environment could be effectively used to improve productivity. But
his opinion faced severe opposition.
Trade Unions.
During the late 1700's and early 1800's governments began to feel pressure from the working
class masses who started to question and defy the power of the aristocracy. The working class
began to form workplace combinations and trade organizations to provide a collective voice for
their rights. Governments tried to fight this using legislation such as the Combination Acts of
1799/1800 in the UK, which banned everything from meetings to combinations.
"There were also attempts to form general unions of all workers irrespective of trade. William
Benbow (a Lancashire shoemaker), Robert Owen and many others looked upon trade unionism
not just as a means for protecting and improving workers' living standards, but also as a vehicle
for changing the entire political and economic order of society. Owen experimented with co-
operative ventures and 'labour exchanges'; both attempts to bypass the existing order of wage
slavery." (Trade Unions Congress, 2004).
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17. Trade Unions were and are still an influential force, working for continued economic and social
development of workers and societies in many countries around the world.
The Industrial Revolution.
The momentum for the industrial revolution grew through the 17th
century. Agricultural methods
were continually improving, creating surpluses that were used for trade. In addition, technical
advances were also occurring, for example the Spinning Jenny and the Steam Engine. These
advances created a need for improved work methods, productivity and quality that led to the
beginning of the Industrial Revolution.
In 1776, Adam Smith wrote about the economic advantages of the division of labour in his work
The Wealth of Nations. Smith (1776) proposed that work could be made more efficient through
specialization and he suggested that work should be broken down into simple tasks.
From this division he saw three advantages: the development of skills, time saving, and the
possibility of using specialized tools. Smith's suggestions led to many changes in manufacturing
processes. "every individual necessarily labours to render the annual revenue of the society as
great as he can. He generally, indeed, neither intends to promote the public interest, nor knows
how much he is promoting it. By preferring the support of domestic to that of foreign industry,
he intends only his own security; and by directing that industry in such a manner as its produce
may be of the greatest value, he intends only his own gain, and he is in this, as in many other
cases, led by an invisible hand to promote an end which was no part of his intention.
Nor is it always the worse for the society that it was no part of it." (Smith, 1776).
Adam Smith, considered by many to be the father of Capitalism, also discussed the Invisible and
or Laissez Faire approach (this term is not used in the book but argues the case). "According to
the hidden hand approach, the only responsibility of business is to maximize profits according to
the market principle and within the constraints of the law. If government interference in business
is restricted to a minimum, society will benefit automatically from the activities of the business
sector."(Rossouw, 1994).
According to Rossouw (1994) the hidden hand approach lost value when societies did not benefit
automatically from business activity. It was clear that business could not be relied upon to act in
the best interests of is staff, consumers and the society within which it was
operating.
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18. In 1832, Charles Babbage examined and expanded upon the division of labour in his work, On
the Economy of Machinery and Manufacturers. In this book Babbage offered, as an advantage to
the division of labour, that the amount of skill needed to undertake a specialized task was
only the skill the necessary to complete the task. Babbage analyzed and documented the
manufacture of a pin and broke the process down into seven elements to illustrate his point. This
study became important to employers in that they only had to pay for the amount of skill
required to complete a task (www.accel-team.com, 2004).
Industrial Welfare
Industrial welfare was the first form of human resource management (HRM). In 1833 the
factories act stated that there should be male factory inspectors. In 1878 legislation was passed to
regulate the hours of work for children and women by having a 60 hour week. During this time
trade unions started to be formed. In 1868 the 1st trade union conference was held. This was the
start of collective bargaining. In 1913 the number of industrial welfare workers had grown so a
conference organized by Seebohm Rowntree was held. The welfare workers association was
formed later changed to Chartered Institute of Personnel and Development.
Frederick Winslow Taylor.
F.W. Taylor is considered to be the father of Scientific Management. In 1911, his seminal work,
The Principles of Scientific Management was published. This book contains four overriding
principles of scientific management: Each part of an individual’s work is analyzed 'scientifically',
the most suitable person to undertake the job is 'scientifically, chosen' and is taught the exact way
to do the job, managers must co-operate with workers to ensure the job is done in a
scientific way, there is a clear division of work and responsibility between
management and workers. (Bloomsbury, 2002).
"Taylor's impact has been so great because he developed a concept of work design, work
measurement, production control and other functions, that completely changed the nature of
industry. Before scientific management, such departments as work study, personnel, maintenance
and quality control did not exist." (www.accel-team.com, 2004).
Recruitment and Selection
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19. It all started when Mary Wood was asked to start engaging girls during the 1st world war. In the
1st world war personnel development increased due to government initiatives to encourage the
best use of people. In 1916 it became compulsory to have a welfare worker in explosive factories
and was encouraged in munitions factories. A lot of work was done in this field by the army
forces. The armed forces focused on how to test abilities and IQ along with other research in
human factors at work. In 1921 the national institute of psychologists established and published
results of studies on selection tests, interviewing techniques and training methods.
The Hawthorne Studies.
It should be noted that major change was noticed in personnel practices after the World War I.
The modern Human Resource Management started in 1920. Groups were formed to conduct
research on personnel problems. A number of studies were undertaken to analyze the fallacies in
the personnel field. For the first time, psychology was applied to management. The Hawthorne
studies advocated the need to improve industrial relations for increasing production. The
application of psychology brought a dramatic change in the work relationship and productivity
started increasing. But this prosperity ended during the great depression. Thereafter,
organizations started offering fringe benefits to workers to induce them to work. Findings of
behavioural science were used to enhance productivity.
Increasing number of organizations adopting manpower planning, management development,
techniques of personnel management, etc. Personnel departments started stressing on
management-individual employee relationships. This was followed by setting up of labours
relations department to negotiate and administer collective bargaining. Federal interest gave rise
to manpower management department. The members of these departments were technically
competent in testing, interviewing, recruiting, counseling, job evaluation negotiation and
collective bargaining. They also acquired expertise in wage and salary administration, employee
benefit schemes and services, training and development and other allied services. The top
management started encouraging line managers in middle management to consult personnel
departments in these respects. This department, later on acquired recognition as staff to the
working-line. This led to multiplicity of personnel jobs instead of a single, stereotyped task. The
personnel or human resource manager became a part of top management.
19

20. The Hawthorne Studies were a groundbreaking set of experiments conducted at the Western
Electric plant in Hawthorne, Chicago by Elton Mayo. The studies were conducted from 1927 to
1932 and measured the relationship between productivity and working environment. The studies
were based on preliminary experiments conducted in 1924 that measured the effect of lighting on
productivity. (Bloomsbury, 2002).
The results of the experiments showed that changes in the environment did affect productivity,
but this was not the sole factor. The workers considered management to be showing an interest in
them and this improved motivation.
Mayo's studies and the subsequent results were a significant break from the theories of F.W.
Taylor in that the workers were not solely motivated by self-interest. Mayo's research has led to
the understanding that workplaces are more than machine like environments in that there are
social environments and human emotions that require consideration. Mayo's studies led to the
rise of the Human Relations Movement.
In today’s world, stress is on scientific selection, training and development. There is an
increasing emphasis on interrelationship between the leader, follower and the environment.
Attempts are also on to provide scope to an individual’s personal dignity, status and sense of
achievement. The concern is increasing profits through people.
Acquisition of other Personnel Activities
During the 2nd
World War the focus was on recruitment and selection and later on training;
improving morale and motivation; discipline; health and safety; joint consultation and wage
policies. This meant that a personnel department had to be established with trained staff.
The Human Relations Movement
The Human Relations movement "argues that people are not just logical decision makers but
have needs for creativity support, recognition and self-affirmation." (The workingmanager.com,
2004). The movement presents an alternative and opposite approach to scientific management as
it focuses on the individual and not the task.
20

21. The Human Relations movement boasts some of the world's foremost management thinkers and
theories in its ranks: Abraham Maslow, The Hierarchy of Needs. Presented in the US
Psychology Review in 1943, Douglas McGregor Theory X and Theory Y. Published in the book
'The Human Side of Enterprise" in 1960. Frederick Herzberg. The Hygiene-Motivation Theory.
Published in the book "The Motivation to Work" in 1959. (www.accel-team.com, 2004)
Industrial Relations
Consultation between management and the workforce spread during the war. This meant that
personnel departments became responsible for its organization and administration. Health and
safety and the need for specialists became the focus. The need for specialists to deal with
industrial relations was recognized so that the personnel manager became as spokesman for the
organization when discussions where held with trade unions/shop stewards. In the 1970's
industrial relations was very important. The heated climate during this period reinforced the
importance of a specialist role in industrial relations negotiation. The personnel manager had the
authority to negotiate deals about pay and other collective issues.
Legislation
In the 1970's employment legislation increased and the personnel function took the role of the
specialist advisor ensuring that managers do not violate the law and that cases did not end up in
industrial tribunals.
Flexibility and Diversity
In the 1990's a major trend emerged where employers were seeking increasing flexible
arrangements in the hours worked by employees due to an increase in number of part-time and
temporary contracts and the invention of distance working. The workforce and patterns of work
are becoming diverse in which traditional recruitment practices are useless. In the year 2000,
growth in the use of internet meant a move to a 24/7 society. This created new jobs in e-
commerce while jobs were lost in traditional areas like shops. This meant an increased potential
for employees to work from home. Organizations need to think strategically about the issues
21

22. these developments raise. Human Resource Management managers’ role will change as changes
occur.
Information Technology
Some systems where Information Technology helps Human Resource Management are: Systems
for e-recruitment; On-line short-listing of applicants; developing training strategies on-line;
Psychometric training; Payroll systems; Employment data; Recruitment administration;
References; Pre-employment checks. Information Technology helps Human Resource managers
offload routine tasks which will give them more time in solving complex tasks. Information
Technology also ensures that a greater amount of information is available to make decisions.
Contemporary Human Resource Management.
In modern business the Human Resources Management function is complex and as such has
resulted in the formation of Human resource departments/divisions in companies to handle this
function. The Human resource function has become a wholly integrated part of the total
corporate strategy.
The function is diverse and covers many facets including Manpower planning, recruitment and
selection, employee motivation, performance monitoring and appraisal, industrial relations,
provision management of employee benefits and employee education training and development.
HISTORICAL MILESTONES IN HRM DEVELOPMENT
Table 1 identifies some of the major milestones in the historical development of HRM. Frederick
Taylor, known as the father of scientific management, played a significant role in the
development of the personnel function in the early 1900s. In his book, Shop Management, Taylor
advocated the "scientific" selection and training of workers. He also pioneered incentive systems
that rewarded workers for meeting and/or exceeding performance standards. Although Taylor's
focus primarily was on optimizing efficiency in manufacturing environments, his principles laid
the ground-work for future Human Resource Management development. As Taylor was
developing his ideas about scientific management, other pioneers were working on applying the
principles of psychology to the recruitment, selection, and training of workers. The development
22

23. of the field of industrial psychology and its application to the workplace came to fruition during
World War I, as early vocational and employment-related testing was used to assign military
recruits to appropriate functions.
The Hawthorne Studies, which were conducted in the 1920s and 1930s at Western Electric,
sparked an increased emphasis on the social and informal aspects of the workplace.
Interpretations of the studies emphasized "human relations" and the link between worker
satisfaction and productivity. The passage of the Wagner Act in 1935 contributed to a major
increase in the number of unionized workers. In the 1940s and 1950s, collective bargaining led to
a tremendous increase in benefits offered to workers. The personnel function evolved to cope
with labor relations, collective bargaining, and a more complex compensation and benefits
environment. The human relations philosophy and labor relations were the dominant concerns of
Human Resource Management in the 1940s and 1950s.
Human Resource Management was revolutionized in the 1960s by passage of Title VII of the
Civil Rights Act and other anti-discrimination legislation as well as presidential executive orders
that required many organizations to undertake affirmative action in order to remedy past
discriminatory practices. Equal employment opportunity and affirmative action mandates greatly
complicated the Human Resource Management function, but also enhanced its importance in
modern organizations. As discussed more fully in a later section, these responsibilities continue
to comprise a major part of the Human Resource Management job. Finally, changes in labor
force demographics, technology, and globalization since the 1980s have had a major impact on
the Human Resource Management function. These factors also are discussed in more detail in a
later section.
Table 1: Milestones in the Development of Human Resource Management
1890-
1910
Frederick Taylor develops his ideas on scientific management. Taylor advocates
scientific selection of workers based on qualifications and also argues for incentive-
based compensation systems to motivate employees.
1910-
1930
Many companies establish departments devoted to maintaining the welfare of
workers. The discipline of industrial psychology begins to develop. Industrial
psychology, along with the advent of World War I, leads to advancements in
employment testing and selection.
23

24. 1930-
1945
The interpretation of the Hawthorne Studies' begins to have an impact on management
thought and practice. Greater emphasis is placed on the social and informal aspects of
the workplace affecting worker productivity. Increasing the job satisfaction of workers
is cited as a means to increase their productivity.
1945-
1965
In the U.S., a tremendous surge in union membership between 1935 and 1950 leads to
a greater emphasis on collective bargaining and labor relations within personnel
management. Compensation and benefits administration also increase in importance
as unions negotiate paid vacations, paid holidays, and insurance coverage.
1965-
1985
The Civil Rights movement in the U.S. reaches its apex with passage of the Civil
Rights Act of 1964. The personnel function is dramatically affected by Title VII of the
CRA, which prohibits discrimination on the basis of race, color, sex, religion, and
national origin. In the years following the passage of the CRA, equal employment
opportunity and affirmative action become key human resource management
responsibilities.
1985-
presen
t
Three trends dramatically impact HRM. The first is the increasing diversity of the
labor force, in terms of age, gender, race, and ethnicity. HRM concerns evolve from
EEO and affirmative action to "managing diversity." A second trend is the
globalization of business and the accompanying technological revolution. These
factors have led to dramatic changes in transportation, communication, and labor
markets. The third trend, which is related to the first two, is the focus on HRM as a
"strategic" function. HRM concerns and concepts must be integrated into the overall
strategic planning of the firm in order to cope with rapid change, intense competition,
and pressure for increased efficiency.
HRM DEVELOPMENT AND IMPLEMENTATION RESPONSIBILITIES
While most firms have a human resources or personnel department that develops and implements
HRM practices, responsibility lies with both Human Resource professionals and line managers.
The interplay between managers and Human Resource professionals leads to effective Human
Resource Management practices. For example, consider performance appraisals. The success of
a firm's performance appraisal system depends on the ability of both parties to do their jobs
24

25. correctly. Human Resource professionals develop the system, while managers provide the actual
performance evaluations.
The nature of these roles varies from company to company, depending primarily on the size of
the organization. This discussion assumes a large company with a sizable HRM department.
However, in smaller companies without large Human Resource Management departments, line
managers must assume an even larger role in effective Human Resource Management practices.
Human Resource professionals typically assume the following four areas of responsibility:
establishing Human Resource Management policies and procedures, developing/choosing
Human Resource Management methods, monitoring/evaluating Human Resource Management
practices, and advising/assisting managers on Human Resource Management-related matters.
Human Resource professionals typically decide (subject to upper-management approval) what
procedures to follow when implementing a Human Resource Management practice. For
example, Human Resource professionals may decide that the selection process should include
having all candidates (1) complete an application, (2) take an employment test, and then (3) be
interviewed by a Human Resource professional and line manager.
Usually the Human Resource professionals develop or choose specific methods to implement a
firm's Human Resource Management practices. For instance, in selection the Human Resource
professional may construct the application blank, develop a structured interview guide, or choose
an employment test. Human Resource professionals also must ensure that the firm's Human
Resource Management practices are properly implemented. This responsibility involves both
evaluating and monitoring. For example, Human Resource professionals may evaluate the
usefulness of employment tests, the success of training programs, and the cost effectiveness of
Human Resource Management outcomes such as selection, turnover, and recruiting. They also
may monitor records to ensure that performance appraisals have been properly completed.
Human Resource professionals also consult with management on an array of Human Resource
Management related topics. They may assist by providing managers with formal training
programs on topics like selection and the law, how to conduct an employment interview, how to
appraise employee job performance, or how to effectively discipline employees. Human
Resource professionals also provide assistance by giving line managers advice about specific
Human Resource Management-related concerns, such as how to deal with problem employees.
25

26. Line managers direct employees' day-to-day tasks. From a Human Resource Management
perspective, line managers are mainly responsible for implementing Human Resource
Management practices and providing Human Resource professionals with necessary input for
developing effective practices. Managers carry out many procedures and methods devised by HR
professionals. For instance, line managers: Interview job applicants, provide orientation,
coaching, and on-the-job training, provide and communicate job performance ratings,
recommend salary increases, carry out disciplinary procedures, investigate accidents and settle
grievance issues
The development of Human Resource Management procedures and methods often requires input
from line managers. For example, when conducting a job analysis, Human Resource
professionals often seek job information from managers and ask managers to review the final
written product. Additionally, when Human Resource professionals determine an organization's
training needs, managers often suggest what types of training are needed and who, in particular,
needs the training.
HRM SPECIALTY AREAS OR FUNCTIONS OF HRM
TRADITIONAL SPECIALTY AREAS
Training/Development
Conducts training needs analysis; designs/conducts/evaluates training programs;
develops/implements succession planning programs.
Compensation/Benefits
Develops job descriptions; facilitates job evaluation processes; conducts/interprets salary
surveys; develops pay structure; designs pay-for-performance and/or performance improvement
programs; administers benefits program.
Employee/Industrial Relations
Helps resolve employee relations problems; develops union avoidance strategies; assists in
collective bargaining negotiations; oversees grievance procedures.
Employment/Recruiting
26

27. Assists in the Human Resource planning process; develops/purchases Human Resource
information systems; develops/updates job descriptions; oversees recruiting function; develops
and administers job posting system; conducts employment interviews, reference checks, and
employment tests; validates selection procedures; approves employment decisions.
Safety/Health/Wellness
Develops accident prevention strategies; develops legal safety and health policies;
implements/promotes EAP and wellness programs; develops AIDS and substance abuse policies.
Affirmative Action
Develops and administers affirmative action programs; helps resolve EEO disputes; monitors
organizational practices with regard to EEO compliance; develops policies for ensuring EEO
compliance, such as sexual harassment policies.
HRM Research
Conducts research studies, such as cost-benefit analysis, test validation, program evaluation, and
feasibility studies.
NEW HRM SPECIALTY AREAS
Work and Family Programs
Develops and administers work and family programs including flextime, alternative work
scheduling, dependent-care assistance, telecommuting, and other programs designed to
accommodate employee needs; identifies and screen child- or elder-care providers; administers
employer's private dependent-care facility; promotes work and family programs to employees.
Cross-Cultural Training
Translate the manners, mores, and business practices of other nations and cultures for American
business people. Other cross-cultural trainers work with relocated employees' families, helping
them adjust to their new environment.
27

28. Managed-Care
As a company's health-care costs continue to escalate, employers are embracing managed-care
systems, which require employees to assume some of the costs. Employers hire managed-care
managers to negotiate the best options for employees.
Managing Diversity
Develop policies and practices to recruit, promote, and appropriately treat workers of various
ages, races, sexes, and physical abilities.
CONTEMPORARY/ DIVERSITY ISSUES
HRM departments within organizations, just as the organizations themselves, do not exist in a
vacuum. Events outside of work environments have far-reaching effects on Human Resource
Management practices. The following paragraphs describe some of these events and indicate
how they influence Human Resource Management practices.
As mentioned previously, the enactment of federal, state, and local laws regulating workplace
behavior has changed nearly all Human Resource Management practices. Consider, for instance,
the impact of anti-discrimination laws on firms' hiring practices. Prior to the passage of these
laws, many firms hired people based on reasons that were not job-related. Today, such practices
could result in charges of discrimination. To protect themselves from such charges, employers
must conduct their selection practices to satisfy objective standards established by legislation and
fine-tuned by the courts. This means they should carefully determine needed job qualifications
and choose selection methods that accurately measure those qualifications. Social, economic, and
technological events also strongly influence Human Resource Management practices. These
events include: An expanding cultural diversity at the work-place, the emergence of work and
family issues, the growing use of part-time and temporary employees, an increased emphasis on
quality and team-work, the occurrence of mergers and takeovers, the occurrence of downsizing
and layoffs, the rapid advancement of technology, an emphasis on continuous quality
improvement and a high rate of workforce illiteracy.
These events influence Human Resource Management practices in numerous ways. For example:
Some firms are attempting to accommodate the needs of families by offering benefit options like
maternity leave, child care, flextime, and job sharing. Some firms are attempting to
28

29. accommodate the needs of older workers through skill upgrading and training designed to
facilitate the acceptance of new techniques. Some firms are educating their employees in basic
reading, writing, and mathematical skills so that they can keep up with rapidly advancing
technologies.
Unions often influence a firm's Human Resource Management practices. Unionized companies
must adhere to written contracts negotiated between each company and its union. Union
contracts regulate many Human Resource Management practices, such as discipline, promotion,
grievance procedures, and overtime allocations. Human Resource Management practices in non-
unionized companies may be influenced by the threat of unions. For example, some companies
have made their Human Resource Management practices more equitable (i.e., they treat their
employees more fairly) simply to minimize the likelihood that employees would seek union
representation.
Legal, social, and political pressures on organizations to ensure the health and safety of their
employees have had great impacts on Human Resource Management practices. Organizations
respond to these pressures by instituting accident prevention programs and programs designed to
ensure the health and mental well-being of their employees, such as wellness and employee
assistance programs.
Today's global economy also influences some aspects of Human Resource Management. Many
firms realize that they must enter foreign markets in order to compete as part of a globally
interconnected set of business markets. From a Human Resource Management perspective, such
organizations must foster the development of more globally-oriented managers: individuals who
understand foreign languages and cultures, as well as the dynamics of foreign market places.
These firms also must deal with issues related to expatriation, such as relocation costs, selection,
compensation, and training.
CONCLUSION
The history of Human Resource Management has progressed through the ages from times when
people were abused in slave like working conditions to the modern environment where people
are viewed as assets to business and are treated accordingly. The Human Resource function will
have to adapt with the times as staff become more dynamic and less limited in their roles and
29

30. bound by a job description. In future we may see employees being measured on the value they
contribute to a business and not their cost to the business.
Human resource management is, and was, an attempt to resolve the failures of personnel
management, human relations, and industrial relations to provide direction as to how
organizations should handle people so that organizational effectiveness and individual
satisfaction would be maximized. The resulting discussion and conception of humans as valuable
resources had a broad appeal which attracted many proponents of personnel management, human
relations, and industrial relations. In the exchange, the meaning of Human Resource
Management became so diffuse and uncertain that it is now idiomatic.
Human resource management now exists in several versions, each tied to the philosophical and
institutional position of its adherents. Human resource management continues to enjoy
managerial support and attract managerial attention. Conducting Human Resource Manaement
research is a more legitimate and socially desirable endeavour than conducting research on
industrial relations, with its pro-union slant, or conducting research on organizational behavior
with it ethereal findings. This broad acceptance of the goals and purposes of human resource
management may result in its imperialization of the study of work and employment within
business schools.
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