Differences in HR management

ALTHOUGH both human resource management (HRM) and personnel

management focus on people management, if we examine critically, there are

many differences between them. However, to find substantive and clear

differences between HRM and personnel management is not a simple task

because both are referring to "people". Nevertheless, debates and articles in the

management literature regarding the differences have clearly been proven.

There are five differences that can be debated between them which are:

1. Nature of relations;

2. Leadership and management role;

3. Contract of employment;

4. Pay policies and job designs; and

5. Communication and negotiation.

Nature of relations

The nature of relations can be seen through two different perspective views

which are Pluralist and Unitarist. There is a clear distinct difference between

both because in personnel management, the focus is more on individualistic

(Parag Diwan, 1998) where individual interest is more than group interest.

The relationship between management and employees are merely on contractual

basis where one hires and the others perform. Whereas, HRM focuses more on

Unitarist where the word "uni" refers to one and together.

Here, HRM through a shared vision between management and staff create a

corporate vision and mission which are linked to business goals and the

fulfilment of mutual interest where the organisation's needs are satisfied by

employees and employees' needs are well-taken care by the organisation.

Motorola and Seagate are good examples of organisations that belief in this

Unitarist approach which also focuses in team management and sees employees

as partners in an organisation.

Relation of power and management:

The distribution of power in personnel management is centralised where the top

management has full authority in decision-making where even the personnel

managers are not even allowed to give ideas or take part in any decision which

involves "employees".

This is what I call as "depowerment". The management is more hieratically

structured with top-down approach. The style of management here is more as

labour management where employees are merely seen as "operational workers"

who are directed to do things.

HRM, on the other hand, sees the decentralisation of power where the power

between top management is shared with middle and lower management groups.

This is known as "empowerment" because employees play an important role

together with line and HR managers to make collective and mutual decisions,

which can benefit both the management and employees themselves.

In fact, HRM focuses more on TQM approach as part of a team management

with the involvement and participation of management and employees with

shared power and authority.

The nature of management is focused more on bottom-up approach with

employees giving feedback to the top management and then the top

management gives support to employees to achieve mutually agreed goals and

objectives.

Today, the emergence of HRM-TQM has created Joint Consultative Committee

(JCC) where management and employees form a task committee to solve

problems or conflicts and to generate ideas and innovative business plans.

Leadership and management role

Personnel management emphasises much on leadership style which is very

transactional. This style of leadership merely sees the leader as a task-oriented

person.

This leader focuses more on procedures that must be followed, punishment form

non-performance and non-compliance of rules and regulations and put figures

and task accomplishments ahead of human factors such as personal bonding,

interpersonal relationship, trust, understanding, tolerance and care.

HRM creates leaders who are transformational. This leadership style encourages

business objectives to be shared by both employees and management.

Here, leaders only focus more on people-oriented and importance on rules,

procedures and regulations are eliminated and replaced with:

Shared vision;

Corporate culture and missions;

Trust and flexibility; and

HRM needs that integrates business needs.

The above have then created as what we call now MBO (management by

objectives) which is based on HRM strategy that focuses in transformational

leadership, style which encourages "participative management".

This according to John Storey is an "ideal type" if the new HRM model which HR

practices are no more involving only HR managers, but also the line managers.

Here, the HR managers and the line managers are equally important in directing

and co-ordinating people resources in order to achieve "bottom-line" objectives.

Contract of employment

In personnel management, employees contract of employment is clearly written

and employees must observe strictly the agreed employment contract.

The contract is so rigid that there is no room for changes and modifications.

There is no compromise in written contracts that stipulates rules, regulations, job

and obligations.

HRM, on the other hand, does not focus on one-time life-long contract where

working hours and other terms and conditions of employment are seen as less

rigid. Here, it goes beyond the normal contract that takes place between

organisations and employees.

The new "flexible approach" encourages employees to choose various ways to

keep contributing their skills and knowledge to the organisation.

HRM, with its new approach, has created flexi-working hours, work from home

policies and not forgetting the creation on "open contract" system that is currently

practised by some multinational companies such as Motorola, Siemens and

GEC.

HRM today gives employees the opportunity and freedom to select any type of

working system that can suit them and at the same time benefit the organisation

as well. Drucker (1996) calls this approach a "win-win" approach.

Pay policies and job design

Pay policies in personnel management is merely based on skills and knowledge

required for the perspective jobs only. The value is based on the ability to

perform the task and duties as per the employment contract requirement only.

It does not encourage value-added incentives to be paid out. This is also

because the job design is very functional, where the functions are more

departmentalised in which each job falls into one functional department.

This is merely known as division on labour based on job needs and skill

possessions and requirement.

HRM, on the contrary, encourages organisations to look beyond pay for

functional duties. Here, the pay is designed to encourage continuous job

performance and improvement (Kaizen) which is linked to value-added incentives

such as gain sharing schemes, group profit sharing and individual incentive

plans.

The job design is no more functional based but teamwork and cyclical based.

HRM creates a new approach towards job design such as job rotation which is

inter and intra-departmental based and job enlargement which encourages one

potential and capable individual to take on more tasks to add value to his/her job

and in return enjoy added incentives and benefits.

Communication and negotiation

Personnel management restricts communication between line managers,

employees and top management. The communication process is very indirect

and it is always difficult for the employees to channel problems, grievances or

ideas to the management because there are too many layers of communication

that can slow down the speed of any decision.

HRM gives employees direct communication with the management. Problems or

grievances can be solved immediately through open-door policy where one need

not make an appointment to see the head of department or even the chief

executive officer (CEO).

Motorola is one exceptional case of how HRM promotes open-door policy where

employees can even walk in straight to the managers room anytime to discuss

any problem pertaining to job or personal. In fact every employee have direct e-

mail access to the Motorola CEO in the US.

In personnel management, the negotiation process in any terms and conditions

are often made through the union as a third party who plays the role of a

mediator between employees and management.

This often creates mistrust, abuse of power, misunderstanding and conflicts if

both parties do not agree to compromise. HRM believes that if they can fulfil

employee needs, then third party involvement (the union) can be eliminated

because HRM focuses on how to get closer with the employees.

HRM also believes that negotiation of any terms and condition of employment

can be made directly through the process of collective discussions and

participation.

Employee Suggestion Scheme (ESS) is a success story of HRM. Minolta is one

of the companies that applies the ESS that sets or changes any HR policies

through mutual agreement.

HRM wants to focus on a non-unionist environment as one of the four pillars for

effective people development (Sissons, 1990). Employee training and

development: Personnel management sees training and development of

employees as part of a fulfilment of job changes and requirements.

Training programmes are designed to meet performance requirement. There is

no room for creating and innovative development.

It merely focuses on IQ development rather than EQ needs. Personnel managers

play the role of training officers who will identify, select and implement training

programmes not knowing what are the line managers' requirements and

expectations and the employees' strength and weakness.

HRM focuses more on learning organisations that can learn, unlearn and relearn

(Senge, 1984) to meet and adapt to business and technological plus job

changes.

Employee training and development is more linked to internal career growth and

long-term HR planning where the line managers together with HR managers and

employees will suggest the best possible training and development programmes

that can be selected and implemented to fulfil the organisational needs and

objectives.

This is normally done through the formation of career and training committee

which compromises of line managers and HR managers who work together to

create a learning organisation.

Conclusion

There is no doubt that HRM do differ from personnel management because the

former is more focused on production based economy (p-economy) whereas the

latter focuses more on knowledge based economy (k-economy).

Many writers such as Michael Armstrong and Fowler challenge and argue that

HRM is nothing new because the approach and strategies are still as in

personnel management. In my opinion, although HRM can be stated as the

reflection of the same picture, the models of people management is clearly

different.

Personnel management is very much on the classical way of managing people,

using functional model, but HRM is seen as scientific management (F.W. Taylor)

which uses wholistic model. This is because the work environment in the past is

very much different now; employees are becoming highly literate and

independent. Industrialisation has also reached the level of maturity where one

needs to depend on the other to achieve results.

Overall, HRM helps encourages innovation, teamwork and total quality that

encourage the willingness to keep moving in the pursuit to reach excellence.

"It is easy to manage money, machines or any other organisational assets but it

is difficult to manage people because they respond to you either negatively or

positively".

The art of people management

IN the era of globalisation (global think + local needs), the emergence of the new

scientific way of people management has given birth to the new term called

human resource management (HRM).

HRM can be the magic contributor to the success of an enterprise because it is in

a key position to affect customers, business results and ultimately "shareholder

value".

We should not forget that HRM is one integrated part of the management that

deals directly with people and for people. In other words, HRM focuses on

fulfilment of the internal customers needs, which can then help the organisation

to satisfy the needs of the external customers.

HRM is the "buzzword" for people development strategies and partnership

policies (SPP), which is the key to organisational success and sustainability.

Barry Smith, 1998 has stated that people are the most important asset and one

of the underlying factors is that "human capital" is very much powerful and

valuable than any other resources in an organisation.

Although Keenoy branded HRM as a "case of the wolf in sheep's clothing"

because it is the new term, which is more fashionable than the previously known

"personnel management", the former Ministry of Labour has supported it.

In fact, the former Ministry of Labour has discarded the old name in favour of the

HRM of Malaysia with the intention of keeping up with global business and

human resource changes. Although the debate on HRM versus personnel

management has largely died down, some valid theoretical perspective on the

topic is still being argued.

Well the argument whether HRM is the new name for personnel management

can be seen in many ways, especially when some quarters say that is it nothing

but "an old wine wrapped up in a new bottle". In fact, there are many differences

between both.

Torrington and Hall in their book Personnel Management: A New Approach made

clear that there are "substantive differences" between HRM and personnel

management.

They have strongly stated that personnel management is more focused on

people management whereas HRM focuses more on people development and

innovation.

In other words, personnel management was seen as a part of the problem but

HRM is seen as a part of the solution (Dev Anand, 2000).

The strategic role of HRM

In the past, most organisations were focused on the inward looking (Torrington,

1999), but with employees becoming more aligned with the strategic business

needs, they have become equally important as external customers. Because of

this, HRM has influenced organisations to be more outward looking (Torrington,

1999).

This has resulted in HRM as the complete role player, manager and changer,

which integrate people resources as "critical means to achieve desirable ends'

(Stone, 1998). Therefore HRM plays an important role, which is more business-

oriented, people-innovated and strategically focused. There are four main roles

of HRM strategically, that are:

HRM as a strategic partner;

HRM as people innovator;

HRM as part of an open management system; and

HRM as change management.

HRM as a strategic partner

HRM encourages HR managers to play a strategic role where they have the

ability to translate business strategy into action.

This facility roles the HR manager together with the HR team to take part in the

organisational decision making process. In short, HRM integrates and

strategically links the corporate business strategy to HR policies and practices.

HRM as people innovator

HRM also plays the role of people innovator through the integration of skills and

knowledge development plans (SKDP) advocated by John Storey. Storey clearly

says that as a people innovator, HRM focuses more on long-term planning and

therefore sees employees training and development as part of an investment.

The current role of HRM gives HR managers challenges to create highly

innovative and adaptive employees who cannot only participate in daily

operations but also contributes ideas for organisational development and adopt

to any changes which involves technological changes, social changes,

organisational changes, job changes or business changes.

HRM as an open management system

HRM sees the HR manager as an individual who must be able to relate and meet

the needs of employees. This can be achieved by being the employees voice in

the management discussions, by being fair and principled, by assuring that their

concerns are being heard, and by helping them find new ways to improve their

performance, contribute more to the organisation and be more job competent.

On the other hand, HR managers must play advisory and consultant role in

giving strategic views and ideas pertaining to any HR policies or regulations that

need to be implemented. HRM encourages management to be more participative

where line managers and HR managers work as a team.

In the open management system, problems are made very transparent and

employees' ideas and suggestions are not filtered before reaching the top

management.

HRM as part of change management

HRM is also involved in the process of change management, which is due to:

Uncertainty (what information is available in decision-making);

Volatility (how often is the environment changing);

Magnitudes of change (how drastic are the changes); and

Complexity (how many external and internal influences in the environment

are at play).

According to Denton (1984), HRM success depends on recognising the need for

change and successfully implementing it. Therefore, HRM urges HR managers to

be more alert to people and situations requiring changes (Legge, 1988), be

receptive to new ideas and ways of doing things and be able to lead and support

initiatives for change.

Changes in business and HR strategies requires careful introduction. Changing

employee's behaviour requires a change in the organisations culture.