Unit 1

The evolution of Human Resource Management (HRM)

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Detailed structure
1.0 Overview
1.1 Learning Outcomes
1.2 Terminology and Vocabulary
1.3 Introducing Human Resource Management (HRM)

 Organisation and people

 HRM and the 1980s
1.4 Evolution of HRM

 Taylorism and the Personnel function

1.5 HRM and Personnel Management

 Defining HRM
 John Storey’s 27 point of differences
1.6 HRM perspectives, HR functions, roles and competencies

 Soft variant of HRM

 The Harvard Model

 The strategic fit or the hard variant of HRM(Michigan School

of HRM)
 The Guest Model
 The Warwick Model
 Ulrich’s model
 Ulrich’s ‘three-legged’ model

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  HR roles and competencies and HR professional knowledge

1.7 Key HR challenges and issues

 Organisational performance
 People related challenges

1.8 The future of HRM

1.0 Overview
This unit is an introduction to the Human Resource Management(HRM)
its nature and scope, origins and evolution, it’s orientations and key
attributes. It also deals with the contributions of HRM to organisational
effectiveness in a context of complex changes.
1.1 Learning Outcomes
After completing this Unit, you will be able to:

 Define HRM
 Trace the evolution of HRM
 Contrast the nature and characteristics of Personnel
Management and HRM
 Review the main models and frameworks of HRM
 Indicate the significance of HRM to organisational effectiveness
 Reflect on future of HRM
1.2 Terminology/Vocabulary
HRM, Personnel Management, organisation, resources, triple bottom-
line, HRM models and perspective, HR roles and competencies, HR
metrics

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Warming up Activity

 List all the resources that an organisation needs to accomplish its

goals and objectives?
 How are Human/People resources different from all other resources
in your list?
What are the purposes of :
(a)Business Organisations?
(b)Public Sector Organisations?
(c)Compare your answers and discuss the similarities and differences that
you have observed.

 Reflect on the work of managers and list the key managerial

functions undertaken by all managers in an organisation?
 List the key operational functions in organisations?

1.3 Introducing Human Resource Management (HRM)

 Organisations and people

Organisations are made up of people, and other resources like Capital,
Raw Materials, Buildings, Machinery, Property and Location. For many
organisations, time and location are also important resources as
timeliness/deadlines and accessibility also impact upon organisational
performance and success.

Activity
What could be the implications of delays for (a) Private Sector
Organisations (b) Public Sector Organisations?
Organisations exist to provide societies with goods and services which
contribute to the welfare and standard of living of the citizens. Every

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organisation serves certain specific purposes which are referred to as
Goals and Objectives.

Activity Discuss the difference between Goals and Objectives? Use

some specific examples to illustrate your answer.

People and other resources are mobilised and co-ordinated to achieve the
purposes of organisations in the most efficient and effective manner.
Activity Discuss the difference between “Efficiency” and
“Effectiveness” Use some specific examples.

Now stop and think for a while. Can the production of goods and
services take place without the involvement of human beings? Human
beings constitute the most critical of all resources. They are also the most
valuable. Much of the success or failure of organisations depends upon
the effective management of these resources.
 Environmental factors
In managing organisations, it is important to keep track of the
environmental factors that can impact on management decisions and
actions and organisational outcomes. All societies are dynamic and are
undergoing various changes and these developments can influence and
shape organisational strategies and activities. In a context of competition
among organisations for highly skilled manpower, organisations will
have to deal with a number of important issues: How to recruit high
calibre employees, how to gain their interest, how to reward and retain
them?
With the progress of globalisation and economic liberalisation, and the
spread of the internet, the world has become increasingly inter-connected.
There is greater economic integration; competition is of a global scale;
technological innovation is faster; work attitudes and expectations are
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evolving fast and lifestyle changes are pervasive. These developments
pose new challenges to the management of organisations as well as the
management of people in organisations.

Noe et al., (2003) have remarked:

“The events that have occurred have also forced most companies to re-
examine their priorities and place more emphasis on providing value to
customers, shareholders and employees. Traditionally, the concept of
value has been considered a function of finance or accounting. However,
we believe that how human resources are managed is crucial to the long-
term value of a company and ultimately to its survival. Our definition of
value includes not only profits but also employee growth and satisfaction,
additional employment opportunities, protection of the environment, and
contributions to community programs”.
Management, which is essentially the process of getting people together
to accomplish desired goals and objectives using available resources
efficiently and effectively, has to cope with the emerging new realities,
new challenges and opportunities. It has to continuously adapt and
innovate the policies and practices that are involved in fulfilling the
purposes of the organisations.

 The 'Triple Bottom Line'

As the purposes of organisations have been shifting by incorporating the

needs of investors and other stakeholders, the impact of new technologies
and concerns for the environment, the management of people in
organisations has not been immune to these developments.

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On purposes of organisation:The 'Triple Bottom Line'

The phrase 'Triple Bottom Line' also referred to ‘Profits, People and Planet’ was “coined in
1994 by John Elkington and later used in his 1997 book "Cannibals With Forks: The Triple
Bottom Line Of 21st Century Business" describing the separate financial, social and
environmental "bottom lines" of companies. A triple bottom line measures the company's
economic value, "people account" – which measures the company's degree of social
responsibility and the company's "planet account" – which measures the company's
environmental responsibility. Elkington argued that companies should prepare three bottom
lines – the triple bottom line – instead of focusing solely on its finances, thereby giving
consideration to the company's social, economic and environmental impact.”
Source : http://www.investopedia.com/terms/t/triple-bottom-line.asp [1]

What are your views on the Triple bottom line concept?

 The 1980s and Human Resource Management(HRM )

How organisations manage their people is now referred to as Human
Resource Management(HRM).It began as a very rudimentary, clerical
duty of record keeping, payroll administration and provision of basic
welfare like worker’s  housing facilities and health care. In its early days
it was referred to as Personnel Administration/Management.
Towards the end of the 20th century, around the 1980s, in the US and
Europe, HRM emerged as an important development that aimed at re-
examining and reorienting employment relationships within
organisations. Most organisations were facing competition specially from
Japanese manufacturing firms, especially automobile makers, electrical
appliance makers, electric equipment manufactures, and precision
machinery industries which enjoyed a world-wide competitive advantage
for three decades from the early 1960s to the 1980s.
Japanese people-centric management practices were considered to be the
most important aspect of its success.

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Management practices, in particular the management of employees had to
be redefined. The traditional Personnel Management function had to be
revamped. It is in this context that the emergence of HRM in the 1980s in
the US and Europe is viewed as an important development that aimed at
re-examining and reorienting employment relationships within
organisations. It was argued that HRM can no longer operate in a
reactive mode and limit itself to addressing traditional administrative
tasks like hiring, paying and training employees in a piece-meal and
fragmented manner ; it had to demonstrate how it could add value to
overall goals and objectives of organisations. Beyond its operational
considerations, it had to also to assume its responsibility as a strategic
partner to top management and contributing directly to the realisation of
the business purposes.
Such an orientation posed a serious challenge to many of the managerial
beliefs and assumptions that were guiding managerial initiatives and
activities as far as the management of human resources was concerned so
far. One of the fundamental assertions of HRM which resonates with
contemporary mainstream management ideas is that the source of
productivity, creativity, competitiveness and value are the people who
work for organisations. According to Dave Ulrich, the twenty-first
century “belongs to human resources and to organisational capabilities.”
(Sims, 2007).
He was echoing what Peter Drucker, the Management guru, had already
asserted in the 1950s.
“The most valuable assets of a 20th-century company were its production
equipment. The most valuable asset of a 21st-century institution, whether
business or non-business, will be its knowledge workers and their
productivity" (Drucker, 1999).
 
The HRM discipline came to be associated with the assumption that
people are the primary creator of value and their quality and

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engagement will determine the survival, success and sustainability of
organisations.
HRM was called upon to play a catalytic role in aligning the
performance, productivity and engagement of people to the strategic
goals of organisations. It will have to operate in a more proactive mode
with additional responsibilities to help organisations to adjust to the
avalanche of continual changes, both internal and external.
The idea of HRM which emerged in the 1980s as a “fragile plant” has
now gained “a fairly secure hold”. There is now available sufficient
statistical “proof” of the performance outcomes of HRM policies and
practices.(Storey,ed.,2007) Besides, developments in the wider literature
on management, strategy and organisations have produced theories and
concepts like the resource-based (RBV)of the firm, the learning
organisation, human capital management, knowledge management,
which are in tune with and supportive of the HRM thesis.
Gradually, HRM has become “a pervasive and influential approach in the
management of employment in a wide range of market economies”
(Beardwell and Holden,1995).
According to Armstrong(2006):
“The terms ‘human resource management’ (HRM) and ‘human
resources’ (HR) have largely replaced the term ‘personnel management’
as a description of the processes involved in managing people in
organizations.
1.4 Evolution of HRM
Tracing the antecedents and origins of HRM is not an easy task.
Essentially the process has been evolutionary, beginning with elementary
changes concerning the welfare of workers to viewing workers as
partners in a strategic alliance for the success of organisations as well as
that of its stakeholders.

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The origins of modern day HRM can traced back to the earliest phase of
the Industrial Revolution in the 18th and the 19th centuries “when welfare
officers (sometimes called ‘welfare secretaries’) came into being. They
were women and concerned only with the protection of women and girls.
Their creation was a reaction to the harshness of industrial conditions,
coupled with pressures arising from the extension of the franchise, the
influence of trade unions and the labour movement, and the campaigning
of enlightened employers, often Quakers, for what was called ‘industrial
betterment’” (CIPD,2013).
In UK, with the setting up of textile and other factories, and with the
expansion of the mining industry, there was need for employing workers
in large numbers. It was in those days that the employers had to put in
place arrangements to deal with worker-related problems like low
productivity, indiscipline and absenteeism. Organisations had to
undertake such activities like record keeping, hiring, basic training
paying and removing or replacing workers.
This gave rise to an elementary system of personnel management, which
primarily addressed the needs of the employers and was geared towards
obtaining the highest productivity at the minimum cost. Employers
attitudes towards workers were generally exploitative and workers were
subjected to harsh conditions of work and often, faced problems of
health, injuries and ill treatment, along with low wages and poor working
conditions
However there were some notable exceptions. Robert Owen (1771-
1858)who was a factory owner as well as a social reformer, was
interested in improving the health, education, well-being and rights of the
working class. He was a committee member of the Manchester Board of
Health which was set up to promote improvements in the health and
working conditions of factory workers.

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He campaigned in favour of a ten-hour day in year 1810, and instituted it
in his New Lanark cotton mills. By 1817 he had formulated the goal of
the 8-hour day and coined   the slogan 8 hours labour, 8 hours recreation,
8 hours full rest. He held the view that:
‘commercial success could be achieved without exploitation of those
employed’.
The Quaker family companies -Cadburys chocolate and Clarks shoes-
also adopted a caring attitude towards workers, built homes for them to
live and set up shops with credit facilities. Many factories started
employing welfare officers.

 Taylorism and the personnel function

At the beginning of the 20th century, Taylor, who was an engineer and
whose name is closely associated with the Scientific Management
school, experimented with a set of principles which would improve
worker efficiency and productivity. In his book, Shop Management,
Taylor advocated the "scientific" selection and training of workers and
incentive schemes to reward high performers.
Taylor's primarily focussed on optimizing efficiency in manufacturing
environments, but the principles he advocated for that purpose came to
constitute the foundation for the future development of the personnel
function which later developed into the HRM function.
With the First World War, important changes took place. Women were
recruited in large numbers to fill the gaps left by men going to fight,
which in turn meant reaching agreement with trade unions (often after
bitter disputes) about ‘dilution’– accepting unskilled women into
craftsmen’s jobs and changing manning levels. This led to an accelerated
change in the development of personnel management
During the 1920s, in the engineering sector and other industries where
there were large factories, new positions were created with the titles of
‘labour manager’ or ‘employment manager’, to handle absence,

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recruitment, dismissal and queries over bonuses and so on. Employers’
federations, particularly in engineering and shipbuilding, negotiated
national pay rates with the unions, but there were local and district
variations and there was plenty of scope for disputes.
During the 1930s, with a growing economy, big corporations were set up
in new sectors. The Hawthorne studies, conducted by Elton Mayo & Fritz
Roethlisberger (1927 to 1940) ushered in the Human Relations
movement which influenced employment relationships significantly.
Observations and findings of Hawthorne experiment shifted the focus of
Human resource from increasing worker’s productivity to increasing
worker’s efficiency through greater work satisfaction.
Employers saw value in improving employee benefits as a way of
recruiting, retaining and motivating employees. The Second World War
brought about welfare and personnel work on a full-time basis at all
establishments producing war materials. Specialist personnel
management was seen as part of the drive for greater efficiency and the
number of people in the personnel function grew substantially; there were
around 5,300 in 1943.
By 1945, ‘personnel management’ was well established. Lessons from
the war had shown that output and productivity could be influenced by
employment policies. The role of the personnel function in wartime had
been largely that of implementing the rules demanded by large-scale,
state-governed production, and thus the image of an emerging profession
was very much a bureaucratic one.
In the 1960s, personnel managers were criticised for lacking negotiation
skills and failing to plan industrial relations strategies. In UK, following
the development of poor industrial relations, a Royal Commission under
Lord Donovan was set up. The Commission was critical of both
employers and unions and it suggested that these deficiencies were a
consequence of management’s failure to give personnel management
sufficiently high priority.
In the 1960s and 70s employment grew significantly. Personnel
management began to adopt techniques, using theories from the social

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sciences about motivation and organisational behaviour; selection testing
became more widely used, and management training expanded.
In the Mauritian context, it was in the late 1960s and the early 1970s that
interest in Personnel Management began to take firm roots. This was due
to the prevailing strained relations between employers and trade unions
in the sugar sector which was the main revenue and employment
generation sector of the economy. Also, government had adopted a
policy of employment creation with the setting up of a new sector of the
economy-the Export Processing Zone where many textile factories were
located. The need was felt for training in personnel management and the
employers turned to the University of Mauritius for the setting up of
basic training for their officers handling employee relations. The first
Certificate in Personnel Management training were launched in the early
1970s.This marked the professionalization of the personnel management
in Mauritius and laid the foundation for the future development of
Human Resource Management as a distinct field of management
practice. To-day with a diversified economy, HRM is well established
both in the private and public sectors and there are now available a wide
range of advanced education and training programmes, both at the
introductory and professional levels. HR practitioners have set up an
association-the Mauritian Association of Human Resource
Professionals-to promote the HRM function in the Mauritian context.
During the 1970s, specialism started to develop, with reward and
resourcing, for example, being addressed as separate issues. As the world
economy went through important changes, it opened the way for growth
in exports and imports. After the two World Wars, America and Europe
had emerged as power houses of industrial production. However, new
players like Japan, had also come on the scene and were engaged in trade.
Competition, both at the local level and at the international level, became
a new phenomenon-both an opportunity and a threat to economic players.
As observed by Beardwell and Holden(1995):
“By the 1980s the US economy was being challenged by overseas
competitors, most particularly Japan”.
As far as the UK is concerned, they noted:

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“In the UK in the 1990s, the business climate also became conducive to
changes in the employment relationship. As in the US this was partly
driven by economic pressure in the form of product market competition,
the recession in the early part of the decade, and the introduction of new
technology.”Other factors that also contributed to the movement for
change were a muscular entrepreneurialism and anti-union legislation
favoured by the Thatcher government.
Researchers and academics as well as some practitioners began to
identify and highlight important changes in the approach to the
management of people and they argued that way people were managed
held the key to competitive advantage. There was need to revisit and
rethink personnel management and the 1980s marked the beginning of a
vigorous debate about what needed to be changed and why, and the type
of relationship that should exist between those who manage and those
who are managed.
In the 1980s, the US economy faced the challenge of overseas
competition, in particular from exports coming from Japan; in UK,
increased product market competition coincided with the privatisation.
These conditions became the basis for a vigorous debate among
practitioners, academics and commentators about the nature, scope and
purpose of employment relationship. The result was different US and UK
analyses which produced different models and perspectives of HRM
about the essential elements of HRM, its functions and roles. Human
resource management became increasingly line management function ,
linked to core business operations.

A diagrammatic representation of the evolution of HR is provided below.

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In the mid-80s and beyond, the term ‘human resource management’
became integrated to the existing management vocabulary. Today some
companies refer simply to the ‘people’ function and call their most senior
HR executive the ‘chief people officer’. There now exists many more
job positions in the HR field which reflect the dynamic and complex
nature of contemporary HRM.

Examples of HR Jobs

 HR Business Partner
 HR Shared Services Manager / HR Business Partner
 Learning, Development & Talent Manager
 Change Analyst

Website: http://www.hrjobs.co.uk/jobs/ [2]

(Check other websites to find out other examples of new HR jobs.)

The HR profession itself now encompasses a number of specialist

disciplines, including reward management(including compensation,
benefits, pensions)diversity, resourcing, employee relations, organisation
development and design, and learning and development. 

Armstrong (2000) points to increasing professionalism among personnel

practitioners encouraged by bodies such as the UK's Chartered Institute
of Personnel and Development and the dissemination of ideas about
HRM by academics publishing in an increasing range of publications.

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 Activity Do you know the name of any professional body in Mauritius
which exists to promote the professional development of HR
managers?
What are its main objectives?

Ulrich has summarised developments in HRM in an interview to

HRMASIA. An extract is provided below with the website for access to
full interview.

Dave Ulrich comments on the evolution of HRM

How has the HR profession evolved over the years? What is the biggest shift that has taken place?

We have seen four shifts in the HR profession. In Phase One, HR began as an administrative function managing terms
and conditions of employment. It then moved into Phase Two, which focused on the practices of HR, such as staffing,
training, compensation, promotion, communication and organisation development. Phase Three saw HR align these
practices with the strategy of the business - strategy served as a mirror in which HR practices were reflected. In Phase
Four, which is now emerging, we are looking at “Outside-in HR”. Instead of being a mirror, HR practices align with
business conditions outside the firm, which include general environmental conditions and specific external
stakeholders. All four phases are relevant and build on each other, but the shift has been towards the different ways in
which HR can deliver value to their companies.

http://www.hrmasia.com/case-studies/look-whos-talking-dave-ulrich-headlines-hr-summit-2014/181306/
[3]

1.5 HRM and Personnel Management

According to Edwin Flippo (1971) "Personnel management is the

planning, organising, directing and controlling of the procurement,
development, compensation, integration and maintenance of the people
for the purpose of contributing to organizational, individual and social
goals.

The Institute of Personnel Management (IPM)-the precursor of CIPD,

UK- defined it as follows:

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"Personnel Management is that part of management concerned with
people at work and with their relationships within an enterprise. Its aim is
to bring together and develop into an effective organisation the men and
women who make up an enterprise and, having regard to the well being
of the individual and of working groups, to enable them to make their
best contribution to its success".

Traditionally, in many firms, personnel management was a support

function, existing on the periphery of organisational and strategic
decision making, which held a relatively lowly operational status (Wilton
2013)

In contrast, there is, now, general agreement that HRM needs to have a
closer fit with business strategy than previous models of personnel
management and be a source of value and competitive advantage to
organisations.

 Defining HRM

There are as many definitions as there are textbooks and authors of

HRM, but overall purpose of HRM is to ensure that the employees of
an organization are managed in such a way that the employer obtains
the greatest possible benefit from their abilities and the employees
obtain both material and psychological rewards from their work
(Graham, 1980).

According to CIPD(2011):
“....we can say that the ‘people management’ function – whether we
wish to define it as ‘personnel management’ or as ‘human resource
management’– may be described as:

All the management decisions and actions that directly affect or

influence people as members of the organisation rather than as
job-holders.”

To John Storey ( 1995):

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Human resource management is a distinctive approach to employment
management which seeks to achieve competitive advantage through the
strategic deployment of a highly committed and capable workforce, using
an integrated array of cultural, structural and personnel techniques.

Buchanan and Huczynski (2004) have stated that:

“HRM is a managerial perspective which argues the need to establish an

integrated series of personnel policies to support organizational strategy.”

Armstrong (2006) defines HRM 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”.

To Bratton and Gold (2007),

“HRM is a strategic approach to managing employment relations which

emphasizes that leveraging people’s capabilities is critical to achieving
competitive advantage, this being achieved through a distinctive set of
integrated employment policies, programmes and practices”.

Price(2011) has suggested the following definition:

“A philosophy of people management based on the belief that human
resources are uniquely important in sustained business success. An
organization gains competitive advantage by using its people effectively,
drawing on their expertise and ingenuity to meet clearly defined
objectives. HRM is aimed at recruiting capable, flexible and committed
people, managing and rewarding their performance and developing key
competencies”.

‘Umbrella’ term vs ‘distinctive approach’

According to Wilton(2013) ,HRM can be viewed from two angles:

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(i) as an ‘umbrella’ term, HRM is used to denote the activities associated
with people management in work organisations.

(ii)as a distinctive approach, also referred to as ‘ high-commitment

HRM’, the ‘mutual gains’ perspective to managing people that is
significantly different to traditional personnel management practices
through its ability to contribute to both enhanced organisational
performance whilst simultaneously improving workers’ experience of
employment and commitment to the organisation.

Although there is no consensus on the definitions or the characteristics of

HRM, it can be seen from the above definitions that HRM is a
combination of people-oriented management practices that views
employees as assets, not costs; and its main aim is to create and maintain
a skilful, knowledgeable and committed workforce to gain competitive
advantage. It has an innovative and proactive approach.

 Contrast between Personnel Management and HRM

BASIS FOR PERSONNEL HUMAN RESOURCE
COMPARISON MANAGEMENT MANAGEMENT

Meaning The aspect of management The branch of management

that is concerned with the that focuses on the most
work force and their effective use of the manpower
relationship with the entity of an entity, to achieve the
is known as Personnel organizational goals is known
Management. as Human Resource
Management.

Approach Traditional Modern

Treatment of Machines or Tools Asset

manpower

Type of function Routine function Strategic function

Basis of Pay Job Evaluation Performance Evaluation

Management Role Transactional Transformational

Communication Indirect Direct

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 BASIS FOR PERSONNEL HUMAN RESOURCE
COMPARISON MANAGEMENT MANAGEMENT

Labor Collective Bargaining Individual Contracts

Management Contracts

Initiatives Piecemeal Integrated

Management Procedure Business needs

Actions

Decision Making Slow Fast

Job Design Division of Labor Groups/Teams

Focus Primarily on mundane Treat manpower of the

activities like employee organization as valued assets,
hiring, remunerating, to be valued, used and
training, and harmony. preserved.

(https://keydifferences.com/difference-between-personnel-management-and-human-
resource-management.html)

Price (2000) has proposed a 10 ‘C’ model of HRM as a comprehensive

framework for understanding the various processes that drive HRM in
organisations.

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  John Storey’s 27 point of differences
Different models of HRM, representing different perspectives exist. They
will be reviewed at a later stage. At present, let us consider what makes
HRM different form traditional Personnel Management. John Storey
(1992) has developed a classificatory matrix of 27 points of differences
between Personnel and IR practices and HRM.

27 Points of Difference between Personnel Management & HRM

No
Dimension Personnel Management
.

Beliefs & Assumptions

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1 Contract Careful delineation of written contracts

2 Rules Importance of devising clear rules/mutuality

3 Guide to management Action Procedures

4 Behaviour Referent Norms/custom & practice

5 Managerial Task vis-à-vis Labour Monitoring

6 Nature of Relations Pluralist

7 Conflict Institutionalised

STRATEGIC ASPECTS

8 Key Relations Labour Management

9 Initiatives Piecemeal

10 Corporate Plan Marginal to

11 Speed of Decision Slow

LINE MANAGEMENT

12 Management Role Transactional

13 Key Managers Personnel/IR Specialists

14 Communication Indirect

14 Communication Indirect Direct

15 Standardisation High (e.g. ‘parity’ an issue) Low (e.g. ‘parity’ not seen as relevant)

16 Prized management skills Negotiation Facilitation

KEY LEVERS

17 Selection Separate, marginal task Integrated, key task

18 Pay Job Evaluation (fixed grades) Performance – related

19 Conditions Separately negotiated Harmonisation

20 Labour Management Collective bargaining contracts Towards individual contracts

Regularised through facilities & Marginalised (with exception of some bargaining for
21 Thrust of relations
training change models)

22 Job categories & grades Many Few

23 Communication Restricted flow Increased flow

24 Job Design Division of Labour Teamwork

25 Conflict Handling Reach temporary truces Manage climate & culture

26 Training & Development Controlled access to courses Learning companies

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 Foci of attention of
27 Personnel procedures Wide ranging cultural, structural & personnel strategies
interventions

Storey’s classification of the ‘ideal type’ of HRM “is not necessarily an

aim in itself but more a tool in enabling sets of approaches to be
pinpointed in organizations for research and analytical
purposes”(Beardwell and Holden,1995).
On the other hand Lundy (1994) has analysed the hard and soft models of
HRM (the control versus the commitment consideration) and has made
the following observations about their implications for HRM.

Policy Area Control-Based HRM Commitment-based

HRM
Job design sub-division of work; broader jobs; combined
principles specific job responsibility planning and
- with accountability ; implementation; teams
planning separate from
implementation

Management top-down control and flat structure; shared

Organisation coordination; hierarchy; goals for coordination
status symbols and control; status
minimized
Compensation fair day’s pay for a fair reinforcing group
day’s work; job evaluation achievements; pay geared
and appraisal; individual to skill and other
incentives contribution criteria;
profit sharing

Employee Unionised (damage mutual mechanisms for

Voice control, bargaining); Non communications and
unionised (attitude participation;
surveys) mechanisms for giving

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 employee voice on issues

Labour Adversarial mutuality; joint problem-

Management solving and planning
Relations
Management the boss dictates; fulfillment of employee’s
Philosophy management obligated to needs is a goal rather than
stakeholders an end

1.6 HRM perspectives, HR functions, roles and competencies

The challenges and issues that organisations have confronted and will
confront in the future will continue to attract the interest and attention of
both researchers and practitioners. Also, how organisations have been
dealing with such challenges in the past and now, and how will they deal
with them in future will continue to be part of “a longer debate over what
type of relationship does and should exist between, on the one hand,
those who manage and, on the other, those who are
managed.”(Beardwell and Holden, 1995)

The available literature indicates that as far as the conceptualisation of

HRM is concerned, there is considerable diversity-there is no one
monolithic mould for HRM.A review of the various perspectives of HRM
will drive home this point.

 Soft variant of HRM

Differences in the interpretations of HRM have created two different

schools of thought: soft and hard variants of HRM (Storey, 1995),
represented by   the Michigan and Harvard models-the two main models
of HRM.

The soft HRM version stresses the ‘human’ aspects of human resources,
and is identified by Storey as involving treating employees as valued

23
assets, a source of competitive advantage through their commitment,
adaptability and high quality. It also highlights the need to take into
account the interests of different stakeholders in the organisation (such as
shareholders, management, employee groups, government, community
and unions) and how their interests are related to the objectives of
management.
It involves:
• Gaining commitment of employees
• Aligning the interests of management, employees, and other
stakeholders
• Integration and team work
• Commitment and motivation.

The soft HRM version focuses on employee training, development, and

aims at developing motivation, quality and commitment of employees;
the hard HRM version, on the other hand, concentrates mostly on strategy
where human resources are used to achieve organisational goals. It
emphasises the ‘human’ side of human resources-the need to manage
people in ways that will obtain added value from them and thus achieve
competitive advantage. The actual content of HRM is articulated in four
policy areas, namely, human resource flows, reward systems, employee
influence, and works systems. Each of the four policy areas is
characterised by a series of tasks to which managers must attend. The
outcomes that these four HR policies need to achieve are commitment,
competence, congruence, and cost effectiveness. The aim of these
outcomes is therefore to develop and sustain mutual trust and improve
individual / group performance at the minimum cost so as to achieve
individual well-being, organisational effectiveness and societal well-
being.

 The Harvard Model

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Beer et al (1984) devised the famous Harvard Map (sometimes referred
to as the Harvard model) of HRM as shown in the diagram below:

Beer et al (1984) have argued that when general managers determine the
appropriate human resource policies and practices for their organizations,
they require some method of assessing the appropriateness or
effectiveness of those policies. This Harvard map is based on an
analytical approach and provides a broad causal depiction of the
'determinants and consequences of HRM policies.' It shows human
resource policies to be influenced by two significant considerations:

 Situational factors in the outside business environment or within

the firm such as laws and societal values, labor market conditions,
unions, work-force characteristics, business strategies, management
philosophy, and task technology. According to Beer et al these
factors may constrain the formation of HRM policies but (to
25
 varying degrees) they may also be influenced by human resource
policies.
 Stakeholder interests, including those of shareholders,
management employees, unions, community, and government.
Beer et al argue that human resource policies SHOULD be
influenced by ALL stakeholders. If not, 'the enterprise will fail to
meet the needs of these stakeholders in the long run and it will fail
as an institution.

The Harvard model claims to be comprehensive in as much as it concerns

six critical components of HRM. The dimensions included in the model
are: stakeholders, interests, situational factors, HRM policy choices, HR
outcomes, long-term consequences and a feedback loop through. The
outputs flow directly into the organization and the stakeholders.

This map is based on an analytical approach and provides a broad causal

depiction of the 'determinants and consequences of HRM policies.'

The authors also contend that human resource policies have both
immediate organizational outcomes and long-term consequences.
Managers can affect a number of factors by means of the policy choices
they make, including:

- the overall competence of employees, 

- the commitment of employees, 
- the degree of congruence between employees' own goals and those of
the organization, and 
- the overall cost effectiveness of HRM practices.

Beer et al state that these 'four Cs' do not represent all the criteria that
human resource policy makers can use to evaluate the effectiveness of
human resource management, but consider them to be 'reasonably
comprehensive' although they suggest that readers may add additional
factors depending on circumstances. And various authors have done so.

Beer et al argue that: "In the long run, striving to enhance all four Cs will
lead to favourable consequences for individual well-being, societal well-
26
being, and organizational effectiveness (i.e., long-term consequences). By
organizational effectiveness we mean the capacity of the organization to
be responsive and adaptive to its environment. We are suggesting, then,
that human resource management has much broader consequences than
simply last quarter's profits or last year's return on equity. Indeed, such
short-term measures are relatively unaffected by HRM policies. Thus
HRM policy formulation must incorporate this long-term perspective."

Unlike the Michigan model, the Harvard model represents the soft variant
of HRM. In the words of Wilton (2013):

“Soft HRM has its emphasis on developing and investing in human

capital, nurturing employee loyalty and providing well-rewarded and
satisfying work. This approach prioritises a positive employer–employee
relationship based on mutual trust, developed through employee
participation and involvement in organisational decision-making, worker
empowerment, collaboration and team working and a stakeholder
approach where the interests of all groups are equally valued”.

 The strategic fit or the hard variant of HRM(Michigan School

of HRM)
One of the first explicit statements of the HRM concept was made by the
Michigan School (Fombrun et al, 1984). They held the view that HR
systems and the organization structure should be managed in a way that is
congruent with organizational strategy(strategic fit).It is also known as
the ‘matching model’.

In this model of strategic HRM, the central theme is that there is a ‘tight
fit’ between organisational strategy, organisational structure and HRM
system. It highlights the ‘resource’ aspect of HRM and emphasises the
efficient utilisation of human resources to meet organisational objectives.
This means that, like other resources of organisation, human resources
have to be obtained cheaply, used sparingly and developed and exploited

27
as fully as possible. This is the hard variant of HRM. It concentrates on
quantitative, measurable criteria, control and performance management.

The approach emphasises:

• The interests of management

• The adoption of a strategic approach that is closely integrated with
business strategy
• The securing of added value from people by the process of human
resource deployment and performance management
• The need for a strong corporate culture expressed in mission and
value statements and reinforced by communications, training and
performance management process.

It is also associated with cost control and head count strategies, especially
in business processes like downsizing, lowering the wages, shortening
comfort breaks, etc. (Beardwell and Claydon, 2007).

Fombrun et al., (1984) have argued that in this model, HRM practice is
made up of a human resource cycle ,comprising of four generic
processes or functions that are performed in all organizations, as
illustrated in the diagram below. These are:
1. selection – matching available human resources to jobs;
2.appraisal- performance management;
3. rewards – ‘the reward system is one of the most under-utilized and
mishandled managerial tools for driving organizational performance’; it
must reward short as well as long-term achievements, bearing in mind
that ‘business must perform in the present to succeed in the future’;
4. development– developing high quality employees.

These processes are linked in a human resource cycle, as shown in the

diagram.

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The overall aim of the HR system is to achieve the most efficient
implementation of business strategies.

The Fombrun et al model focuses on only four functions of HRM and

ignores all environmental and contingency factors that can impact HR
functions

The Guest Model

This model was developed by David Guest in 1997 in the UK. It shows
the relationship between HRM activities and organizational strategy.

In this model, the HR manager has specific strategies to begin with,

which demand certain practices and when executed, will result in
outcomes. These outcomes include behavioral, performance related and
financial rewards.

According to Guest, there are four propositions which can influence the
practice of HRM. These are:

 Strategic integration-the ability of organizations to integrate HRM

issues into their strategic plans

 High commitment-the pursuit of agreed goals and a strong

identification with the organization
29
  High quality-the investment in high quality employees, which in
turn impact on the quality of goods and services

 Flexibility-the adaptability of organization structure together with

the capacity to manage innovation.

The diagram below illustrates these points.

The model emphasizes the logical sequence of six components: HR

strategy, HR practices, HR outcomes, behavioral outcomes, performance
results and financial consequences. It is therefore more prescriptive than
analytical in its approach. Looking inversely, financial results depend on
employee performance, which in turn is the result of action oriented
employee behaviors. Behavioral outcomes are the result of employee
commitment, quality and flexibility, which, in turn are impacted by HR
practices. HR practices need to be in tune with HR strategies which are
invariably aligned with organizational strategies.

30
The claim of the Guest model that it is superior to others is partly
justified in the sense that it clearly maps out the field of HRM and
delineates the inputs and outcomes. But the dynamics of people
management are so complex that no model (including the Guest model)
can capture them comprehensively.

 The Warwick Model

This model was developed by two researchers, Hendry and Pettigrew of

University of Warwick (hence the name Warwick model). The Warwick
model extends the Harvard framework by drawing on its analytical
aspects. Like other human resource management models, the Warwick
proposition centers around five elements, as shown in the diagram:

 Outer context (macro environmental forces)

 Inner context (firm specific or micro environmental forces)
 Business strategy content
 HRM context
 HRM content

31
The Warwick model takes cognisance of business strategy and HR
practices (as in the Guest model), the external and internal context (unlike
the Guest model) in which these activities take place, and the process by
which such changes take place, including interactions between changes in
both context and content. The strength of the model is that it identifies
and classifies important environmental influences on HRM. It maps the
connection between the external and environmental factors and explores
how human resource management adapts to changes in the context.
Obviously, those organizations achieving an alignment between the
external and internal contexts will achieve performance and growth.

 The strength of the model is that it identifies and classifies important

environmental influences on HRM. It maps the connection between
the external and environmental factors and explores how human
32
 resource management adapts to changes in the context. The model is
especially useful as it shows interplay between environmental
contingencies or factors and those specific to HR.

Obviously, organizations that bring about an alignment between the

external and internal contexts will achieve better performance and
growth.

 Ulrich’s model
In 1997, in his the book, Human Resource Champions, Dave Ulrich's
launched his business partner model of HRM. He suggested that the
contemporary HR professional fulfils four main roles:
• A partner with senior and line managers in strategy execution
•An expert in the way work is organised and executed so as to increase
efficiency
and reduce costs
• A champion for employees, representing their views and working to
increase their contribution
•An agent for continuous transformation, shaping processes and culture to
improve an organisation’s capacity for change.

The central idea behind Business partnering is that – HR department

should operate as a ‘business within a business’ and the aim of the
model is to help HR professionals integrate more thoroughly into

33
business processes and to align their day-today work with business
outcomes.

In 2005,the model was expanded and five distinct HR roles were

identified to respond to the changing business context, combining both
effectiveness in the present with preparing for the future. Wilton(2010)
has observed:

“The role of the HR specialist is, therefore, multifunctional, acting as

both a facilitator and leader of the strategic direction of the firm.”

A typology of HR roles

 Strategic Partner Incorporating the roles of change agent, business

expert, strategic HR planner and manager of organisational
‘knowledge’
 Functional Expert Emphasising concern for administrative
efficiency and
the design of HR policies and intervention
 Employee Advocate Addressing the needs of an organisation’s
current workforce
 Human Capital Developer Preparing employees to meet future
challenges
 Leader Incorporating leadership of the HR function itself, working
collaboratively with other areas of the business and being effective
in the preceding four roles

In 2012, further research showed that the priorities of HR shifted with a

focus on the following 6 orientations :

 outside/in: HR must turn outside business trends and stakeholder

expectations into internal actions
 business/people: HR should focus on both business results and
human capital improvement
 individual/organisational: HR should target both individual ability
and organisation capabilities
34
  event/sustainability: HR is not about an isolated activity (a
training, communication, staffing, or compensation programme) but
sustainable and integrated solutions
 past/future: respect HR's heritage, but shape a future
 administrative/ strategic: HR must attend to both day-to-day
administrative processes and long-term strategic practices.
To cope with these concerns, the research found HR professionals
needed to upgrade their competencies in six domains in order to respond
to these business challenges and create sustainable value.
The six competency domains are:
- Strategic Positioner
- Credible Activist
- Capability Builder
- Change Champion
- Human Resource Innovator and Integrator
- Technology Proponent

The 6 key competencies for HR success are illustrated in the given

diagram

35
Furthermore, the research showed that same pattern of HR competencies
holds true across regions of the world, across levels of HR careers, in
different HR roles and in organisations of all sizes.
In 2013,, the Society for Human Resource Management also published a
competency model, titled Elements for HR Success. The SHRM Elements
for HR Success competency model contains nine competencies, the first
one a technical competency and the remaining eight behavioral:

1. Human Resource Technical Expertise and Practice: Applying

the principles and practices of human resource management to
contribute to the success of the business;

2. Relationship Management Consultation: Managing interactions

with and between others with the specific goal of providing service
and organizational success;

3. Consultation: Providing direct guidance to organizational

stakeholders (e.g., employees and leaders) seeking expert advice on
a variety of situations or circumstances;

4. Organizational Leadership and Navigation: Providing direct

guidance to organizational stakeholders (e.g., employees and
leaders) seeking expert advice on a variety of situations or
circumstances;

5. Communication: Effectively exchanging and creating a free flow

of information with and among various stakeholders at all levels of
the organization to produce impactful outcomes;

6. Global and Cultural Effectiveness: Managing human resources

within and across borders and cultures;

7. Ethical Practice: Integrating core values, integrity and

accountability throughout all organizational and business practices;

36
 8. Critical Evaluation: Interpreting information (e.g., data, metrics,
literature) to determine ROI and organizational impact in making
business decisions and/or recommendations; and

9. Business Acumen: Understanding business functions and metrics

within the organization and industry.

The two competency models are different in design but they provide
research-grounded road maps for HR leaders to follow in building their
own competencies and the competencies of their HR team. They both
provide an answer to the worrisome question that HR managers often
ask: "What should I be doing to be effective?" 

Form the review of the different models and frameworks of HRM it can
be seen that during the initial years of the HRM orientation of the
management of human resources, the descriptive, analytical, normative
academic dimensions have been emphasized. Over time especially in the
late 1980s, 1990s, and the twenty first century, the direction was towards
the establishment of competency-based HR models that were somewhat
more practical and more useful. (Abdullah and Sentosa,2012)

As HR professionals master the HR competencies, they will not only be

seen as more effective HR professionals, they will add explicit value to
their business. Contemporary research shows that being a credible
activist helps HR professionals gain personal credibility, but being
capability builders, HR innovators and integrators and technology
proponents have more impact on business performance.

 Ulrich’s ‘three-legged’ model

As the HRM agenda changes, there is need to reconfigure approach for
the delivery of HR services. In 1997, in his book Human Resource
Champions: The next agenda for adding value and delivering results,
Dave Ulrich had advocated the structure and restructure of the HR
function for the delivery of services to meet the challenges of changing
national and international business conditions. He had also argued that
the role of the HR professional must be redefined to meet the competitive

37
challenges organisations were facing then and would face in the future.
He proposed the ‘three legged’ model which is made up of :
(i)an in-house or outsourced HR service centre carrying out routine,
transactional HR work
(ii)centres of expertise (or excellence) providing specialist advice to all
parts of the business on matters such as reward, employee relations and
talent management to deliver competitive business advantages through
HR innovations and
(iii) finally, HR business partners (or strategic partners- senior or key HR
professionals) working closely with business leaders or line managers,
usually embedded in the business unit, influencing and steering strategy
and strategy implementation..

This model is in contrast to the traditional  arrangement where each

business unit has its own HR team carrying out the full range of HR
activities. Ulrich has argued that the three-legged model of HR delivery
gives the function an opportunity to become a key strategic player, able
to contribute to policy development, rather than simply carry out the
decisions of others.

The 2006 CIPD report The Changing HR Function has noted that what
emerges from the literature are two approaches to HR structures that
dominate the way in which services are currently organised:

 traditional approaches of a single team of generalists, specialists

and administration or a corporate strategy team aligned by business
units or locations
 the ‘three-legged stool’ model of business partners, shared services
and centres of expertise.

It has concluded that the primary driver for the structural transformation
of HR has been the desire for the function to be a more strategic
contributor and to maximise HR’s contribution to business performance.
Noe et al (2003),on their part, have observed that while HRM began as a
purely administrative function, it has now assumed a much more strategic
role. HRM is also likely to be involved in wider strategic and operational
/managerial activity such as change management and employer branding.

38
It follows, therefore that the HRM structure needs to be redefined and
improved.

 HR competencies and HR professional knowledge

As we have seen ,the competency approach confers additional and new
roles to HR managers. In some cases, HRM specialists play a central and
leading role and in others they are more likely to fulfil an advisory
capacity for managers in other areas of the business. For example, in
filling a job vacancy, HR specialists in large organisations are likely to
provide support in designing job specifications and advertisements,
ensuring legal compliance (for example, with equal opportunities
legislation) and assisting with or advising on the selection process. HRM
professionals might be generalists responsible for all HR processes in a
firm or, more likely in larger organisations, they might specialise in one
or more specific areas, for example reward, training or diversity.
Importantly, HRM encompasses not only those activities that are the
responsibility of designated HR departments or specialists but also those
activities that are carried out by managers in all areas of the business who
are responsible for the management of co-workers. Many organisations
now have an HR director on the board.
HR professionals are encouraged to continually update their professional
knowledge and skills and gain greater understanding of wider business
processes in order to increase their influence on corporate strategic
decision-making. This perspective of the role of HRM in the organisation
clearly fits with Ulrich’s typology of HR roles discussed earlier
The challenge for HR leaders is to actually step up and to learn and use
the tools now available. This is another extract from an interview Dave
Ulrich gave to HRMASIA on the HR core competencies. The full
interview can be accessed at the website provided.

What core competencies does HR lack?

We have studied HR competencies for 25 years, and the competencies have evolved. In our 2012 study, we found six
key competency traits required of HR professionals: strategic positioner (able to turn business knowledge into
organisation actions), credible activist (able to build relationships of trust and influence), capability builder (able to
diagnose and shape an organisation’s culture), change champion (able to initiate and sustain change), HR innovator

39
and integrator (able to align, innovate, and integrate new HR practices), and technology proponent (able to use
information to drive long term results). We find that HR professionals are most competent as credible activists, which
helps them build personal credibility. But business results come when they demonstrate competencies of capability
builders, HR innovators and integrators, and technology proponents.

http://www.hrmasia.com/case-studies/look-whos-talking-dave-ulrich-headlines-hr-summit-2014/181306/

Activity Take a close look at the list of core competencies for HR

professionals and write brief explanations for each of them.

At this stage, it will also be good to remind HR managers of , an Irish

proverb that says, "A trade not properly learned is an enemy," and
another English proverb that says, "There's no time like the present."  

1.7 Key HR challenges and issues

The agenda of HRM has been evolving to reflect contemporary concerns

as HRM is called upon to address a wider, more comprehensive agenda
than traditional Personnel administration /management.
Noe et al(2003) have argued that there will be an increase in the
importance of HRM due to four competitive challenges, namely:

 The new economy challenge with the rise in e-business and the
growth in professional and service jobs, making it more difficult for
companies to find and keep talented employees. How will
organisations build a committed, productive workforce in turbulent
economic conditions that offer opportunity for financial success but
can also turn sour ,making every employee expendable? How will
employee loyalty be balance with job security?
 The global challenge which requires organisations both to defend
their domestic markets from foreign competitors and broaden their
scope to encompass global markets.
40
  The challenge of meeting stakeholders’ needs-how to integrate
customer, employee and community needs in organisation
purposes? How to engage in ethical and responsible actions in an
environment of competition?
 The high-performance work systems challenge-how to integrate
human resources and their capabilities, new technology and its
opportunities and efficient work structures and policies that allow
employees and technology to interact. How to promote a culture of
working smarter mediated by new technology?
In a recent study on Human Capital Challenges and Priorities for
organisations and their HR functions in the Suisse Romande area,
Hathorn (2012) has identified two types of challenges for HRM:

 Organisational performance

1. Sustaining organisational performance in the current economic

climate-global competition and decreasing demand- placed high pressure
on margins and cost control.

2. Responding to the financial and competitive challenges

faced in 2011 and expected to continue in 2012-many organisations
found that they were not structured correctly for the current conditions
and could not maintain acceptable profitability levels, resulting in low or
no compensation increases and some staff cuts.

3. Engaging and motivating staff under the current conditions was cited
as a major challenge-given that many staff members face employment
uncertainty, additional workload, stagnant pay levels, a market with
fewer full time positions and even low or negative performance of their
pension funds, it is not surprising that engagement was one of the top
three concerns for achieving organisational performance.

 People related challenges

41
1. Providing a full range of support for the talent pool-
developing staff and teams to respond to increasing demands

2. Keeping staff engaged and motivated- motivating the multiple

generations(Baby boomers, X,Y) with their different expectations was
cited as a particular challenge, and was creating a climate where
innovation was valued.
Activity Brainstorm on how organisations can secure the
engagement of their employees

Activity Apart from the two key challenges mentioned, what other
challenges need to be addressed?

1.8 The future of HRM

Over the last few decades, HRM has undergone substantial change and
reorientation. The HRM research and literature continues to expand. The
debate about HRM reality and rhetoric is ongoing .New technology and
the outsourcing process is impacting on the very nature and scope of
HRM. The role of the HR professional is changing. In the past, HR
managers were often viewed as the systematizing, policing arm of
executive management. Their role was more closely aligned with
personnel and administration functions that were viewed by the
organization as paperwork. In this role, the HR professional served
executive agendas well, but was frequently viewed as a road block by
much of the rest of the organization.

While some need for this traditional role is justified, much of the HR
role is transforming itself and needs to be transformed. The primary focus
of HRM is shifting and the central concern is about how much value the

42
HR functions are creating for the organisations, when addressing the
emerging and new challenges facing HRM.

Price (2011) has identified ten trends that will impact on HRM.

1 Use of technology to communicate with employees.

2 Rising health care costs.
3 Increased vulnerability of intellectual property.
4 Managing talent.
5 Greater demand for high-skilled workers than for low-skilled
workers.
6 Labour shortage.
7 Change from manufacturing to information/service economy.
8 Increase in employment-related government regulations.
9 Focus on domestic safety and security.
10 Ability to use technology to more closely monitor employees.

In this context ,the change of HR roles is both an immense opportunity

and a threat for human resource managers. The HR function of the future
will need to make the most of knowledge workers and knowledge
professionals and emphasize intellectual capital, learning processes and
organizational adaptability. How to attract, motivate and develop workers
with scarce but critical abilities, and how to develop effective processes
of work organization will be fundamental to knowledge-based
competition and will determine the organisational effectiveness and
success in the future.

Activity Now that you have completed your reading and

understanding of Unit 1,
(a) write your own definition of HRM

(b)state, what according to you, is the main change that is

43
taking place as far as the practice of HRM is concerned?

44