Introduction To Human Resource Management BUS 125

What is a human resource?

Human resources are all the people who work for or contribute to the organization in one capacity or
another. Together, these people make up a company’s workforce. They can be full-time or part-time
salaried or hourly employees, for example, but also contingent workers such as consultants, contractors,
or freelancers. Just as we have Human Resources, we also have Non-human Resources which consists of
machines and robots that are increasingly involved in day-to-day work in all industries. And the
interaction between the human and the machine is becoming increasingly important to the
organization’s success, which arguably forms part of the workforce in the organization.

Human Resource Management (HRM) involves strategically managing an organization's workforce to

achieve its goals, encompassing recruitment, training, performance management, compensation, and
employee relations, all guided by a philosophy that values employees as valuable assets.

Human Resource Management (HRM) is a strategic approach to managing employees to achieve better
organizational performance. It aims to attract, manage, and retain employees who contribute to the
company’s success, ensuring their alignment with the organization’s strategic goals and culture. HRM
encompasses various functions, including recruitment, compensation, and employee development, to
support and engage the workforce effectively.

For example, if you hire people into a business, you are looking for people who resonate with your
company culture as they will be happier, stay longer, and be more productive than people who don’t.
Another example is engagement. Engaged employees are more productive, deliver higher quality work,
and make customers happier. This means that if HR can find ways to make employees more engaged, this
benefits the company.

The HR department aims to provide the knowledge, tools, training, legal advice, administration, and
talent management crucial to supporting and advancing the company.

This is what Human Resource Management boils down to: optimizing organizational performance
through better management of human resources.

Basic Concepts of HRM:

• Strategic Role:

HRM is not just about administrative tasks; it's a strategic function that aligns with the overall business
objectives.

• Employee as a Resource:

HRM views employees as a valuable resource, not just a cost, and focuses on developing and retaining
talent.

• Key Functions:

• Recruitment and Selection: Attracting and hiring qualified candidates.

• Training and Development: Enhancing employee skills and knowledge.

 • Performance Management: Setting goals, evaluating performance, and providing
feedback.

• Compensation and Benefits: Designing fair and competitive compensation packages.

• Employee Relations: Fostering a positive and productive work environment.

• HR Information Systems: Using technology to manage HR data and processes.

• HR Data and Analytics: Using data to make informed HR decisions.

• Focus on People:

HRM emphasizes the importance of understanding employee needs, motivations, and aspirations.

• Legal and Ethical Compliance:

HRM ensures that all HR practices comply with relevant laws and ethical standards.

Philosophy of HRM:

• Humanistic Approach: HRM philosophy often emphasizes a humanistic approach, treating

employees as individuals with unique needs and potential.

• Belief in Employee Potential: HRM believes that employees can be developed and motivated to
contribute their best.

• Commitment and Belonging: HRM aims to foster a sense of commitment and belonging among
employees.

• Value of Diversity and Inclusion: HRM recognizes the value of diversity and promotes an
inclusive workplace.

• Continuous Improvement: HRM is committed to continuous improvement in HR practices and

processes.

• Adaptability: HRM must be able to adapt to changing business environments and employee
expectations.

The philosophy of Human Resource Management

The philosophy of Human Resource Management (HRM) encompasses the guiding principles and beliefs
an organization holds regarding its employees, shaping how they are treated, recruited, trained, and
developed, ultimately impacting the company's success.

• Core Principles:

The HR philosophy outlines the organization's values and beliefs about people, their nature, needs, and
contributions to the workplace.

• Influence on HR Practices:
This philosophy determines how the company will approach various HR functions, including recruitment,
training, development, performance management, compensation, and employee relations.

• Organizational Success:

A well-defined HR philosophy is crucial for creating a positive and productive work environment,
fostering employee engagement, and driving organizational success.

• Examples of HR Philosophy:

• Employee-centric approach: Prioritizing employee well-being, development, and

engagement.

• Talent management focus: Identifying, developing, and retaining top talent.

• Diversity and inclusion: Creating an inclusive environment where all employees feel
valued and respected.

• Performance management: Establishing clear expectations, providing regular feedback,

and supporting employee growth.

• Employee relations: Fostering open communication, resolving conflicts effectively, and

building strong relationships with employees.

• Modern HR Philosophy:

Modern HR philosophy emphasizes a more holistic approach to employee management, focusing on

employee well-being, engagement, and development, while also aligning with organizational goals.

• Importance of HR Philosophy:

• Clarity and Consistency: Provides a clear framework for HR practices and decision-
making.

• Employee Motivation: Creates a positive and supportive work environment that

motivates employees.

• Competitive Advantage: Attracts and retains top talent, leading to a competitive

advantage.

• Organizational Success: Drives organizational success by fostering a productive and

engaged workforce.

Why is Human Resource Management important?

HRM involves various activities, processes, and policies – tied together in an HR strategy – that aim to
align a company’s workforce with its strategic (business) objectives.
As such, effective Human Resource Management is integral to any organization’s success and plays a role
in the following:

• Attracting and retaining talent: The HR department creates a comprehensive talent

strategy that helps the organization recruit, develop, and retain the right people.

• Enabling managers: Managers play a crucial role in employee retention and success. HR is there
to equip managers with all the tools, resources, and support they need to help their teams
flourish.

• Driving strategic planning: HR works with senior leaders to keep the HR strategy in line with the
organization’s objectives. This enables the HR team to identify talent gaps and create workforce
plans to then proactively find the right talent for the right position.

• Fostering organizational culture: HRM plays a vital role in shaping and cultivating the company’s
culture by establishing the values, norms, and behaviors that correspond with the organization’s
mission and vision.

• Creating a productive work environment: A positive work environment is good for employee
productivity, which, in turn, is critical to the success of the business. Various HRM practices,
therefore, aim to implement effective performance management systems, set clear job
expectations, and provide regular feedback, among other things.

EVOLUTION OF HUMAN RESOURCE MANAGEMENT

Evolution of HRM over the period of time is important for understanding the philosophy, functions and
practices of HRM that are followed in different situations so that relevant HRM practices are evolved in
the present situation.

HRM, being a part of management discipline, has followed the pattern of development of management
because of the interrelationship of the problems of both the fields.

Human Resource Management (HRM) is relatively a very recent term considered for managing human
resources in an organisation. HRM is still evolving to become an amalgam of organisational behaviour,
personnel management, industrial relations and labour legislation.

Historical Perspective of Human Resource Management

The term “human resource management” is of recent origin. In its modern connotation, it came to be
used mainly from the 1980s onwards. During ancient times and for a long period in the medieval era,
production of goods was done mainly by skilled artisans and craftsmen. They themselves owned the
tools and instruments, produced articles and sold these in the market.

As such, the question of employer-employee or master-servant relationship did not arise in their cases.
They managed their affairs themselves and with the help of the family members. However, many
effluent craftsmen also employed apprentices and certain categories of hired labourers. There existed a
very close relationship between the master craftsmen and the apprentices, and they themselves took
care of the problems facing the apprentices and their family members.

A sort of human approach was involved in their relationship. After a prolonged period of training, many
apprentices established their own enterprises, and many others remained attached with their master
craftsmen on lucrative terms. During the medieval period, the skilled craftsmen also formed their guilds
primarily with a view to protecting the interests of their respective trades.

These guilds also determined the price of their products, the wages of the journeymen and hired
labourers, and regulated the terms and conditions of their employment. The ancient and a major part of
the medieval period also witnessed prevalence of certain other distinct types of labourers. These
comprised slaves, serfs and indentured labourers.

A brief description of the manner in which they were treated and managed will be relevant for a proper
understanding of human resource management in a historical perspective.

1. Managing Slaves:
Slaves comprised an important source of manpower in almost all ancient civilisations. They could
be sold and purchased like commodities. Their main purchasers were the wealthy rulers,
landlords, tribal chiefs and effluent businessmen. The purchasers of slaves had a rather complete
control over their slaves.
The masters of the slaves took a variety of arduous work from them such as carrying heavy
loads, rowing ships and boats, construction of buildings and forts, digging canals, cattle-rearing
and tillage of soil. The remuneration or compensation for their efforts comprised mainly food,
shelter and clothing. The slaves were dealt with iron hands. They were subjected to strict
supervision, and non-compliance of the orders of their masters or supervisors was generally
punishable with physical tortures, and occasionally with mutilation of their limbs and even death
sentence for grave offences.
2. Managing Serfs:
Serfdom was widely prevalent in the feudal societies of the pre-and early medieval era. Serfs
were engaged by landlords mainly in agricultural operations and allied activities. The landlords
would usually give them a piece of land for their habitat and often, some land for their own
cultivation. In many cases, a paltry sum of money was advanced to them in order that they could
remain attached to their masters.
In lieu of these facilities, the serfs and their family members were required to serve their
masters. The work assigned to serfs mainly comprised – tillage of soil, cattle-rearing, domestic
work and similar other activities. Many landlords would also give them a meagre amount as
wages, whether in cash or in kind. Usually, serfs could become free after returning to their
masters the habitat, the piece of land and advances with interest. They could also be transferred
to some other landlord on payment.
Under serfdom, some measure of personal relationship existed between the landlords and the
serfs. Many landlords often tried to solve their genuine grievances and extended some help to
those who were in distress. The feudal lords also occasionally gave some economic inducements
to their serfs in the form of additional supply of food-grains and some money for their increased
productivity and good behaviour.
 Although the management of serfs was based on the principle of authoritarianism, the element
of human treatment was often found in their relationship. With the abolition of the feudal
system, serfdom also came to an end. However, some remnants of the past can still be found
even today, especially in rural areas. The bonded labour system in India is comparable to the
system of serfdom prevalent in European countries during the medieval period.
3. Managing Indentured Labour:
The system of indentured labour emerged primarily with the flourishing of mercantilism and
advent of industrial revolution. The discovery of new lands through sea and land routes led to a
substantial increase in the demand of European goods abroad, and at the same time, gave a fillip
to the establishment of industries in the continent.
As a consequence, trade flourished leaps and bounds, and the mercantilists, taking advantage of
the expanding markets, tried to accumulate as much wealth as possible. In their quest for
maximising wealth, the mercantilists would offer attractive inducements to the artisans and
skilled craftsmen for accelerating production of goods in demand. The artisans and craftsmen
responded and they started engaging an increasing number of apprentices and hired labourers
to cope with the demand of the products.

Emergence of Modern Industrial Labour and Improvement of Status:

Even during the periods when slavery and serfdom were rampant, there were various categories of
workers who enjoyed a certain amount of freedom in the relationships with their employers. They were
mainly skilled craftsmen and artisans and experienced apprentices. However, the composition of free
workers materially changed with the spread of industrialisation and establishment of factories and other
kinds of industrial and business establishments. Industrialisation led to the congregation of a large
number of workers at the same establishment owned by an individual employer or a company. The
employers were generally interested in maximising their profits, and callously disregarded human
aspects in managing the affairs of their enterprises.

The state also remained a mute spectator to the miseries and sufferings of the toiling masses of workers,
primarily because of the widespread prevalence of the doctrine of individualism and laissez faire. These
situations led to further deterioration in the conditions of industrial workers who had to face numerous
problems in their employment.

Notable among these problems were low wages, excessive hours of work, hazardous and strenuous
physical working conditions, instability of employment, and arbitrary treatment by supervisors and
managers.

The industrial workers, sooner or later, came to realise that individually they might be dispensable to the
employer, but collectively, they were indispensable as the running of the enterprise was in the interests
of both. This realisation induced them to organise and pressurise the employers and the state to take
positive steps to improve their conditions.

However, these early combinations received severe blows from the courts of law either under common
law or under special statutes such as Combination Acts, 1799 and 1800 of England.

The conditions, however, changed during the course of time. Certain notable developments relevant to
the management of human resources included spread of democratic ideals and principles, growth of
socialist ideas, emergence of the concept of welfare state, strengthening of workers’ organisations,
efforts of social reformers, and changes in the size and composition of the labour force.

These developments led to substantial changes in the attitude of the employers towards workers and
the role of the state in regard to labour matters.

The state started enacting labour laws with a view to ameliorating physical working conditions at the
place of work, laying down minimum standards in specified areas of terms and conditions of
employment, making available to workers certain welfare amenities, adopting social security measures
against certain contingencies such as disablement and death resulting from work-injuries, sickness and
maternity and establishing workers’ right to form trade union and bargain collectively with the employer.

The employers increasingly came to realise that their prerogatives of “hiring and firing” workers at their
will and unilaterally laying down the terms and conditions of employment had been enormously
encroached upon by union pressures and state intervention, and it would be difficult for them to
manage their enterprises if they did not give due attention to human aspects in dealing with their
workers.

These conditions have come to exist even today, but in a greatly modified form. Some of the more
notable developments relating to human resources in modern perspective comprise – (i) substantial
change in the composition of labour force with the entry of a large number of educated and highly
skilled workers with specialisation, (ii) greatly improved status of all categories of employees, (iii)
extensive state intervention in the domain of human resources, (iv) development of liberal attitude of
employers towards employees with major attention on human aspects, (v) enhancement of strength and
status of unions, and (vi) growing international deliberations and exchanges in human resources matters.

Evolution of Human Resource Management – From 19th Century till Recent

Times: Different Eras of Human Resource Management
Identification of evolution of HRM over the period of time is important for understanding the philosophy,
functions, and practices of HRM that are followed in different situations so that relevant HRM practices
are evolved in the present situation. HRM, being a part of management discipline, has followed the
pattern of development of management because of the interrelationship of the problems of both the
fields.

Though HRM as a field of study has relatively recent origin, history of management of people in the
organizations particularly in state administration, is quite old. However, these ancient developments
could not create much impact on the recent development of literature and practices of HRM as these
developments were concerned primarily to state administration.

Some serious thoughts were applied towards the effective utilization of labour force in industrial
organizations after the industrial revolution that started in 19th century. Since then, organized practices
relating to management of people, initially labour force and subsequently managerial personnel also,
started taking place and literature describing these practices started emerging.

From industrial revolution era, emphasis has been put on a particular approach of managing people at
work. A succeeding era does not mean the complete end of preceding era but there has been
overlapping in these. Main features of these eras and the type of practices related to managing human
resources are as follows:

1. Industrial Revolution Era: The systematic development of HRM started with industrial revolution
that started during 1850s in Western Europe and USA. The industrial revolution consisted,
essentially, the development of machinery, the use of mechanical energy in production
processes, and consequently the emergence of the concept of factory with large number of
workforce working together. The factory system replaced the old cottage system. Industrial
revolution brought out a number of changes like centralized work locations with large number of
workers working together, mechanized production process, migration of workers from their
place of origin, and indirect contact between factory owners and workers.
In order to manage people in the factory system of industrial revolution, three systems of HRM
were developed- recruitment of workers, training for workers, and control of workers. However,
the basic philosophy of managing workers revolved around master-servant relationship.
2. Trade Union Movement Era: Shortly after the emergence of factory system, workers started to
organize themselves based on their common interests to form workers’ associations which were
subsequently known as trade unions. The basic objectives of these associations were to
safeguard interest of their members and to sort out their problems which arose primarily
because of employment of child labour, long hours of work, and poor working conditions. Later,
other aspects of work such as economic problems and wages, employee benefits and services,
etc. also became issues. These trade unions started such weapons as strikes, slowdowns,
walkouts, boycotts, etc., for the acceptance of their demands. These activities of the trade
unions forced owners and managers to adopt employee grievance handling systems, arbitration
as a means of resolving conflicts between owners/managers and workers, disciplinary practice,
expansion of employee benefit programmes, holiday and vacation time, clear definition of job
duties, job rights through seniority, and installation of rational and defensible wage structures.
3. Social Responsibility Era: In the first decade of 20th century, some factory owners started
adopting a more humanistic and paternalistic approach towards workers. Paternalistic approach
to labour management is based on the philosophy that labour is just like a child and owner is just
like a father and the owner should take care of his labour just like a father takes care of his
children. Those industrialists who adopted paternalistic approach offered a number of
concessions and facilities to labour force like reduced number of work hours, improved facilities
at workplace, model villages to workers, etc. All these practices led to the development of social
welfare aspect of labour management. Many critics to paternalistic approach viewed that this
approach was adopted to overcome the problems posed by labour union movement as plenty of
trade unions emerged which frequently interrupted work performance. Employers observed that
workers were going out of their control and to overcome this problem, they implemented
welfare scheme. Thus, this was a compulsion rather than a philosophy.
4. Scientific Management Era: Around the beginning of 20th century, Taylor started to find out ‘one
best way of doing thing’ based on time and motion studies. On the basis of his experiments, he
was able to increase workers’ productivity considerably and wrote many papers based on these
experiments and a book on scientific management.

The main principles of scientific management are: (i) Replacing rule of thumb with science, (ii)
harmony, not conflict, (iii) cooperation, not individualism, and (iv) development of each and
 every person. Scientific management techniques relevant to management of workers are-
functional foremanship, standardization and simplification of work, and differential piece wage
system.

5. Human Relations Era: Around 1920s, management researchers gave a close look at the human
factor at work and the variables that affected people’s behaviour. Before that, Hugo
Munsterberg wrote a book on ‘Psychology and Industrial Efficiency’ which suggested the use of
psychology in the field of personnel testing, interviewing, attitude measurement, learning, etc.
This brief period was termed as ‘Industrial Psychology Era’. In 1924, a group of professors from
Harvard Business School, USA, began an enquiry into the human aspects of work and working
conditions at Hawthorne plant of Western Electric Company, Chicago. They conducted
researches from 1924 to 1932 and arrived at the conclusions that productivity of workers
depended on- (i) social factors at the workplace, (ii) group formation and group influence, (iii)
nature of leadership and supervision, and (iv) communication. They concluded that in order to
have better productivity, management should take care of human relations besides the physical
conditions at the workplace. Consequently, the concepts of social system, informal organization,
group influence, and non-logical behaviour entered the field of management of personnel.
6. Behavioural Science Era: In contrast to human relations which assume that happy workers are
productive workers, the behavioural scientists have been goal and efficiency- oriented and
consider understanding of human behaviour to be the major means to that end. They have tried
several sophisticated research methods to understand the nature of work and the people in the
work environment. The contribution of behavioural scientists to management practices consists
primarily of producing new insights rather than new techniques. It has developed or expanded a
useful way of thinking about the role of the manager, the nature of organizations, and the
behaviour of individuals within organizations. As against human relations model, they have given
the concept of human resource model.
Major conclusions of the contributions made by behaviouralists are as follows:
i. People do not dislike work. If they have been helped to establish objectives, they will
want to achieve them. In fact, job itself is a source of motivation and satisfaction to
employees.
ii. Most people can exercise a great deal of self-direction and self-control and generate
more creativity than required in their current job. Therefore, their untapped potential
remains unutilized.
iii. Managers’ basic job is to use untapped human potential in the organization.
iv. Manager should create a healthy environment wherein all persons can contribute to the
best of their capacity. The environment should provide a healthy, safe, comfortable, and
convenient place to work.
v. Managers should provide opportunity for self-direction by their subordinates and they
must be encouraged to participate fully in all important matters.
vi. Operating efficiency can be improved by expanding subordinate influence, self-
direction, and self control.
vii. Work satisfaction may improve as a ‘by-product’ of subordinates making full use of their
potential. Behavioural science era led to the development of two-way communication,
participation of employees in decision making, joint goal-setting, group dynamics,
management development, and management of change in the organization. These
 contributions of behavioural science era are backbone of behavioural approach of
human resource management even in the present context.

7. Systems and Contingency Approach Era: Systems and contingency approach has attracted
maximum attention of thinkers in management in the present era. It is an integrated approach
which considers management of human resources in its totality based on empirical data. The
basic idea of this approach is that analysis of any object must rely on a method of analysis
involving simultaneous variations of mutually-dependent variables. This happens when systems
approach is applied in managing human resources.

8. Human Resource Management Era: When the factory system was applied in production, large
number of workers started working together. A need was felt that there should be someone who
should take care of recruiting, developing, and looking after welfare of these workers. For this
purpose, industrial relations department came into existence in most of the large organizations
which was concerned mostly with workers.

However, as the time passed and the complexity of managing human resources in large business
organizations increased, the scope of industrial relations department was extended to cover
supervisory staff and subsequently managerial personnel. Industrial relations department was
named as personnel department.

With the increasing competition for market share, competition for resources including human
talents, and increased knowledge in the field of managing human resources, people were not
treated merely as physiological beings but socio-psychological beings as a prime source of
organizational effectiveness and large organizations changed the nomenclature of their
personnel department to human resource ‘department to reflect the contemporary view.

Even the American Society for Personnel Administration, the largest professional association in
the field of human resource management, changed its name to the Society for Human Resource
Management in 1990. At the academic level, similar pattern was followed and the title of
personnel management course was changed to human resource management. Since then, the
expression is gradually replacing the hackneyed term ‘personnel management’.

History of Modern Human Resource Management

1. Early Philosophy (Before 1900):

The history of modern Human Resource Management began with the efforts of Robert Owen. Owen is
called the founder of Human Resource Management. In 1813, he wrote a book, A New View of Society.
In it he propounded the need for better industrial relations and improvements in the service conditions.
His attitude towards workers was very cordial, liberal and paternalistic. He got good houses constructed
for his workers by the side of his factory. He eliminated child labour and provided healthy working
conditions. J.S. Mill, Andrew Yule and Charles Bewarage, contemporaries of Robert Owen, developed
Human Resource Management as a science and supported the idea of wage incentives, profit sharing
and labour welfare, etc.
2. Efficiency and Productivity Movement (1900-1920):

During the last year of the 19th century arrived the age of efficiency and productivity
movement. The two decades from 1900 to 1920 were the years of scientific management
movement. Taylor’s Scientific Management Thought was accepted during this period. Taylor
opposed the idea of trade unionism and workers’ organization. The main contribution of these
two decades has been the increase in the size of units, introduction of scientific thinking into
actions, job analysis, standards costing, scientific selection and training of workers and the idea
of mental revolution.

3. Period of Welfarism and Industrial Psychology (1920- 1930):

Up to 1925, the Human Resource Management had taken a definite form. Staff line organization
became the basis of Human Resource Management. The opposition of scientific management
movement by workers introduced the need of industrial psychology. Industrial psychologists
developed many new techniques like psychological testing, interviewing, workers training and
non-financial incentives. They helped to give a professional form to Human Resource
Management. The Human Resource Management began to be realized as a profession and a
specialist’s function.
4. Period of Human Relations (1930-1950):
When Prof. Elton Mayo and his companions conducted Hawthorn experiments, it was the
beginning of recognition of the fact that human resources have greater influence on production
than other psychical resources. A worker must be treated as a human being. His social,
psychological and moral instincts should be fully recognized by the management. Due to these
experiments the commodity concept of labour changed to social concept. The decade of 1940-
1950 was very important for the development of Human Resource Management. During that
decade, many new techniques were developed for the selection, training and induction of
workers. The human resource philosophy became people-oriented. Trade unions flourished and
provision of fringe benefits for the workers became common.
5. Modern Times (After 1950):
The history of Human Resource Management since 1950 up to current times is the age of
modern developments. It is the period of the citizenship concept of labour where the workers
have full right to be consulted in determining the rules and regulations under which they work.
The concept of industrial democracy has imposed many new responsibilities upon the human
resource managers of industrial houses. In modern times, Human Resource Management is
widely accepted as an independent discipline. One finds two important developments during
this period, after 1960, the Human Resource Management began to be realized as a behavioural
science which centred completely on human elements with the study of organizational
behaviour as its main crux. After 1970s the belief of ‘open social and industrial system’ became
very popular for business organizations. In modern times, Human Resource Management is fully
recognized as a profession dealing with the management of human resources. These
developments widened the scope of Human Resource Management.
Evolution of Human Resource Management – 3 Stages for the Growth of Human Resource Management

Historically, the beginning of HRM from the writing of Robert Owen, Charles Babbage and Henry Towde.
Especially, the HRM growth was particularly marked in the inter-war era. It has branched out specifically
along the domains of applied psychology and sociology. The latter in turn has evolved around the
concept of the “welfare state”. While the former has proceeded as the behavioural science movement.
Human Resource Management (HRM) is relatively a very recent term considered for managing human
resources in an organisation. HRM is still evolving to become an amalgam of organisational behaviour,
personnel management, industrial relations and labour legislation.

Following stages explain the process involved for reaching to the current HRM stage:

1. Labour Welfare Stage: Formal beginnings of HRM may have emerged from industrial disputes
and conflicts. An enquiry on determining reasons for industrial disputes and conflicts gave light
to several problems related to living and working conditions of employees across industries. This
enquiry highlighted limitations of businesses that perceived human resources as machines for
obtaining increased productivity and more profits at lower costs. Workers worked long hours in
strenuous working conditions that led to the formation of trade unions. These trade unions
focused on protecting and promoting workers’ interests but faced resistance from the
management of businesses thus leading to industrial disputes and conflicts.

2. Personnel Management Stage: When labour welfare issues were provided legal assurances,
organisations began focusing on behaviour of employees at all levels at an individual, group and
overall organisational basis. A “Personnel” was appointed to manage the employee-employer
relationship by managing issues related to human resource planning, recruitment and selection,
training and development, performance and potential appraisal, promotions, transfers, quality
of working life, compensation, compliances to labour laws and legislations.

3. HRM Stage: Human Resource Management or HRM is a mix of labour welfare and personnel
management. HRM aims at maximising employee performance in accordance to the objectives
set by an organisation. HRM is a result of increasing organisational size, changing social and
cultural norms, easy access to information (via technology) and globalisation. Accordingly, it
attempts to build worker-employees relationship more humanely through motivation, training
and development, retention, worker protection, etc.

Also, under HRM, HR managers need to obtain and incorporate knowledge about possible
changes that may affect the overall organisation. HR managers thus attempt to execute relevant
strategies to ensure smooth transition of changes without disturbing inter-relationships and
avoiding disputes/conflicts within an organisation.

Evolution of Human Resource Management – From 18th Century to the Modern Times

In today’s global and competitive environment, human resource is the key to efficient running and
survival of an organisation. The concept of human resource management has emerged from the
personnel management. The term personnel management has emerged in 1945 after the World War.
During this stage, the personnel managers distinguished themselves from other managerial functions,
and personnel function being declared as a separate managerial function.
At that time, the scope of personnel function was criticised due to the ‘hire and fire’ policy of the
organisations. The concept of HRM has evolved through various stages of Industrial revolution, trade
union, scientific management, Behavioural science and human relations. Hence, the concept HRM has
gradually replaced the term Personnel Management. HRM is the most appropriate name to deal with
human resource, as it highlights the significance of the human beings working in an organisation.

Differences between contemporary HRM and traditional personnel

management
Contemporary Human Resource Management (HRM) differs from traditional personnel management
by focusing on strategic alignment, employee development, and viewing employees as assets, while
traditional personnel management focuses on administrative tasks and a more transactional approach to
employees.

Personnel management is mainly about basic administrative tasks like hiring, paying, teaching, and
making sure everyone gets along. HRM, on the other hand, focuses on measuring the needs of the
company and constantly reviewing and changing all systems to reach a single goal.

Traditional Personnel Management:

• Focus: Primarily administrative tasks like hiring, payroll, and benefits administration.

• Employee View: Employees are seen as a cost to be controlled, not as assets to be developed.

• Role of HR: HR is seen as a support function, separate from the core business strategy.

• Approach: Reactive and often focused on short-term issues.

• Examples: Focus on compliance, basic training, and maintaining employee records.

Contemporary Human Resource Management (HRM):

• Focus: Strategic alignment with the organization's goals, employee development, and building a
high-performing workforce.

• Employee View: Employees are seen as valuable assets to be invested in and developed.

• Role of HR: HR is seen as a strategic partner, actively involved in shaping the organization's
future.

• Approach: Proactive and focused on long-term growth and development.

• Examples: Talent acquisition, employee engagement, performance management, succession

planning, and organizational development.
 Comparison chart: HRM vs. personnel management

Basis For
Personnel Management Human Resource Management
Comparison

An aspect of management that is An essential branch of management that deals with

Meaning concerned with employees at work and making the optimum usage of organizational
their relationships within the company. human resources to achieve organizational goals.

Working for the growth & development of the

Objective Managing people at work
workforce

Approach Traditional Modern

Treatment of
Machines or Tools Resource & Asset
manpower

Type of function Routine function Strategic function

Basis of Pay Job Evaluation Performance Evaluation

Management
Transactional Transformational
Role

Communication Indirect Direct

Labor
Collective Bargaining Contracts Individual Contracts
Management

Initiatives Piecemeal Integrated

Management
Procedure Business needs
Actions

Decision Making Slow Fast

Job Design Division of Labor Groups/Teams

Recruitment & staffing, Equal employment

Employee hiring, remuneration, training,
Major Functions opportunity, HR development, Remuneration,
and harmony.
Employee relations, Continuos growth, etc.