Many students of management and laypeople often hear the term HRM or Human Resource Management and wonder about the difference between HRM and the traditional term Personnel Management. In earlier times, the Personnel Manager of a factory or firm was the person in charge of ensuring employee welfare and interceding between the management and the employees. In recent times, the term has been replaced with HR manager. This article looks at the differences in usage and scope of functions as well as the underlying theory behind these nomenclatures. In the section on introducing HRM, we briefly looked at the main differences. We shall look into them in more detail here.
Traditionally the term personnel management was used to refer to the set of activities concerning the workforce which included staffing, payroll, contractual obligations and other administrative tasks. In this respect, personnel management encompasses the range of activities that are to do with managing the workforce rather than resources. Personnel Management is more administrative in nature and the Personnel Manager’s main job is to ensure that the needs of the workforce as they pertain to their immediate concerns are taken care of. Further, personnel managers typically played the role of mediators between the management and the employees and hence there was always the feeling that personnel management was not in tune with the objectives of the management.
Raj works for a company in personnel management. Personnel management is an administrative function of an organization that exists to provide the personnel needed for organizational activities and to manage the general employee-employer relationship. Let’s see how Raj does it.
Raj engages in planning and job analysis to determine his organization’s current and future labor needs. He recruits employees with knowledge, skills and abilities that the organization needs. Raj and his coworkers will also help develop current employees through employee appraisal and training. He’ll help ensure a safe and healthy workplace by making sure the organization complies with all occupational health and safety regulations.
Human Resource Management
With the advent of resource centric organizations in recent decades, it has become imperative to put “people first” as well as secure management objectives of maximizing the ROI (Return on Investment) on the resources. This has led to the development of the modern HRM function which is primarily concerned with ensuring the fulfillment of management objectives and at the same time ensuring that the needs of the resources are taken care of. In this way, HRM differs from personnel management not only in its broader scope but also in the way in which its mission is defined. HRM goes beyond the administrative tasks of personnel management and encompasses a broad vision of how management would like the resources to contribute to the success of the organization.
Lata works in human resource management (HRM). Human resource management also involves the management of people in an organization. The job of human resource management is to ensure that the organization has the human capital it needs to accomplish its goals. ‘Human capital’ is a fancy way of describing employees with a certain set of knowledge, skills and abilities that can be used by an organization in a productive way. Let’s take a quick look at what Lata and other people in human resource management do.
Lata ensures that the company is appropriately staffed, which includes job analysis, planning, recruiting and selection. Lata and her fellow resource managers also develop training and education programs to keep employees up-to-date on the skills and knowledge they need. Human resource management develops compensation plans just like personnel management.
10 points difference
- Personnel management is a traditional approach of managing people in the organization. Human resource management is a modern approach of managing people and their strengths in the organization.
- Personnel management focuses on personnel administration, employee welfare and labor relation. Human resource management focuses on acquisition, development, motivation and maintenance of human resources in the organization.
- Personnel management assumes people as a input for achieving desired output. Human resource management assumes people as an important and valuable resource for achieving desired output.
- Under personnel management, personnel function is undertaken for employee’s satisfaction. Under human resource management, administrative function is undertaken for goal achievement.
- Under personnel management, job design is done on the basis of division of labor. Under human resource management, job design function is done on the basis of group work/team work.
- Under personnel management, employees are provided with less training and development opportunities. Under human resource management, employees are provided with more training and development opportunities.
- In personnel management, decisions are made by the top management as per the rules and regulation of the organization. In human resource management, decisions are made collectively after considering employee’s participation, authority, decentralization, competitive environment etc.
- Personnel management focuses on increased production and satisfied employees. Human resource management focuses on effectiveness, culture, productivity and employee’s participation.
- Personnel management is concerned with personnel manager. Human resource management is concerned with all level of managers from top to bottom.
- Personnel management is a routine function. Human resource management is a strategic function.
Personnel Management and HRM: A Paradigm Shift ?
Cynics might point to the fact that whatever term we use, it is finally “about managing people”. The answer to this would be that the way in which people are managed says a lot about the approach that the firm is taking. For instance, traditional manufacturing units had personnel managers whereas the services firms have HR managers. While it is tempting to view Personnel Management as archaic and HRM as modern, we have to recognize the fact that each serves or served the purpose for which they were instituted. Personnel Management was effective in the “smokestack” era and HRM is effective in the 21st century and this definitely reflects a paradigm shift in the practice of managing people.
It is clear from the above paragraphs that HRM denotes a shift in focus and strategy and is in tune with the needs of the modern organization. HRM concentrates on the planning, monitoring and control aspects of resources whereas Personnel Management was largely about mediating between the management and employees. Many experts view Personnel Management as being workforce centered whereas HRM is resource centered. In conclusion, the differences between these two terms have to be viewed through the prism of people management through the times and in context of the industry that is being studied.
Contributed by Suchin Kulshrestha, (Class of 2008, IBS Hyderabad)