Personnel management refers to a set of functions or activities including recruitment, training, pay and industrial relations performed effectively but often in isolation from each other or with overall organization objectives. In 1991, Hillier noted that the Australian tradition of many sub-specialties or functions (industrial relations, compensation, training and pay) was out of date. The early 1 sass was an are of great speculation on the future of the functions in managing people.
The concept Human Resource Management (HARM) began to influence the practice of integrating functions with each other and organization objectives. Cobblestone (1991) explained “the HRS function within any enterprise must first of all seer. ‘e the organization… An investment area rather than a cost to the organization. ” Reinforced by other writers, human resources should be viewed as ‘human capital’, and that HRS managers should strive to use them as investment creating an environment where the appropriate strategy is likely to emerge. Williams, 1991) Alternate perspectives of HARM emphasis either the effective management of employees through greater accountability and control, the greater involvement in decision making processes, or both of these. Inkers, Compton & McCarthy, 1 993)In countries such as Australia, the personnel management function arrived more slowly than its USA counterparts and came from a number of avenues. The orientation of personnel management was not entirely managerial.
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In the UK, its origins were traced to ‘welfare officers’ where it became evident that there was an inherent conflict between their activities and those of line managers. There were not seen to have a philosophy compatible with the view of senior managers. The welfare officer orientation placed personnel management as a buffer between the business and the employees. In terms of organizational politics this was not a viable position for those wishing to further their careers, increase their status, earn high salaries or influence organization performance.
Industrial relations further compounded the distinction through their intermediary role between unions and line management. (Price, 2005) However, during the sass, many Australian organizations found themselves in turbulent business and economic climates with major competition from the USA Europe and Asian markets. Concurrently, the Institute for Personnel Management (MAMA) and training institutions such as TAFT and universities were becoming more biophysicist in their approaches incorporating more recent approaches such as ‘Excellence” and ‘Total Quality Management’.
During this period the MAMA held national and international conferences, initiated relationships with the Asia-Pacific region, developed an accreditation process and the now titled Asia Pacific Journal Of Human Resources. (Inkers et al, 1993)By the sass, personnel had become a well-defined but low status area of management. Traditional personnel managers were accused of having a narrow, functional outlook. Storey (1989) comment that personnel management “… As long en dogged by problems of credibility, marginality, ambiguity and a ‘trash- can’ labeling which has relegated it to a relatively disconnected set of duties – many of them tainted with a low status ‘welfare’ connotation. ” In practice, the background and training of many personnel managers left them speaking a different language from other managers and unable to comprehend wider business issues such as business strategy, market competition, labor economics and the role of other organizational functions. Price, 2005) This set the scene to integrate personnel management with wider trends in management thinking. In 1 999 (cited in Gallon 2005), Hunt suggested, ‘the key link to the success of the function lies in the struggle to acquire more influence, something that is being carried out in a climate of downsizing and outsourcing. Even the change of name from personnel to HRS is indicative that the way people view and perform this role is changing – with the new name communicating a desire to break with the past and to throw off an image that Was limp and limiting…
The future of the HRS function may be far from certain [however] . In situations of uncertainty, it is the confident who win through I know of no origination whose senior managers believe their company will operate, in the future, without any human beings. Whether ensuring the supply of those human beings resides in a function called HRS or not is rather irrelevant. Such themes included human capital theory and human resource accounting, however, HARM gained further ground and prominence once introduced to the Harvard Business School MBA course in 1981.
The four main approaches founded during the sass were: The strategic matching theories from the Michigan and New York Schools; Multiple Stakeholders theory from the Harvard School; Political and Change Process Theory from he Warwick School and a Behavioral Transformation Theory from the Schuler School. (Price, 2005) Each theory expressed models that stress people as human resources which are a resource different to any other the organization may have and therefore require to be managed differently.
This could be conceived as rather confusing, however Townies (1994) argued that much of the confusion over the role of human resource managers is due to two factors: 1 . The conflict between the welfare tradition of personnel management and the strategic orientation of more modern HARM and; 2. A ender divide between female or soft personnel management at lower management and administrative levels and male, hard nosed human resource managers within upper management. Benchmarking and best practice have become widely used terms in the past decade.
HARM benchmarking is a process which provides knowledge of the key HRS levers which are important to business outcomes; comparison with other businesses with better performance and ways of using that information to improve HRS processes. This allows HRS processes and outcomes to be quantified so that objectives can be set meaningfully and realistically. This was a revolutionary approach for many HRS professionals who were used to us objective job descriptions and values with a focus on process rather than outcome which did not gain much credibility with other business units who were used to objective and quantifiable measures of performance. Inkers et al, 1993; Price, 2005)Villains and Harper (2005) explored the impact of performance management on staff, the organization and the business. Performance management was found to be useful in improving role clarity, identifying and standardizing performance objectives increasing reference feedback and assisting in the development of more useful and meaningful performance measures. The authors found that how performance management was viewed depended on the performance of the team. That is, if the team were performing well, it was viewed positively, if the team were not performing well, it was viewed negatively.
Furthermore, Villains and Harper (2005), found difficulty in evaluating the impact of performance management systems in organizations. There fore it is difficult to determine the impact this human resource strategy on organization performance in a quantitative sense. Royal and O’Donnell (2005), argue that qualitative human capital analysis would assist in predicting organization sustainability and future financial performance by providing substantial evidence indicating the link between particular HRS practices and organization performance.
These practices included learning and development, flexible work policies and performance management. The focus on long term relationships between the organization and staff was the impact on organization performance rather than an economic exchange. Exploring the impacts of downsizing on organization performance, Farrell and Moved (2005) reported on the contradictory evidence in the literature about this relationship and surveyed manufacturing companies in order to test the impact.
The findings concluded that when redesign of organizations drive downsizing the impact on the business is positive, but it is negative when the organization redesign is driven by downsizing. This indicated that good HRS practice linking with the organization strategic plan is more likely to provide a positive business outcome. According to McGrath-Champ and Braid (2005), HARM practices and the role of HRS and employee relations practitioners have been undergoing major hinges since the 1 sass. Particular changes Include the shift to enterprise bargaining.
The authors used data from numerous surveys aimed at exploring the changing role of HRS practitioners and the implications on the skills required in order to fulfill the changed role. This, in turn, impacts on the capability of the HRS area in its ability to support and influence organizational performance. Given that small business is a significant employer in Australia, Bertram (2005) found they are not as likely to use participative management techniques, invest in training in the area of employee relations or develop origination strategy.
However, without the use of HARM practices, small business can be effected detrimentally particularly in a global economic climate. The evidence suggests that organization performance will usually benefit from the integration of human resource management and product and market strategies, improved understanding of the needs of employees at the workplace, and better use of their skill and ingenuity.
Strategies designed to achieve a more comprehensive use of employees’ human potential, desire to learn, flexibility and personal responsibility would appear capable of levering higher levels of performance (Gallon & Davis, 1998). This is at the heart of the argument for more attention to HARM. Other things being CEQ al, it will assist improve profitability through changing employee attitudes, overcoming resistance to change. (Gallon & Davis, 1998) Moreover, there will be experience of mutual advantage.
Management can benefit from improved performance and reduced levels of turnover and absenteeism and being an employer of choice in the current labor tight market. As a result employees may enjoy more job security, development opportunities, autonomy and incentives to take ownership and responsibility for quality outcomes. (West & Patterson, 1998)While HARM approaches are worthwhile in terms of improving organization performance, it can be difficult to measure the link between the improvement and the HRS practice.
The length of time can be fraught with problems when considering the impact of HARM on organization performance. A short term consultation with staff could pay off years ahead in performance. The most difficult obstacle is in the change of organization culture for both managers and employees in terms of leadership kills, strategy and resources for development. Based on research statistics of over 30 000 HRS professionals, Broadband (2005), stated ‘the HRS field is outstanding at doing what it says it will do, in terms Of delivering the basic HRS infrastructure activity … S an intersection Of HRS competencies and agendas that have to do with managing the culture, contributing to strategic decision making, managing change and creating process of information flows that continually integrate the organization… HRS professionals are mediocre at this set of activities… The logic of HRS role in ringing critical information about the external business world into the firm, disseminating it and using that information on a broad scale within the organization as the basis for integration, unity and ultimately organizational responsiveness. Broadband (2005) further identified that HRS market driven connectivity rates at 17 per cent of strategic contribution’s impact on organization performance. The direct impact of HRS on business performance has increased about 300 per cent since 1992. This is factored around the shift from focusing on traditional personnel functions and moving towards tragic input into the organization’s development coupled with technological change and a global economy.
In other words, this indicates that in order to make an impact, HRS needs to understand the business their organization is in including the customers, shareholders and stakeholders. To surmise, the evidence suggests there is a great deal of participation taking place in Australia, (Morphed, Steele, Alexander, Stephen & Tiffin, 1 997) however, findings from the research highlight the quality of many HARM practices need to be appropriate measured and reported in order to continue o develop the link between HRS practices and organization performance.
From the research synthesized in this paper, it is evident that some human resource practices can contribute to high levels of organizational performance. Explored from a range of perspectives, the problems in demonstrating this relationship are highlighted. The number of dimensions to the problems making study comparisons difficult include: definitions used as a basis for the research; the ability to draw a relationship between human resource practices and organizational performance; methodological issues and; differences and variable measurement.