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Monday, October 19, 2009

Human Resource Management vs Personnel Management

Human resource management involves all management decisions and practices that directly affect or influence the people, or human resources, who work for the organization. In other words, Human resource management is concerned with ‘people centric issues’ in management.

The Human Resources Management (HRM) function includes a variety of activities, and key among them is deciding what staffing needs you have and whether to use independent contractors or hire employees to fill these needs, recruiting and training the best employees, ensuring they are high performers, dealing with performance issues, and ensuring your personnel and management practices conform to various regulations. Activities also include managing your approach to employee benefits and compensation, employee records and personnel policies. Usually small businesses (for-profit or nonprofit) have to carry out these activities themselves because they can't yet afford part- or full-time help. However, they should always ensure that employees have -- and are aware of -- personnel policies which conform to current regulations. These policies are often in the form of employee manuals, which all employees have.

DIFFERENCES BETWEEN HRM AND PERSONNEL MANAGEMENT
ALTHOUGH both human resource management (HRM) and personnel management focus on people management, if we examine critically, there are many differences between them. Some are listed below:

i) Nature of relations: The nature of relations can be seen through two different perspective views which are Pluralist and Unitarist. There is a clear distinct difference between both because in personnel management, the focus is more on individualistic where individual interest is more than group interest.

The relationship between management and employees are merely on contractual basis where one hires and the others perform. Whereas, HRM focuses more on Unitarist where the word "uni" refers to one and together.

Here, HRM through a shared vision between management and staff create a corporate vision and mission which are linked to business goals and the fulfillment of mutual interest where the organization’s needs are satisfied by employees and employees' needs are well-taken care by the organization. Motorola and Seagate are good examples of organizations that belief in this Unitarist approach which also focuses in team management and sees employees as partners in an organization.

Relation of power and management: The distribution of power in personnel management is centralized where the top management has full authority in decision-making where even the personnel managers are not even allowed to give ideas or take part in any decision which involves "employees".

HRM, on the other hand, sees the decentralization of power where the power between top management is shared with middle and lower management groups.

This is known as "empowerment" because employees play an important role together with line and HR managers to make collective and mutual decisions, which can benefit both the management and employees themselves.

In fact, HRM focuses more on TQM approach as part of a team management with the involvement and participation of management and employees with shared power and authority.

The nature of management is focused more on bottom-up approach with employees giving feedback to the top management and then the top management gives support to employees to achieve mutually agreed goals and objectives.

ii) Leadership and management role: Personnel management emphasizes much on leadership style which is very transactional. This style of leadership merely sees the leader as a task-oriented person. This leader focuses more on procedures that must be followed, punishment form non-performance and non-compliance of rules and regulations and put figures and task accomplishments ahead of human factors such as personal bonding, interpersonal relationship, trust, understanding, tolerance and care.

HRM creates leaders who are transformational. This leadership style encourages business objectives to be shared by both employees and management. Here, leaders only focus more on people-oriented and importance on rules, procedures and regulations are eliminated and replaced with:

• Shared vision;
• Corporate culture and missions;
• Trust and flexibility; and
• HRM needs that integrates business needs.

iii) Contract of employment: In personnel management, employees contract of employment is clearly written and employees must observe strictly the agreed employment contract. The contract is so rigid that there is no room for changes and modifications. There is no compromise in written contracts that stipulates rules, regulations, job and obligations.

HRM, on the other hand, does not focus on one-time life-long contract where working hours and other terms and conditions of employment are seen as less rigid. Here, it goes beyond the normal contract that takes place between organizations and employees. The new "flexible approach" encourages employees to choose various ways to keep contributing their skills and knowledge to the organization.

HRM, with its new approach, has created flexi-working hours, work from home policies and not forgetting the creation on "open contract" system that is currently practiced by some multinational companies such as Motorola, Siemens and GEC.

HRM today gives employees the opportunity and freedom to select any type of working system that can suit them and at the same time benefit the organization as well. Drucker (1996) calls this approach a "win-win" approach.

iv) Pay policies and job design: Pay policies in personnel management is merely based on skills and knowledge required for the perspective jobs only. The value is based on the ability to perform the task and duties as per the employment contract requirement only. It does not encourage value-added incentives to be paid out. This is also because the job design is very functional, where the functions are more departmentalized in which each job falls into one functional department. This is merely known as division on labour based on job needs and skill possessions and requirement.

HRM, on the contrary, encourages organizations to look beyond pay for functional duties. Here, the pay is designed to encourage continuous job performance and improvement which is linked to value-added incentives such as gain sharing schemes, group profit sharing and individual incentive plans.

The job design is no more functional based but teamwork and cyclical based. HRM creates a new approach towards job design such as job rotation which is inter and intra-departmental based and job enlargement which encourages one potential and capable individual to take on more tasks to add value to his/her job and in return enjoy added incentives and benefits.

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