Personnel Management vs Hrm

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chapter 1

People management: personnel management and human resource management

i n tro d u c t i o n
Good managers are not only effective in their use of economic and technical resources, but when they manage people they remember that these particular resources are special, and are ultimately the most important assets. People are the only real source of continuing competitive advantage. Good managers also remember that these particular assets are human beings.

le a r n i ng ou tco m e s
On completion of this chapter you should:
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have a good appreciation of what the ‘people management’ function in contemporary organisations comprises know what we mean by the term ‘human resource management’ (HRM) and how this differs from the earlier ‘personnel management’ (PM) concept of the function have some appreciation of the theoretical development of HRM understand the relationship between HRM and business strategy have an appreciation of the practical application of HRM understand the impact of new working methods on HRM recognise some of the key themes of HRM in the twenty-first century.

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A free sample chapter from Human Resource Management for MBA Students 2nd Edition By Iain Henderson Published by the CIPD. Copyright © CIPD 2011 All rights reserved; no part of this excerpt may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise without the prior written permission of the Publishers or a licence permitting restricted copying in the United Kingdom issued by the Copyright Licensing Agency. If you would like to purchase this book please visit www.cipd.co.uk/bookstore.

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Human Resource Management for MBA Students

The definition of terms such as ‘personnel management’ and ‘human resource management’ is one area of particular confusion and irritation to general managers, and we will discuss later the differences between what typically is meant by these terms. We will use the phrase ‘people management’ as a generic term to cover both ‘personnel management’ (PM) and ‘human resource management’ (HRM) in the absence of a specific definition of either. But broadly, 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. In other words, people management is not executive management of individuals and their jobs. Management of specific tasks and responsibilities is the concern of the employee’s immediate supervisor or manager – that is, the person to whom his or her performance is accountable (sometimes this might be the person’s team). So people managers – whether ‘personnel managers’ or ‘human resource managers’ – do not have line authority over employees. The term ‘human resource management’ was being used by Peter Drucker and others in North America as early as the 1950s without any special meaning, and usually simply as another label for ‘personnel management’ or ‘personnel administration’. By the 1980s, however, HRM had come to mean a ‘radically different philosophy and approach to the management of people at work’ (Storey, 1989; pp4–5) with an emphasis on performance, workers’ commitment, and rewards based on individual or team contribution, differing significantly in all of these from the corresponding aspects of traditional personnel management. One of the main characteristics of HRM is the devolution of many aspects of ‘people management’ from specialists directly to line managers. HRM itself has been called ‘the discovery of personnel management by chief executives’. So line managers over the past ten years or so have frequently been confronted with HRM decisions and activities in their day-to-day business in a way that was not the case...
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