Personnel Management vs Strategic Hrm

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“Over the past decade a shift has occurred away from ideas of ‘personnel management’ towards HRM and concepts of people management” (Pass, S. & Hyde, P., 2005) This shift has been essential, as with the globalization of the market and more competitors, firms have found it more and more difficult to gain competitive advantage. In order to adapt to this changing environment, the firm’s traditional management system evolved to a more strategic approach towards human resource management. “Strategy is about building sustainable competitive advantage that in turns creates above average financial performance”. (Becker, B & Huselid, M., 2006) (Wielemaker, M. et al, 2005) states that before the shift, firms were seeking competitive advantage from outside, such as in costs of goods and trade prices. But a new belief argues that the principal source of competitive advantage actually lies within the firm itself. It is now thought that the main sources of competitive advantage are dependent on people. This new ideology has caused the role of human resources from being supportive, to being strategic.

As (Wielemaker, M. et al, 2005) stated the role of traditional personnel management was mainly supportive and repetitive. Tasks such as training, recruiting and compensation were the usual roles of the human resources department. (Pass, S. & Hyde, P., 2005), argues that now, with strategic human resources management, the role of the human resources department has become more one of to ensure strategic integration, long term planning and a transfer from human resources responsibility to line management. From this, it can be concluded that strategic human resource management now focuses more on its internal people. It can also be argued that it is now regarded as a significantly more important role than previous, where the role of personnel management was seen as an option, it is now seen as a crucial part of a firm’s success.

The purpose of this essay is to critically evaluate the initial, traditional style of personnel management to the more recent, strategic approach to human resource management. In order to achieve this, each approach will be closely analysed. First, the history and attributes of traditional personnel management will be overviewed. To help understand why there was a need for a ‘shift’ towards strategic human resource management, the weaknesses of the traditional personnel management will also need to be investigated. Finally, the factors that make the strategic personnel management a more successful way of obtaining competitive advantage will be analysed, along with any problems the new system may have. From these findings, it will be possible to conclude how much of an advantage the internal employees really are to their firms, and what difference strategic human resource management has made to today’s market.

Initially, personnel issues were handled by the accounting department of a firm. (Van Marrewijk, M. & Timmers, J., 2003) states that when the issues of recruitment, terms of employment and industrial relations became too time consuming, a new separate department that dealt with employees was created. This was the start of personnel management. The first academic resource that acknowledged this change was written in 1920 by Orday Tead and Henry Metcalf. (Kaufman, B., 1999), states that these authors deserve to be credited as co founders of the field. (Kaufman, B., 1999) believes that the creation of a new personnel management department was also due to the perception that it would be a ‘solution’ to the labour problems at the time.

The attributes of having a separate department for personnel management signified that the accounting department would have had more time to concentrate on making profits. Also having a separate department would have meant that the employees working in the new personnel management department would have been better qualified to undertake such tasks as recruiting and training....
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