The development of human resource management

It is generally accepted that the concept of HRM originated in North America in the late 1910s to
early 1920s. At this period a plethora of names were used to describe processes in employment
area: employment management, labour management, personnel management, personnel
administration, labour relations, industrial relations, industrial relations management and
employment relations. The term ‘‘human resource management’’ was not used, however the
general term ‘‘human resources’’ was already employed to express the „idea that the nation’s
labour input is embodied in human beings and represents a form of capital good that can be
augmented through various forms of private and public investment, such as education, training,
and public health programs” (Commons, 1919; Kaufmann, 2001).

Kaufman (2001), one significant trend is the replacement of the old term ‘‘personnel
management’’ with the new one ‘‘human resource management.’’ According to Strauss (2001),
the human resource term was first used in this substitute sense in the mainstream literature in
1964. The background for using „human resource” term can be found in two sources: first, a
published lecture given in 1958 by economist E. Wight Bakke titled ‘‘The Human Resources
Function’’; second, Myers, Frederick, Harbison, and other economists scholars research in the
late 1950s on the role of labour as a factor in economic growth and in that context used the
‘‘human resource’’ term in various publications (Kaufman, 2001).
For some period the ‘‘personnel’’ and ‘‘human resources’’ terms were largely used
interchangeably, however starting in the early 1980s, the term „human resource“ became the
main and represented a break with traditional personnel administration, hereby PM gave way to
HRM (Thornthwaite, 2012).
According to Bratton and Gold (2003), the 1980s and 1990s are the time of the relevant change
in the context and content of the way in which people were managed. In this point the question
concerning the radical change in the context field arises.
Concerning the context, Schuler and Jackson (2005) link the formation of HRM concept with a
growing professionalism among HRM practitioners in USA and with a growing recognition of the
significance of human resource management to organizational success. Guest (1987) identifies
6 factors behind the emergent interest in HRM: the search for competitive advantage; models of
excellence; the failure of personnel management; the decline in trade union pressure; changes
in the workforce and the nature of work; availability of new models. Gooderham and Nordhaug
(2010) underline the end of the “Fordist” or “welfare capitalist” stage in labour management.
According to Beaumont (1992) (as cited in Prowse & Prowse, 2010), a combination of
increasing competitive markets, the introduction of Japanese work systems, declining
unionization in the USA private sector determined the development of HRM in USA.
Very similar attitude shares Legge (1995) emphasizing the changes in product and labour
market in USA and UK mediated by new technologies. Analyzing the genesis of HRM, it is
essential to stress the duality of the concept, because the book New Perspective on Human
Resource Management (1989), edited by John Storey, generated the first wave of debate on the
nature of the normative HRM focusing on hard and soft versions of the construct. Either the
second wave of debate on HRM plays crucial rule in literature and in practice highlighting the
centrality of HRM to success of organizational performance (Bratton & Gold, 2003; Marescaux
et al., 2013).
Summing up, it could be stated that in the process of HRM formation three main stages exist:
first, the initial thoughts originated in USA; second, the further development of these ideas by
British scientists; thirdly, traditional personal management expansion to human resource
management.

The attitude to personnel management and human resource management

Whereas over the last 30 years there has been an increased interest in HRM (Prowse & Prowse, 2010), so the
question arises if HRM represents something different or it is just a continuation of previous management
practices (Legge, 1995; Keenoy, 1990). Is HRM better than PM?; Does something really changed by replacing the
name?; Is the change for better or for worse? – all these questions reflect the core of the discussion,
acknowledging the confusion of the HRM practitioners when concepts or techniques are introduced as new ideas
although they have been used all the time under different names (Armstrong, 2000). Guest (1987) stresses that
term „human resource management“ is used in three approaches: first, HRM is simply a re-title to personnel
management in order to hold the new fashion. Second, HRM is a way of re-conceptualizing and re-organizing
personnel roles and describing the work of personnel departments. It is worth to underline, that this second
attitude is in part reflected in the Harvard model of HRM. Thirdly, HRM is distinctively different and offers a new
approach for people management, whereas it integrates human resources into strategic management and
emphasis on a full and positive utilization of these resources. The analysis of scientific literature allows stating, that
some of scientists (Torrington, 1989; Armstrong, 2000) stick to the opinion that there is any significant difference
in the concepts of PM and HRM and that this is more a matter of emphasis and approach than the essence. Other
scientists (Legge, 1989, 1995; Keenoy, 1990; Storey, 1993; Guest, 1987, 1990; Hope-Hailey et al., 1997), conversely,
claim that HRM represents new philosophy and concept, which radically differs from PM. Based on these two
approaches different authors describe the issue using appropriate statements

Approach to HRM and PM concepts Author Statements

The approach – there is no significant difference between HRM and PM
Armstrong, 1987 HRM is just „old wine in new bottles“. HRM could be no more no less
than another name for PM, however the advantage of HRM lies in the
fact, that it emphasizes the treatment of people as key resources.
Torrington, 1989 PM has grown through assimilating a number of additional emphases to
produce an even richer combination of experience. Due to this fact
HRM is no revolution but a further dimension to a multi-faceted role of
PM.
Lowry, 1990 Whereas personnel work has always included strategic matters and the
(as cited in Armstrong, 2000) emphasis on strategic issues, so HRM is just the continuing process of
PM - it is not different.
Henry and Pettigrew, 1990 HRM can be perceived as perspective on PM and not PM itself.
Armstrong, 2000 The difference between PM and HRM appear to be substantial,
notwithstanding they can be seen as a concern of emphasis rather than
one of substance.
The approach – there is extreme difference between HRM and PM
Guest, 1987 HRM emphasizes the importance of strategic integration, high
commitment, high quality and flexibility.
Bratton and Gold, 2003 The essence of HRM as compared to PM constitutes the treatment of
HRM as strategic part of organization management, which integrates
factors, determining the behavior of the employees
Legge, 1995 The potential of PM has developed and became the worth of the
organization, which is labeled as HRM
Summarizing it is valuable to admit two separate opinions: from one point of view HRM is just „a
perspective on personnel management“ (Hendry & Pettigrew, 1990) and ``high-concept
personnel management“ (Armstrong, 1996, as cited in Armstrong, 2000) or „simply a case of the
emperor‘s new clothes“ (Armstrong, 1987), meanwhile from another point of view it is
highlighted the revolutionary nature of HRM by estimating the relevance of strategic integration,
high commitment, high quality and flexibility (Guest, 1987). Based on above mentioned two
approaches the definition of HRM and PM will be later exploring.

The conceptions of personnel management and human resource management

Seeking to provide the answer to the questions – is PM equal to HRM? Does HRM as compared to PM represent
new approach to managing people? - is it essential to define these two constructs, despite the fact that HRM is
controversial (Kamoche, 1991) and Storey (1995) underlines the dispute due to the definition. In the scientific
discussion framework Noon (1992) asks whether
HRM is a map, a model or a theory?; Legge (1995) exposes the contradictions of the concept; according to Keenoy
and Anthony (1992), HRM is designed to inspire and therefore to explain the construct means to destroy it (Storey,
1995). Acknowledging that “the big ideas can lose something when translated into detail” (Storey, 1995), in the
context of progress and deep understanding it is important to explain, as Bratton and Gold (2003) stated, the content
of the way in which people were managed, it means to define PM and HRM. However, a widely accepted definition
of HRM and PM does not exist: although different scientists do not provide cardinally opposite definitions, but
stress particular aspects (see Table 2).
The definitions of HRM presented in Table 2 illustrate the diversity of the concept. According to Blyton and Morris
(1992) (as cited in Prowse & Prowse, 2010), the linkage of HRM and flexibility is an evidence that HRM postulates a
closer connection between business strategies, personnel policies and practices; Hartley and Stephenson

Definitions of HRM and PM concepts Author Definitions

Personal management is:
Armstrong, 1977 concerned with obtaining, organizing and motivating the human resource
(Armstrong, 2006) required by the enterprise
Torrington & Hall, 1998 is concerned with practices, which allow employer and employee not only
(Armstrong, 2006) to make a contract, but also to assure that the contact is pursuing
Human resource management is:
Beer et al., 1984 all management decisions that affect the relationship between
(Prowse & Prowse, 2010) organizations and employees – its humans
Storey, 1995 a distinctive approach to employment management which seeks to
achieve competitive advantage through the strategic deployment of a
highly committed and capable workforce, using an integrated array of
cultural, structural and personnel techniques
Guest, 1987 defined in terms of four key goals: high commitment, high quality,
flexibility and strategic integration
Pool, 1990 viewed as strategic; it regards people as the most important single asset of
(Prowse & Prowse, 2010) the organization; it involves all managerial personnel; it is proactive in
relationship with people; seeks to enhance organizational performance,
employee “needs” and societal well being
Armstrong, 2009 defined as a strategic and coherent approach to the management of the
most valued assets of organization – the people, who individually and
collectively contribute to the achievement of organization’s objectives
(1992) (Prowse & Prowse, 2010) maintain that HRM has generated new ideas about how to
motivate rather than control employees. Although the definitions of HRM disclose four HRM
dimensions: high commitment, high quality, flexibility and strategic integration, however in 1997
Guest argues that „we still don’t know what HRM is”. The attempts to define PM and HRM does
not provide clear answer to the question: is HRM the same as PM? Seeking to reveal if PM and
HRM are different or the relabeling is just a matter of fashion the similarities and differences of
PM and HRM will be later explored.

The similarities and differences of personnel management and human pesource management

Notwithstanding the diverse approaches to the relation between HRM and PM, both concepts
have similarities and, as Armstrong (2006) states, the differences can be viewed much more as
a matter of focus.

According to Guest (1987), there are two main issues analyzing the differences between two
constructs. First, it is not much known about personnel management. Second, there is a danger
of comparing a normative/ideal view of HRM with a descriptive view of PM.

Armstrong (2006), upholding the view that HRM is no more and no less than PM, presents the
catalogue of concepts similarities:

1. PM strategies, like HRM strategies, flow from the business strategy.

2. PM, like HRM, recognizes that line managers are responsible for people managing.

3. The values of PM and at least the “soft” version of HRM are identical due to the respect for
the individual, developing people to achieve their maximum level of competence for their own
satisfaction and to facilitate the achievement of organizational objectives.

4. PM and HRM recognize that it is significant to match people to ever-changing organizational

requirements: placing and developing right people in and for the right jobs.

5. In PM and in HRM there are used the same range of selection, competence analysis,
performance management, training, management development and reward management
techniques.

6. PM, like “soft” version of HRM, stresses importance to the processes of communication and
participation within an employee relation system.

It is worth to highlight that some of above mentioned similarities are viewed in the literature as
differences also, emphasizing the bigger HRM focus on certain aspects (for example: strategic
integration). As discussed earlier in the paper, there is no consensus in the scientific literature
as to content of HRM, so, it means that scientists, like Guest (1997), Henry & Pettigrew (1990),
Storey (1993), Legge (1995), Armstrong (2006) underline different HRM and PM aspects. These
differences are our interest here.

Several schools have attempted to define HRM traits by producing polar models, which help to
focus debate around the question: Is HRM simply personal management in a new wrapping?
(Bratton & Gold, 2003). In the scientific literature (Bratton & Gold, 2003) five main HRM models
that seek to show analytically the qualitative differences between traditional PM and HRM can
be identified: The Harvard model (Fombrun et al., 1984), The Michigan model (Beer et al.,
1984), Guest (1997) model, Warwick model (Henry & Pettigrew, 1990), Storey (1992) model. All
these models provide an analytical framework for studying HRM, legitimate certain HRM
practices, provide a characterization of HRM and serve as a heuristic device for explaining the
nature and relevance of key human resource practices.

One of the first explicit statements of the HRM concept was made by Michigan school (1984),
putting in the foreground the coherence of internal human resource

Author

Definitions

Personal management is:

Armstrong, 1977

(Armstrong, 2006)

concerned with obtaining, organizing and motivating the human resource required by the
enterprise

Torrington & Hall, 1998

(Armstrong, 2006)

is concerned with practices, which allow employer and employee not only to make a contract,
but also to assure that the contact is pursuing

Human resource management is:

Beer et al., 1984

(Prowse & Prowse, 2010)

all management decisions that affect the relationship between organizations and employees –
its humans

Storey, 1995

a distinctive approach to employment management which seeks to achieve competitive

advantage through the strategic deployment of a highly committed and capable workforce, using
an integrated array of cultural, structural and personnel techniques

Guest, 1987

defined in terms of four key goals: high commitment, high quality, flexibility and strategic
integration

Pool, 1990

(Prowse & Prowse, 2010)

viewed as strategic; it regards people as the most important single asset of the organization; it
involves all managerial personnel; it is proactive in relationship with people; seeks to enhance
organizational performance, employee “needs” and societal well being

Armstrong, 2009

defined as a strategic and coherent approach to the management of the most valued assets of
organization – the people, who individually and collectively contribute to the achievement of
organization’s objectives practices and the congruence between human resource management
practices and organizational strategy.

Another analytical framework – the Harvard model (1984) - is based on the belief that the
problems of historical PM can be solved only “when general managers develop a viewpoint of
how they wish to see employees involved in and developed by the enterprise, and of what HRM
policies and practices may achieve those goals” (Armstrong, 2006).

According to Guest (1987), HRM differ from PM due to four reasons: it integrates human
resources into strategic management; the perspective in unitary with the focus on individual; it
works better in such organizations which have an „organic“ structure; the emphasis is on a full
and positive utilization of human resources (Bratton & Gold, 2003). By making an assumption,
that HRM is “better”, Guest (1987) acknowledges, that all variations should be taken into
account in the context, which might limit HRM effectiveness. Due to this fact Guest (1987)
proposes to view HRM as an approach to manage the workforce.

The Warwick model extends the Harvard framework: it includes business strategy, human
resource practices, the internal and external context in which these practices take place and the
processes by which such changes take place, including interaction between changes in content
and context (Bratton & Gold, 2003). According to Storey (1995), HRM is an amalgam of
description, prescription and logical deduction. He distinguishes four main dimensions in his
model: 1. belief and assumptions - HRM attempts to enhance employee trust and commitment
and aims to go beyond the work contract; 2. strategic aspects - HRM is a matter of strategic
importance; 3. the role of the line managers - line mangers are seen as crucial to the delivery of
HRM practices – HRM specialists have a transformational leadership role in the organization; 4.
key levers. Based on these four dimensions and their characteristics Storey (1995) identified 25
key HRM variables to measure the degree of movement from PM approach to HRM approach.

As it is seen from Table 3, differences between PM and HRM are supported by the review of
five HRM models and by other researchers on HRM field.
Differences between PM and HRM

Author

Statements

Bratton & Gold, 2003 (analyses based on review of five HRM models)

1. HRM is, at least in theory, integrated into strategic planning.

2. HRM highlights the significance of the psychological contract.

3. HRM paradigm explicitly underlines the importance of learning in the workplace.

4. HRM has overall focused on the individual and the way how individuals can be managed in
order to achieve both individual and organizational goals.

5. HRM is characterized by proactive nature.

6. Three of five HRM models make an explicit reference to performance outcomes and one
conclusively claim for HRM is that if organization adopts HRM approach its financial results will
improve.

Legge, 1995

1. PM is the activity primary aimed at non-managers, meanwhile HRM is less clearly focused,
but is certainly concerned more with managerial staff.

2. HRM is much more of an integrated line management activity, whereas PM seeks to make
influence to line management.

3. HRM highlights the relevance of senior management‘s management of culture, whereas PM

has been rather suspicious of organizational development and related unitarist, social –
psychologically oriented ideas.

Armstrong, 2006

1. HRM treats employees as assets and not costs.

2. HRM places more emphasis on strategic fit and integration.

3. HRM is based on management and business oriented philosophy.

4. HRM places more importance on the management of culture and the achievement of
commitment.

5. HRM places more emphasis on the line managers.

6. HRM is a holistic approach concerned with the total interests of the business.
7. Human resource specialists are expected to be business partners rather than just personnel
administrators

Seeking to answer the research question if HRM is just “old wine in new bottles”, and based on
the PM and HRM

differences summarized by Armstrong (2006), further these differences are deeply explored.

HRM treats employees as assets and not costs. In scientific literature there is no consensus as
to what in particular serves as a source of competitive advantage – some authors state that
sustained competitive advantage lies in the human resources, other authors maintain that
competitive advantage is created through HRM practices and not human resources, a third part
of researches proposes a unifying attitude to the critical role of both human resources and HRM
in the enhancement of organizational competitiveness (Kazlauskaite & Buciuniene, 2008).
However, the approach that people should be regarded as assets rather than costs is accepted
underlying that „human resources are valuable” (Legge, 1995), that “people and their collective
skills, abilities and experience, coupled with their ability to deploy these in the interests of the
employing organization, are now recognized as making a significant contribution to
organizational success” (Armstrong, 2006) and that “human resources are key to the success”
(Clarke, 2011).

HRM places more emphasis on strategic fit and integration. The strategic nature of HRM, as the
distinctive dimension, denying PM link with strategic aspects is widely underlined in the scientific
literature (Clarke, 2011; Thornthwaite, 2012). Armstrong (2006) treats the strategic nature of
HRM as most relevant feature of HRM, which flows from top management vision and leadership
and demands the commitment of people to it. Guest (1987) distinguishes four components of
integration: the first component is concerned with integration to management strategy; the
second component encompasses vertical integration between strategic concerns, management
concerns and operational concerns; the third aspect of integration concerns the attitudes and
behavior of line managers; the fourth element of integration proposes that all employees should
be integrated into the business as fully as possible. Guest (1987) underlying these four forms of
integration proposes that „if human resources can be integrated into strategic plans, if human
resource policies cohere, if line managers have internalized the importance of human resources
and this is reflected in their behavior and if employees identify with the company, then the
company's strategic plans are likely to be more successfully implemented.“ Girdauskiene and
Savaneviciene (2004) highlight the importance of the interaction of the general strategies of the
organization and the human resource management as well as the dependence of the reaction to
the changes.

HRM is based on management and business oriented philosophy. According to Armstrong

(2006), HRM is described as a central, senior-management driven strategic activity, whereas,
as Guest (1991) states, „HRM is too important to be left to personnel managers“. Legge (1995)
acknowledges that HRM policies are adapted to drive business values. However, as an
outcome of the discussion concerning HRM as a management-driven activity, Purcell (1993) (as
cited in Armstrong, 2006) envisages a danger that describing HRM as modern best-
management practice we stereotype the past and idealize the future.

HRM places more importance on the management of culture and the achievement of
commitment. The importance of mutuality was emphasized by Walton (1985a) (as cited in
Armstrong, 2009) emphasizing that HRM encompasses policies that promote mutuality – mutual
goals, mutual influence, mutual respect, mutual rewards, mutual responsibility. In that context
arises the relevance of organizational commitment, which is treated as one of the most
important factors, affecting organization competitiveness (Kumpikaite & Rupsiene, 2006). As
Macky and Boxall (2007) stated, committed workers not only identify psychologically with the
employer and feel stronger attachment to the organization, they also are more likely to expend
discretionary effort towards achieving organizational results. Increased commitment means
better communication between employees and managers (Karami, et al., 2004) and employees
who are committed to an organization exhibit a greater volume of positive extra-role behavior
(Wright, Gardner & Moynihan, 2003). According to Buciuniene and Skudiene (2008), committed
employees have strong belief in the organization’s goals and values, possess a willingness to
exert considerable effort on behalf of the organization and feel a strong desire to remain with the
organization. Notwithstanding the stress of commitment is highly criticized in the scientific
literature, whereas in the practice the final decision is up to the employer (Noon, 1992;
Armstrong, 2006). If HRM emphasizes the need of employee to be committed to do what the
organizations wants them to do, the case of HRM as „a wolf in sheep‘s clothing“ (Keenoy, 1990)
can be under consideration.

HRM places more emphasis on the line managers. As it was mention earlier, following an
approach that HRM is too important to be left just to personnel managers (Guest, 1991), the role
of line managers is emphasized. However, in the scientific literature the distinction between
intended HRM practices, actual HRM practices and HRM practices perceived by employees are
underlined (Wright & Nishi, 2006; Purcell & Hutchinson, 2007). This appears due to the fact that
the main role „bringing HR practices to life“ (Purcell et al., 2003) is given to line managers, who,
according to Marchington and Grugulis (2000) (Harney & Jordan, 2008), do not act as “robotic
conformists”.

HRM is a holistic approach concerned with the total interests of the business. HRM concept is
related to the total interests of the organization: the implications are that the interests of the
members of the organization are recognized but subordinated to those of the enterprise. HRM is
characterized by a unitarist rather than a pluralist view, which expresses the belief that people in
organizations share the same goals and work as members of one team (Armstrong, 2009).

Human resource specialists are expected to be business partners rather than just personnel
administrators. Due to the fact that human resource specialists assume and share the
responsibility with line managers concerning business prospects, they need to be capable to
identify business possibilities. According to Ulrich (1998) (as cited in Armstrong, 2000), human
resource managers and line managers should be partners in strategy formulation process,
encourage and manage the discussion how the organization can achieve better performance.
Summing up the review of the similarities and differences of PM and HRM, it could be stated
that in the theory the distinction was made between PM and HRM and the term “human
resource management” is now in general use both in it own right and as synonyms for
“personnel management”. This conclusion still needs more research and answer concerning the
“rhetoric” and “reality” of HRM in organizations. Due to that in the context of today’s Lithuania
the question arises – which approach follows the practitioners – do they use HRM as synonyms
for PM or make difference between two constructs. Based on the literature review and
underlying similarities and differences of PM and HRM a constructive empirical research could
be arranged. The empirical research methodology and discussion on the findings are the topic
for the next paper.

Conclusions

1. The relabeling when the concepts are introduced as new ideas although they were used long
time before just under the different names is not a novel affair in the scientific literature. In the
field of people management one significant trend is the replacement of the old term ‘‘personnel
management’’ with the new one ‘‘human resource management.’’ Notwithstanding the
development of HRM, which is treated as the end of “orthodoxy” in managing of people, is
mediated by product and labour markets, social movements and public policies, however the
process of HRM formation has three main stages existing: first, the initial thoughts originated in
USA; second, the further development of these ideas by British scientists; thirdly, traditional
personal management expansion to human resource management.

2. The existence of two approaches: the first, there is any significant difference in the concepts
of PM and HRM and the second, HRM represents new philosophy and concept, which radically
differs from PM, allow stating that both concepts have the similarities, whereas the difference
can bee seen as a matter of emphasis and approach rather then the search for essential
distinction. In that context it is relevant, that some similarities of two concepts are viewed in the
literature as differences also, emphasizing the bigger HRM focus on certain aspects.

3. Underlying that HRM is controversial, it is acknowledged that widely accepted definitions of

HRM and PM do not exist. Treating employees as assets not costs, placing more emphasis on
strategic fit and integration, placing more importance on the management of culture and the
achievement of commitment; placing more emphasis on the line managers and expecting that
human resource specialists will be business partners rather than just personnel administrators
and upholding the holistic approach concerned with the total interests of the business are the
main features which differ HRM from PM. This allows maintaining that in theory the distinction is
made between PM and HRM and the term “human resource management” is now in general
use both in its own right and as synonyms for “personnel management”.