“Personnel Management &

Human Resource Management

- the same wine only different bottles.”

HR 557- Human Resource Managent

Mr. David Mc Partland

Word Count:

Georgios Kikas – [email protected]

Candela Cortina - [email protected]
Svetlana Korobkova - [email protected]
 Table of Contents

1. Introduction.............................................................................................................................................3
2. From Personnel management to Human Resources Management...........................................................3
2.1 Definitions of PM and HRM.............................................................................................................4
2.2 The Genesis of HRM.........................................................................................................................4
2.3 Philosophy and Values of HRM, soft and hard versions....................................................................5
3. Differences between HRM and PM.........................................................................................................6
3.1 Involvement in strategic planning perspective...................................................................................6
3.2 Control System..................................................................................................................................6
3.3 Industrial Relations/Employee Relation Perspective.........................................................................7
3.4 Structure System................................................................................................................................7
3.5 Employee Commitment.....................................................................................................................8
3.6 Culture Change..................................................................................................................................8
3.7 Contract of Employment...................................................................................................................8
3.8 Evaluation..........................................................................................................................................8
3.9 Level of Qualification........................................................................................................................9
4. Similarities between HRM and PM.........................................................................................................9
5. Best fit approach in the Hospitality Industry.........................................................................................10
6. Conclusion.............................................................................................................................................12
Bibliography:.............................................................................................................................................13
APPENDIX 1.............................................................................................................................................14

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 1. Introduction

The existence and well-being of any organization depends on successful

management of its resources. Human resources are the most important assets in an
organization. No matter how great its financial resources; an organization can achieve
its goals successfully by good management of human efforts.
There are two different approaches to manage employees: Personnel Management
(PM) and Human Resource Management (HRM). In what do they differ? Is one better
than the other? Does HRM represent the new managerial discipline or is it only a new
modern terminology? Is it the same wine, only with different bottles?
There are numerous views in response to these questions. By investigating the
genesis of HRM, trying to understand its philosophy and to compare and contrast the
main differences with PM, we support that HRM is nowadays the most effective and
successful way to manage human resources.

2. From Personnel management to Human Resources Management

In recent years, there has been a debate about differences between PM and HRM.
Some authors like Storey [CITATION JSt92 \n \t \l 1033 ] have mentioned the
revolutionary nature of HRM. Others like Torrington [CITATION Tor07 \n \t \l 1033 ]
have denied that there is important differences in the concepts of PM and HRM.
An earlier answer to this question was made by Armstrong [ CITATION Arm87 \l 1033
]:

“HRM is regarded by some personnel managers as just set of initials

or old wine in new bottles. It could indeed be no more and no less
than another name for personnel management, but as usually
perceived, at least it has the virtue of treating people as a key
resource, the management of which is the direct concern of top
management as part of strategic planning processes of the enterprise.
Although there is nothing new in idea, insufficient attention has been
paid to it in many organizations.”

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 Below, this debate will be further developed.

2.1 Definitions of PM and HRM

In order to make a proper comparative analyze of PM and HRM, it is necessary to

first identify the meaning of each.

Personnel management can be defined as obtaining, using and maintaining a

satisfied workforce. According to Flippo [CITATION Fli84 \n \t \l 1033 ] , “Personnel
management is the planning, organizing, compensation, integration and maintenance of
people for the purpose of contributing to organizational, individual and societal goals.”
PM represents mostly administrative and operating activities and establishes basic
rules of employment.
Human Resources Management on the other hand, concentrates on people
strategies’ development, integrated with business strategies, and guarantees that the
organizations achievements are inseparably linked with corporate culture, improvement
of work quality and motivation of employees. Armstrong [CITATION Arm06 \n \t \l
1033 ], defines HRM as: "a strategic and coherent approach to the management of an
organization’s most valued assets - the people working there, who individually and
collectively contribute to the achievement of its objectives for sustainable competitive
advantage.”

From these definitions, we can assume that HRM carries out the same functional
activities traditionally performed by the PM, such as planning, job analysis, recruitment
and selection, employee relations, etc. However, the HRM approach performs these
functions in a different way, which we will analyze next [ CITATION Col \l 1033 ]

2.2 The Genesis of HRM

How did HRM develop? Just a quick look on the background:

The origin of HRM is in the United States in the beginning of the 1980s. The
previous period, from the 1960s up to the mid-1980s, is characterized by high turnover
and a weak position of an employee in its workplace. Taking this into account,
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managers and academic circles particularly in the liberal market countries like United
States and UK have changed the way to manage people [ CITATION Gol \l 1033 ] . For
example, collective employment contracts represented by trade union were replaced by
individual contracts, emphasizing the role of each employee. Another impact
influencing HRM development was the increase of value of the organization's mission
and elaboration of a positive organizational culture [ CITATION Bra \l 1033 ].

In USA pioneers to implement the innovative practices were companies like IBM
and Hewlett-Packard. These ideas spread to other countries in the 1980s and 1990s,
particularly Australia, New Zealand, parts of northern Europe - especially the UK,
Ireland and Scandinavia. Today, the HRM approach is influential in many parts of the
world [ CITATION HRM \l 1033 ]

2.3 Philosophy and Values of HRM, soft and hard versions

The HRM philosophy is based on the following beliefs:

 People are the key resource and the most important asset in the
organization, which can be developed and increased to an unlimited extent.
 The human resource policies are closely integrated with the business
strategy
 A healthy climate with values of trust, openness and enthusiasm is essential
for developing human resource.
 HRM generates the policies and organizational culture, which are beneficial
both to the individuals and the organization.
 Employees feel committed to their work and the organization; they are
highly motivated and have feeling of belongingness [CITATION Tys06 \l 1033 ].

A literature survey reveals different models of HRM – the hard and the soft.
The hard version of HRM is economically rational and instrumental strategy.
According to Storey [CITATION Sto89 \n \t \l 1033 ] “the hard version emphasizes the
quantitative, calculative approach…the labor is a resource, the same as any other.” In
this view, the main purpose of human resources strategies is to achieve the best
advantages with minimum labor costs.

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 In contrast, the soft version is considerably more humanistic. It focuses on the
communication, motivation and leadership. There is more emphasis on strategies for
gaining commitment by informing employees about the organization’s mission, goals
and values. As a result, it leads to high productivity, high employee trust, they become
effective and proactive[CITATION Nic \l 1033 ].

3. Differences between HRM and PM1

As mentioned above, there are many different opinions regarding the comparison
between PM and HRM. Some believe that PM is a forerunner of HRM and HRM is the
modern view. Others believe that there are two different approaches with some
essential differences.
In 1998 Grant and Oswick accomplished a phone survey and they asked 203
personnel and HR practitioners about differences between HRM and PM. 50 per cent of
the questioners answered that “HRM was something very different from PM” [CITATION
Cal01 \l 1033 ].

Important key areas of differences are:

3.1 Involvement in strategic planning perspective

HRM has succession planning, points to employee’s proactive activities. The

strategy based on research and development in order to achieve high skills, creativity,
long-term hard working and commitment. The role is more strategic and advisory and
aims firstly to tie people management to business objectives and secondly to employ
people in the long-term interests of the business.

PM, on the other hand, is short-term planning, reactive and focuses in day-to-day
functions. The strategy is driven only by strategic considerations to gain competitive
advantage and the role is more administrative.

3.2 Control System

The guideline of management actions in HRM is conducted to business needs.

Prominent position has the self-control. Empowerment is an indispensable factor in
1
Please refer to Appendix 1 for a clear outline of the differences explained below.

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HRM, giving the employees full authority in decision making. HR specialists prefer to
be partners with the employees rather than personnel administrators. They are more
people-oriented.

In PM, line managers have powerful authority and follow fixed procedures to
supervise the staff. They are task-oriented persons. They put rules and figures ahead of
human factors like trust and understanding.

3.3 Industrial Relations/Employee Relation Perspective

There is a clear difference in the field of relations between both approaches. In PM,
the perspective of pluralist is dominating; the staff and the managerial line are totally
separated, there is low trust and indirect communication between them.
HRM focuses on Unitarist, in other words, everyone in the business is a member of
the team with a common goal. ‘‘HRM is holistic, it is concerned with the overall people
requirements of an organization.’’[ CITATION Ala07 \l 1033 ]. Managers and employees
interact with each other, share the same objectives and work together harmoniously.
The information follows a two-way approach; in one way the staff give feedback to
manager line and in the other way managers support their employees. Motorola is a
company that uses Unitarist approach and treats their staff as partners. Employees play
an important role in the organization. When a serious problem or a conflict takes place,
HRM focuses directly on the employee rather with shop stewards. In one side the
individualization of HRM and in the other side the collective method of PM that
handles each employee as unit and not individual.

3.4 Structure System

One company with PM approach has more job categories, with defined formal
roles on each segment and restricted flow of communication. The result of indirect
communication is bureaucracy. The distribution of power is centralized around the top
management. Moreover the PM department is mostly independent from the
organization.

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 On the contrary, in HRM, organizations have a more organic character; there is an
increased flow of information in all organizational levels. The HR department is an
integral part of the company. In addition, there are flexible roles (cross training) inside
the business and empowerment because managers and staff can make collective and
mutual decisions.

3.5 Employee Commitment

It is an unwritten psychological contract and relates what they expect on both sites.
PM is characterized by compliance; in other words, employees just do their jobs.

HRM supports the employee commitment because HR specialists have the

knowledge and the experience to understand that higher employee commitment means
improvements in organization performance.

3.6 Culture Change

There is a strong relation between HRM and culture changes. HRM prefers to
conform to the changes as quick as possible rather than a slow change or a smooth
evolutionary change. The speed of decisions and reactions to changes is faster in HRM
than in PM. PM focuses its attention on personnel procedures and regulations, HRM in
contrast has wide range as cultural, social and personnel strategies.

3.7 Contract of Employment

In PM, the employees contract is strict, inaccessible (after signatures employees

should not deflect from the regulations and the obligations) in the written contract there
is no room for changes.

HRM does not focus so much to the written rules of the contract. It goes beyond
contract; it is a more flexible approach that adapts to the needs and requirements of the
company. One good example in this case is Siemens. Siemens practices an open
contract system with flexi working hours, work from home etc. Drucker in his article
“Management is not a technique (1996)” calls this approach a “win-win approach”
because at the same time benefit both sides employees and organization.

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 3.8 Evaluation

HRM represents a point of view in which employees are treated as valuable assets.
It invests on people and has the purpose to maximize the utilization. The payment is
related in the performance (reward system, performance measurement).

PM is a neutral, quantitative and calculative approach to staff. It targets to cost

minimization (reduce staff, obtained as cheap as possibly).

3.9 Level of Qualification

Tyson (1989) distinguished 3 types of PM jobs. According to him, there are 3 brief
job descriptions that are easy to understand the level of qualifications in PM
professions;
 “Clerks of works”; this type of employees is responsible for the routine work of
the department- set up interviews, reports to the managers etc.
 “Contracts Manager”; They resolve problems in the organization, involve in
the short-term policy and have formal relations with the lower levels of staff. Their
qualifications were mostly experience in trade unions and maybe some degree in senior
management.
 “Architect”; Possibly, they have impressed background but not necessarily the
qualifications and the background match in personnel management. Firstly, they are
business managers and secondly personnel managers [ CITATION Ala07 \l 1033 ]

On the contrary, in HRM there are key skills and personal qualifications like
effective comfort with diverse people and conflict resolution skills. In addition,
educational background, which matches in people management, is essential. Many
colleges and universities have educational programs that offer degrees in Human
Resources.

Please refer to Appendix 1 for a clear outline of the differences explained below.

4. Similarities between HRM and PM

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 From general perception, it is easy to say that PM has similarities only with the
hard version of HR. However, PM has similarities with both versions of HR. The view
that there are not many differences is shared by a number of authors. Legge (1989) and
Torrington (1989) agree that PM is a continuing process of evolution and growth, HRM
is only adding further dimensions and is not introducing something extremely new and
innovative.
Some important similarities are;
 Both are responsible for managing people, based on the orientation and
support services
 Payroll and Associated tasks – both manage wages and salaries, maintain
employees time worked and introduce reward management techniques
 Recruitment – similar hire activities as explanation of the organization
procedures. Both of them focus on the function of matching the right person to the
right position
 Documentation – record and store employee’s files and employee’s
assessment
 Development – both are responsible for training programs, motivate the
employees and try to succeed a collaborate environment in the organization
 PM, like a soft version of HRM, tries to achieve the objectives of the
company through the development of the workforce
 Both strategies flow from the business strategy [ CITATION Arm06 \l 1033 ],
[ CITATION Mar02 \l 1033 ]

5. Best fit approach in the Hospitality Industry

The development of Human Resource Management (HRM) reflects a change of people

management. Even though Personnel Management may seem like the outdated version
of HRM, it is also important to consider that each approach can serve for different
functions. For example, personnel managers were appropriate for the manufacturing
sector whereas HR managers are more appropriate for service firms. Specifically, HRM
applies to the hospitality industry because of the service nature of the job and its
people-focus.

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 The increased competition in the hospitality sector has obliged companies in the
sector to find ways to preserve their existing customers and draw competitors´
customers [ CITATION Cha10 \l 1033 ] . Schneider and Bowen [CITATION Sch93 \n \t \l 1033
] suggested that in a labor-intensive industry as is the hospitality one, the organization
can achieve its competitive differentiation by using its human resources effectively.

For hospitality companies, HRM is key to achieve a successful strategy,

organizational effectiveness and profitability [ CITATION Woo92 \l 1033 ]. This is because
HRM is a practical way to improve “quality of service, customer satisfaction and
performance of hospitality enterprises” [ CITATION Cha10 \l 1033 ]. By improving
employee performance, they will increase customer satisfaction and therefore enhance
the success of the company and its market positioning. Disney, Marriott and Ritz
Carlton are examples of hospitality companies that are well known for recognizing the
importance of their staff in attaining customer expectations within their sector
[ CITATION Bau97 \l 1033 ]. Johnson [CITATION Joh00 \n \t \l 1033 ] supported HRM
practice when he put forward that the essential guiding theory of best practice is when
employee performance is rewarded and valued.

However, HRM has some intrinsic personnel problems that make its application
difficult. Nickson[CITATION Nic \n \t \l 1033 ] identified issues like:

 Low wages
 Unsocial hours and shift patterns
 Seasonal employment
 High levels of labor turnover
 Difficulties in recruitment and retention of employees

Even though these personnel problems make the application of HRM more complicated
than in other industries, HRM can help ameliorate them. A survey that took place in
UK in 1999 with 98 participating UK companies, represented by employees in
personnel and HR professions, showed that organizations which employed HR
specialists had lower average turnover than those organizations which employed
Personnel specialists [ CITATION Cal01 \l 1033 ].
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 The type of management used is also dependent on the amount of employees
and/or the size of the enterprise. For a small firm, a large HR department might be too
pricey, for that reason, the owner might decide to hire only a position of personnel
management. On the other hand, companies that have a large number of employees
may choose to use HRM and have skilled and trained staff to boost workplace stimulus
through job satisfaction.

6. Conclusion

This paper analyzed how HRM developed from PM, its differences and
similarities and how HRM is a more suitable approach for the hospitality industry.
Even though the usual practical activities carried out by HRM are the same as those of
PM, HRM has taken them to a new level focused on the wellbeing of the employee.
After analysing the characteristics of both approaches, HRM seems a more suitable
approach for its employee trust and motivation which leads to commitment and better
results from both parts (organization and employees). To conclude, HRM is the gradual
development of people management which occurred simultaneously with the evolution
of the business model.

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 Bibliography:

Armstrong, M. (1987). Human resource management: a case of the emperor's new clothes? Personnel
Management, 28-35.
Armstrong, M. (2006). A Handbook of Human Resource Management Practice (10th ed.). London: Kogan
Page.
Background and origins of people management. (n.d.). Retrieved май 4, 2011, from HRM Guide:
www.hrmguide.net
Baum, T.; Amoach, V.; Spivack, S. (1997). Policy Dimensions of Human Resource Management in the
Tourism and Hospitality Industries. International Journal of Contemporary Hospitality
Management, 221-229.
Bratton, J. G. (2003). Human Resources: theory and practice (3rd ed.). London: Palgrave Macmillan.
Caldwell, R. (2001, November). A change of name or identity? (B. College, Editor) Retrieved May 4, 2011,
from Emerald: www.emeraldinsight.com
Chand, M. (2010). Human Resources Management in Indian hospitality enterprises: an emperical
analysis.
Collings, G., Wood, G. (2009). Human resources, a critical approach. London: Routledge.
Flippo, A. (1984). Personnel Management (6 ed.). New York.
Goldsmith, A. N. (1997). Human Resource management to hospitality services. London: Thomson
Learning.
Guest, D. (1987). Human Resource Management and Industrial Relations. Journal of Management
studies, 24.
Johnson, E. (2000). The practice of Human Resources Management in New Seland strategy and best
practice. Asia Pacific Journal of Human Resources, 69-83.
Köster, M. (2002). Human Resource Management versus Personnel Management. University of
Manchester (Institute for Development Policy and Management) , Manchester.
Nickson, D. (2007). Human Resources Management for the Hospitality and Tourism Industry. Elsevier
Butterworth Heinemann.
Price, A. (2007). Human Resources Management in a Business Context (3rd ed.). London: Thompson
Learning.
Schneider, B.; Bowen, D. (1993). The service organisation: Human Resources Management is crucial.
Organizational Dynamics.
Storey, J. (1989). New perspective on Human Resources Management. London: Routledge.
Storey, J. (1992). HRM in action: the truth is out at last. Personnel Management, 28-31.
Torrington, D. (2007). Human Resource Management. Prentice Hall.
Torrington, D., Hall, L. (1989). Human Recource Management and the Personnel Function. London:
Routledge.
Tyson, S. (2006). Essentials of Human Management. Oxford: Butterworth Heinemann.
Woods, R. (1992). Managing Hospitality Resources. Michigan.

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 APPENDIX 1.
DIMENSIONS KEY LEVERS PM HRM

Education & Experience Business Personnel

Level of Qualification
Background Managers Managers

Approach Cost Minimization Maximum Utilization

Evaluation Related to
Pay Fixed
Performance
Careful delineation of
Contract Rules & Obligations Beyond Contract
written contracts
Wide range social
Interventions of Culture
Personnel Procedures culture and personnel
Culture Change changes
strategies
Speed of Decision Slow Fast
Employee Commitment Psychological Contract Compliance Commitment
Key Managers Personnel Specialists HR Specialists
Communication Indirect Direct
Integral part of the
Organization Independent
organization
Function Bureaucratic Organic
Structure System
Centralized in top
Power Distribution Empowerment
Mgm
Job Categories Many Few
Flexible/ Cross
Roles Formal
Training
Nature of Relations Pluralist Unitarist / Holistic
Industrial Relations Trust Low High
Conflict Handling Collective method Individual
Managers Task-oriented People-oriented
Control System Control Strict supervise Self-control
Mgm Actions Fixed Procedures Business needs
Perspective Reactive Proactive
Strategic Planning
Time Short-term Long-term

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