Human Resource Management Manipal University Jaipur (MUJ)

BACHELOR OF BUSINESS
ADMINISTRATION
SEMESTER 1

HUMAN RESOURCE MANAGEMENT

Unit 2: HRM and Personnel Management 1

Human Resource Management Manipal University Jaipur (MUJ)

Unit 2
HRM and Personnel Management

Table of Contents
SL Topic Fig No / Table SAQ / Page No
No / Graph Activity
1 Introduction - -
3
1.1 Objectives - -
2 Concept of Personnel Management - 1 4-5
3 Personnel Management in India - - 6
4 Functions of the Labour Welfare Officer - 2 7
5 Difference between Personnel Management and - 3 8-10
HR
6 Summary - - 10-11
7 Glossary - - 11-12
8 Terminal Questions - - 13
9 Answers - - 13-14
10 References - - 14

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1. INTRODUCTION
In the previous unit, we have learnt the concept of Human Resource Management and its
evolution. The concept of HRM has evolved from the concept of Personnel Management.

Personnel Management may be defined as a well founded, planned, executed and evaluated
approach to the employee recruitment, use and development. The role of Personnel
Management has gone a significant change from that of mainly record keeping to
employment, to providing for employee’s welfare, to a more comprehensive approach to
human resource allocation and optimal utilisation. It is important because it gives a better
understanding and taking the right decision about hiring, compensation, performance
evaluation, employee discipline, promotions, training, transfer and many others. It is
assumed that the outcomes from providing justice and achieving efficiency in the
management of personnel activities will result ultimately in achieving organizational
success.

As a student of HRM, it is important to know the changes that happened in the concept and
how it evolved to the concept of HRM, which values the employees as a precious resource
and not just a mere means to satisfy the needs and goals of the organisation.

1.1 Objectives
After studying this unit, you should be able to:
❖ Define Personnel management.
❖ Describe the evolution of Personnel Management in India.
❖ Distinguish between Personnel Management and HR.

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2. CONCEPT OF PERSONNEL MANAGEMENT

Personnel Management is also known as Personnel Administration, Labour Management
and Labour Administration. According to the Institute of Personnel Management of India
Personnel Management is “that part of management function which is primarily concerned
with the human relationships within an organisation. Its objective is the maintenance of
those relationships on a basis which by consideration of the well being of the individual
enables all those engaged in the undertaking to make their maximum personal contribution
to the effective working of that undertaking”.

Prof. Thomas G Spates says, “Personnel Administration is a code of the ways of organising
and treating individuals at work so that they will each get the greatest possible realisation of
their intrinsic abilities, thus attaining maximum efficiency for themselves and their group,
and thereby giving to the enterprise of which they are a part.”

C. H. Northcott defines it as “extension of general management, that of prompting and

stimulating every employee to make his fullest contribution to the purpose of a business.”

According to Richard Calhoon, Harper and Row Calhoon, “Personnel Management involves
the task of handling the human problems of an organization, and is devoted to acquiring,
developing, utilising and maintaining an efficient work force.”

By examining the definitions, we can derive some of the important features of personnel
management as stated below:
• Personnel Management is an extension of the managerial aspects in an organization.
• It focuses on employees as individuals and groups working together for accomplishing
the goals of the organisation.
• All categories of employees from top management to the temporary workers in an
organisation are included.
• Personnel management functions require the support of line and staff managers also.
It cannot be carried out by the Personnel Manager alone.
• It requires constant monitoring and supervision of employee relations and their
importance in everyday operations.

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• It focuses on maintaining organisational harmony and on preventing employment

related problems.
• It is concerned with the development of human resource to the maximum possible
extent to that the employees get the maximum satisfaction from their jobs.

SELF-ASSESSMENT QUESTIONS – 1

Fill in the blanks

1. __________________ is also known as Labour Management and Labour Administration.
2. Personnel management focuses on maintaining ________________and on preventing
employee grievances.
3. Personnel Management is an extension of the ________________aspects in an
organization.

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3. PERSONNEL MANAGEMENT IN INDIA

Personnel management in India was formalised through legislations at different time
periods. Initially personnel management did not receive any particular attention or
importance in the organisations. There was no position for personnel management in the
organisational hierarchy. There were no professionals to manage the employee related
issues. It was managed by the line and staff managers themselves.

The Royal Commission of Labour in 1931 recommended the appointment of labour officers
for protecting “the workers from evils of jobbery and indebtedness, to act as spokesman of
labour and to promote an amicable settlement between workers and management.”

The Bombay Mill owners Association in 1931 appointed labour officers to resolve the
disputes and problems of the workers. Jute Mills Association in Bengal appointed labour
officers to settle disputes as well as to promote welfare of the workers by providing them
with basic amenities such as canteen, adequate toilet facilities etc.

The functions of the labour officers expanded during the Second World War due to influences
of the social reform movement in the country. Exploitation of workers was condemned.
Workers began uniting in the form of trade unions and began demanding the management
to address their problems and to treat them fairly. Thus the functions of the labour officers
enlarged to include administrative, welfare and industrial relations.

The Factories Act of 1948, The Plantation Labour Act, 1951 and The Mines Act 1952 provided
for the appointment of a Labour Welfare Officer. These acts gave a detailed description of the
recruitment procedure, the required qualifications for recruitment, the conditions of service
and a list of duties for the welfare officer which includes personnel administration, welfare
activities and industrial relations. These acts also played an important role in the
professionalising personnel management.

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4. FUNCTIONS OF THE LABOUR WELFARE OFFICER

The major functions performed by a Labour Welfare Officer were primarily statutory. The
welfare officers were initially appointed to fulfil the statutory requirements. They were
considered as reactive rather than preventive. The prime responsibility of welfare officers
was to resolve grievances and disputes between workers and management.

Some of the functions performed by the Labour Welfare Officers or the Personnel managers
are given below.
• Maintaining harmonious industrial relations by resolving grievances and ensuring a
quick settlement of labour issues.
• Formulating welfare and personnel policies.
• Maintaining the health and safety of the workers by ensuring that the machines are
adequately fenced, rooms are well ventilated, workers are provided with safety gadgets
etc.
• Ensuring comfortable working conditions by providing adequate rest periods between
working hours, limiting the working hours to 8 hours a day etc.
• Ensuring the functioning of the Works Committee so that the problems of the workers
are solved at the initial stage itself.
• Providing for welfare of the workers by providing for canteen, rest room, washing area,
place to sit etc.

SELF-ASSESSMENT QUESTIONS – 2

State whether the following statements are true or false

4. Personnel Management functions were given prime importance from the

beginning.
5. The Factories Act of 1948 provided for the appointment of a Labour Welfare
Officer.
6. The prime responsibility of the Labour welfare Officer was to maintain
harmonious industrial relations by resolving grievances and ensuring a quick
settlement of labour issues.

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5. DIFFERENCE BETWEEN PERSONNEL MANAGEMENT AND HRM

The concepts of Personnel Management and Human Resource Management differ in terms
of their areas of focus. Personnel Management primarily focus on employee grievance and
settling disputes. Workforce is given importance only in terms of their productivity and
achievement of organisational goals. Human Resource Management, however focuses on the
welfare of the employees and regard the workforce as the most dynamic and important
resource in an organisation.

Let us now look into the major areas of differences between personnel management and
human resource management in detail:
1. Personnel management is workforce-centred. It is directed mainly at the employees of
the organisation by focusing on their recruitment, providing wages and salary,
explaining the management’s goals and targets, justifying the actions of the
management etc. On the other hand, HRM is resource –centred. It is directed mainly at
management, by focusing on providing opportunities to employees for growth and
development through training and management development programmes,
transferring more power and authority to the workers, etc.
2. Personnel Management is basically an operational function. It gives a lot of importance
to the day-to-day administration of the workers. HRM, however, is strategic in nature.
It focuses on enabling the organisation to gain sustained competitive advantage
through strategic planning.
3. HRM is more proactive than Personnel Management. Personnel management focuses
on employee grievances and disputes expressed. They play a major role in addressing
the problems after its occurrence. Hence it is reactive. HRM focuses on providing a
healthy work atmosphere looking into each and every aspect of the workers. They value
the workers as a crucial resource and therefore take all measures to ensure the job
satisfaction of the employees. This is achieved by providing adequate opportunities for
employees to learn and grow, provide adequate promotional opportunities, conducting
a fair performance appraisal etc.

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4. Personnel Management focuses on negotiation. It focuses on bargaining and

negotiating between the workers. HRM however focuses on facilitation. In HRM, the
management go beyond the contracts and try to retain the employees to the maximum.
5. Industrial conflicts and disputes are given a lot of importance in Personnel
management. Personnel management, as stated in the previous sub- sections focuses
on creating industrial harmony and ensuring that disputes are settles at the earliest.
HRM de-emphasises conflicts. It believes that a certain level of conflict is essential for
generation of new ideas and new perspectives. At the same time HRM focuses on
ensuring that conflicts are mostly prevented by providing training such sensitivity
training, cross-cultural training, fair performance appraisal etc.
6. Personnel management uses job analysis and job evaluation for fixing the wages and
salary of the workers. The wages and salary are mostly fixed and has a specific
structure. HRM provides for performance based pay, where the employees are paid
based on their level of performance. It also provides for fringe benefits that may not be
monetary such as petrol allowance, telephone allowance etc.
7. The leadership style in Personnel Management is transactional. It focuses on the type
of communication between the management and workers. The leadership style of HRM
is transformational. HRM focuses on improving the skills and abilities of the employees.
It provides for bringing about transformational changes in the employees.
8. Personnel management focuses on centralisation of authority. Authority in Personnel
management is in the hands of the management alone. The management makes all the
major decisions and does not involve the workers in it. The decisions of the
management are then communicated to the workers by the labour welfare officers.
HRM provides for decentralisation of authority. It supports employee empowerment
and engages the employees in the major decisions of the organisation.
9. HRM is futuristic. HRM focuses on building the abilities and knowledge of the
employees so that they are capable of taking up future roles and responsibilities as well.
Personnel Management focuses more on the present situation. It focuses on extracting
maximum productivity of the workers.
10. HRM is more nurturing than Personnel Management. HRM provides for more freedom
to the employees and is willing to accept their suggestions and involvement. Personnel

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Human Resource Management Manipal University Jaipur (MUJ)

Management is more monitoring. Productivity and the amount of work carried out is
the focus of assessment of the workers in Personnel Management.

SELF-ASSESSMENT QUESTIONS – 3

State whether the following statements are true or false

7. Personnel Management is operational and HRM is strategic in nature.

8. HRM focuses on centralisation of authority and Personnel Management focuses
on decentralisation of authority.
9. The management style of personnel management is transactional and HRM is
transformational.
10. HRM is reactive and Personnel Management is proactive.

6. SUMMARY

Let us recapitulate the important concepts discussed in this unit:

• According to Richard Calhoon, Harper and Row Calhoon, “Personnel Management
involves the task of handling the human problems of an organisation, and is devoted to
acquiring, developing, utilising and maintaining an efficient work force.”
• Some of the features of Personnel Management are that it is an extension of the
managerial aspects in an organisation, focuses on employees as individuals and groups
working together, includes all levels of workers, requires supervising employee
relations, aim at maintaining organisational harmony and on preventing employment
related problems.
• Personnel management in India was formalised through legislations at different time
periods. Initially personnel management did not receive any particular attention or
importance in the organisations. The Royal Commission of labour in 1931
recommended the appointment of labour officers. The functions of the labour officers
expanded during the Second World War due to influences of the social reform
movement in the country. The Factories Act of 1948, The Plantation Labour Act, 1951

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Human Resource Management Manipal University Jaipur (MUJ)

and The Mines Act 1952 provided for the appointment of a Labour Welfare Officer and
played an important role in the professionalising personnel management.
• The major functions performed by a Labour Welfare Officer were primarily statutory.
The prime responsibility of welfare officers was to resolve grievances and disputes
between workers and management. Labour Welfare Officers were also responsible for
maintaining health and safety standards and ensuring the implementation of welfare
schemes and measures.
• The concepts of Personnel Management and Human Resource Management differed in
terms of their areas of focus. Personnel Management primarily focus on employee
grievance and settling disputes. Human Resource Management, however focuses on the
welfare of the employees and regard the workforce as the most dynamic and important
resource in an organisation. Personnel Management was monitoring, transactional,
operational and reactive whereas HRM was nurturing, transformational, strategic and
proactive.

7. GLOSSARY

• Centralisation: Centralisation is the process by which the activities of an organisation,

particularly those regarding planning decision-making, become concentrated within a
particular group, generally the top management.
• Negotiation: A discussion intended to produce an agreement between the
management and the workers.
• Organisational hierarchy: Organisational hierarchy refers to the organisational
structure, typically visualized as a pyramid, which represents the position of every
member of the organisation.
• Personnel policies: Personnel policies, also called employee handbooks, are a set of
statements that explain what the employer expects from its employees and what
employees may expect from the employer. Policies offer guidelines for decision-making
and reflect a business' values.
• Proactive: Creating or controlling a situation by causing something to happen rather
than responding to it after it has happened.

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• Transactional leadership: Transactional leadership focus on the interactions

between leaders and followers. Transactional leaders focus more on a series of
"transactions". These people is interested in looking out for oneself, having exchange
benefits with their subordinates and clarify a sense of duty with rewards and
punishments to reach goals.
• Transformational leadership: Transformational leadership enhances the motivation,
morale and performance of followers through a variety of mechanisms. These include
connecting the follower's sense of identity and self to the mission and the collective
identity of the organization; being a role model for followers that inspires them;
challenging followers to take greater ownership for their work, and understanding the
strengths and weaknesses of followers, so the leader can align followers with tasks that
optimize their performance.
• Works Committee: The Industrial Disputes Act, 1947 provides for the establishment
of a Works Committee for any industrial establishment employing hundred or more
workmen. Works Committee would consist of an equal number of representatives of
employers and workmen. The duty of the Works Committee is to promote measures for
securing and preserving amity and good relations between the employer and workmen
and to discuss the difference of opinion on conditions and terms of employment.

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8. TERMINAL QUESTIONS
1. Define Personnel management.
2. Explain the evolution of Personnel Management in India.
3. What are the major functions of a Labour Welfare Officer?
4. Differentiate between Personnel Management and HRM.

9. ANSWERS

Self Assessment Questions

1. Personnel Management
2. Organisational harmony
3. Managerial
4. False
5. True
6. True
7. True
8. False
9. True
10. False

Terminal Questions
1. Personnel Management is also known as Personnel Administration, Labour
Management and Labour Administration. Prof. Thomas G Spates defines, “Personnel
Administration is a code of the ways of organising and treating individuals at work so
that they will each get the greatest possible realisation of their intrinsic abilities, thus
attaining maximum efficiency for themselves and their group, and thereby giving to the
enterprise of which they are a part.”
2. Personnel management in India was formalised through legislations at different time
periods. Initially personnel management did not receive any particular attention or
importance in the organisations. The Factories Act of 1948, The Plantation Labour Act,
1951 and The Mines Act 1952 provided for the appointment of a Labour Welfare Officer
and played an important role in the professionalising personnel management.

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Human Resource Management Manipal University Jaipur (MUJ)

3. The prime responsibility of welfare officers was to resolve grievances and disputes
between workers and management. Labour Welfare Officers were also responsible for
maintaining health and safety standards and ensuring the implementation of welfare
schemes and measures.
4. Personnel Management was monitoring, transactional, operational and reactive
whereas HRM is nurturing, transformational, strategic and proactive.

10. REFERENCES

• C. B. Mamoria and S.V, Gankar. (2010). Human Resource Management. Mumbai:

Himalaya Publishing House.
• D'Cenzo, David A. & Robbins, P. Stephen., (2001). Human Resource Management. New
Jersey: Prentice Hall.
• Deb, T., (2009). Human Resources and Industrial Relations. New Delhi: Excel Books.
• Dessler, Gary. (2010) Human Resource Management .New Jersey: Prentice Hall.
• K. Aswathappa., (2006). Human Resource and Personnel Management. New Delhi:
Tata Mc Graw Hill.
• Rao, V.S.P. (2009). Human Resource Management. New Delhi: Excel Books.

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