Revised Oct 1999
Personnel management is the set of activities carried out by an organization to manage effectively the skills and resources of the people who work within the organization. The Institute of Personnel Development defines the function as:
Personnel Management is that part of management concerned with people at work and with their relationships within an enterprise. Its aim is to bring together and develop into an effective organization the men and women who make up an enterprise and, having regard for the well-being of the individual and of working groups, to enable them to make their best contribution to its success.
In many organizations the Personnel Manager is seen as a specialist supporting the management team in matters relating to the management of people. Depending upon the size of the company, the Personnel Manager may be an individual specialist providing the total range of personnel services, or in larger organizations a departmental manager controlling individual functional managers within the personnel area
The functions undertaken either by the individual specialist or by the personnel function can be expressed in two clearly distinctive areas. Those activities relating to the interaction of the employees and their performance, and those activities for which there is legal requirement. The former is internal to the organization and involves the design of management systems, the latter is a response to the externally set legislation. The effective interaction of the people in the organization requires the recruitment of capable people, the training of those people in the specific skills the organization requires and the provision of an environment in which employees will willingly exchange their skills for reward. This is crucial to the success of the organization. Supporting that endeavour is the legal constraint within which the company operates. This requires the firm to recruit fairly, to abide by health and safety regulations, not to discriminate on grounds of sex, or race, and to deal with recognised trade unions in contractual or grievance procedures.
Organization of Personnel Management
Figure 10.1 in unit 10 shows how personnel management fits with other functions of management within an organization. Figures 18.1 to 18.6 in unit 18 show alternative forms of organization structure within which personnel management fits. The organization structure chart in Figure 90.1 shows a typical Personnel Department for a large manufacturing organization and the associated activities for the individual functions. These sub-sections of the Personnel Department can be traced back to the history and traditions of personnel management. The functions will exist in a smaller organization but may be merged between less people. These functional divisions also portray the changing values of society itself. A change in values has seen the personnel profession rise from Welfare Officers in the past dealing with problems caused by employment to the advent of Human Resource Directors involved in policy and strategic decisions.
Historical background to personnel management
The Welfare Stage
This changing approach to the dealing with people at work has seen the work carried out by the personnel function change considerably. The discipline has accordingly grown in status and become more influential. Until the First World War the job was mainly the domain of well-intentioned, liberally-minded, property-owning class. These individuals were largely involved with improving working conditions and visiting the sick. Until the advent of factories and large scale mining during the Industrial Revolution employment had been largely an activity involving small employers. In these enterprises, merchants, guild masters or farmers had employed only small numbers of labourers paid by the day when work was available. For the skilled artisan the notion of regular employment was also unknown and they would be employed on a casual job basis. This would be in a situation not unlike many plumbers, electricians and builders are today where individuals requiring work to be done seek a tradesman to carry out a specific job. The main regulation on employment was through common law and the notion of Master and Servant. For many small employers, and for all those employed, this meant little effective control over employment.
The advent of the Industrial Revolution, in the early 19th century, brought about the need for large scale organizations. The rapid adoption of new technologies and the consequent growth in markets started the movement towards industrialisation. These new technologies and the forms of organization based on them principally brought about the economic concepts of economy of scale and the division of labour which radically changed the pattern of life. Initially the expansion of the factory system proceeded unchecked. Output increased and increasing numbers of people were attracted to the towns to seek employment in these newly expanding industries.
For nearly the first quarter half of the 19th Century the expansion of the industrial system continued with no change to the legal system. In 1824 the Combination Acts which prevented employees from forming trade unions were repealed. This followed pressure from the "Benthamites" a radical liberal thinking group in Britain. More details of trade union legislation is given in unit 93, Industrial Relations. This radical and liberal view continued to grow and in 1832 a Reform Bill was passed that re-defined parliamentary constituencies, and expanded the right to vote to a larger group of property owning men. These changes principally benefited the newly emerging industrialists but can be seen as the foundations for a more general change. The Trade Union Act of 1871 permitted trade unions and the Reform Act of 1884 extended the right to vote to male agricultural workers. The trade unions, the embryonic Labour Party and active individuals such as the Rowntree, Fry and Cadbury families demanded radical change.
Many see the first stirrings of personnel management as an attempt by the employers to respond to this demand for improved conditions within the factories and mines. These earliest attempts to consider employees as other than as slaves or merely as an economic resource saw the introduction of welfare policies. Initially these policies were adopted by only a few organizations and were generally in industries with large concentrations of women employees.
Both the employers and their employees viewed this early work by Welfare Officers with suspicion. As many of the Welfare Officers had the same social backgrounds and upbringing as the employers, the employees were unsure of their motives. Equally, the employers were concerned that profits would be eroded if criteria other than narrowly defined economic ones were used in the management of industrial organizations. The political orientation of employers led them to an adversarial style of management. This caused an alienative response from employees who formed trade unions to defend themselves from exploitation.
Was the introduction of welfare policies by organizations such as the Cadburys, Frys and Rowntrees purely a matter of social conscience ? All of these organizations were run by Quaker families. (Quakers are a branch of the Christian religion, mainly in English speaking countries). Clearly, their religious and social beliefs were predominant in determining their responses to the growing significance of the factory system. Their concern for the morals and working conditions of their employees were based on a desire to improve the lot of those working for them. There is however a need to recognise that the rules associated with that concern also had an element of regulation and control of the workforce.
With the rise of industrialisation came an increase in alcohol-related problems. Alcohol had become a major consumer product, since it was the only commodity that had developed an extensive network of outlets, public houses, and had created a demand for an addictive product. The Quaker families with their belief in abstinence from alcohol had initially developed the chocolate house as an alternative to the attraction of public houses. It is therefore not surprising that as they developed their companies into the manufacture of chocolate products they should still have this concern with the adverse effects of alcohol and the welfare of their employees. This concern was not just in order to treat employees as human but was also based on the recognition that productivity would rise if employees were healthy, well fed and well housed. Giving employees more wages could therefore increase rather than reduce profit.
Many of the rules adopted by the companies and used by the Welfare Officers were couched in the framework of protecting morals and encouraging good citizenship. They clearly also have a role in controlling and developing the behaviour necessary for effective working practices. The rules shown in Table 90.1 are those in existence in the Fry's chocolate factory in Bristol during the 1880's. The Frys were contemporaries of the Cadbury and Rowntree families and were taken over by Cadbury in the early 1920's. It must be remembered these were office staff and that Fry's were benevolent employees, the conditions of manual workers and in other organizations were worse.
Table 90.1 Conditions of Work in Britain in the 1880s.
The conflict of interests, between the need to offer help to individuals within the organization and the requirement to be the custodians of a policy for the organization to interact with its employees was very apparent to the early Welfare Officers. This is still a dilemma that present day personnel practitioners have to face.
The Industrial Relations Stage
The circumstances of the Second World War required a planned economy in Britain to organize manufacturing and the distribution of food. This changed fundamentally the relationships between employers and employees. Both Government and Trade Unions recognised, that in the short term at least, productivity could be improved through joint consultation. This resulted in a situation that between 1945 and the late 1970's increased consultation took place between successive governments and the Trades Union Congress (TUC).
This recognition of the role of centralised bargaining by the trade unions and government took place at a time when the shop stewards movement was becoming increasingly powerful. Industrial relations often only refers to the recognition and trade disputes conducted between the officers of the trade unions and the representatives of the company and Employers Associations. The concept of national agreements was that the Presidents of Trade Unions and the Industrial Relation directors of Employers Associations would agree recognition procedures, pay increases or conditions of employment. The role of the shop stewards was then to police their members to ensure the agreements were upheld. In situations where employers did not uphold the bargain the trade union officers would evoke the procedural process to ensure the employer came into line. The shop stewards found these delays unacceptable and reasoned that work to rules and strikes could resolve the situation more quickly. Increasingly this informal trade union activity became the focus for the membership rather that the centralised formal relationships. The development of industrial relations is covered in more detail in unit 93.
Against this background an increasing amount of legislation was enacted bringing the law into the employment arena. Following the traditions of the welfare approach the initial legislation was in the area of employment regulations (contracts, recruitment practices and safety). Later legislation amended much of these initial regulations and extended it to cover new areas such as discrimination but within a framework which governed the relationships between trade unions and employers. The personnel professional therefore needs to be aware of the laws that provide the background to these formal relationships. This knowledge and negotiating skill enables the personnel practitioner to offer advice in new situations as they arise. The major areas of the law that affect the day to day work of the personnel department are explained below. Most countries have their own employment law. Within the European Union such legislation is being harmonised as a result of the Maastrict Treaty.
DATA FOR PERSONNEL MANAGEMENT
The two main types of data needed by personnel management are:
Job Analysis is the process of collecting and organizing data about the jobs within an organization. It provides data about the characteristics of the population of jobs. This is in addition to data about the people employed to do the jobs. Data is usually held in a set of job descriptions.
Table 90.2 shows a typical job description.
Table 90.2 Job Description for an Office Manager
A job description identifies the main tasks of the job and the resources for which the job holder is responsible. A job description should give a clear statement of objectives and responsibilities but must not be so prescriptive that it reduces opportunity for initiative and development. It should be written in such a way that if an employee follows it then work is done effectively. It must not allow a work-to-rule (referred to in unit 93) to cause output to fall if the employee does the tasks described in the job description. The format and detail in a job description should match the form of job evaluation, since the job description is the prime source of information used in job evaluation. Job evaluation is explained in unit 99. Job descriptions have other purposes, for example as the basis of Skills Analysis (see below).
A job specification is a statement of the requirements needed by a person to do the job. It provides the information needed against which to assess the suitability of applicants for the job. The job specification will be in similar format to the job description. Table 90.3 shows the job specification for the same job as that for which the job description is shown in Table 90.2 above.
Table 90.3 A job specification
Manpower Planning derives from an organization's strategy in the area of human resource management. It seeks to provide the right people in the right jobs with the motivation and commitment to achieve high productivity for the organization. Its role is to improve the ability of the organization to achieve its corporate objectives by enhancing the contribution and commitment of employees. Without manpower planning an organization is likely to operate at low productivity.
Manpower planning seeks to balance the current and future demand for employees of given skills with the supply of such employees within the organization. This can be seen in Figure 90.2. The means of achieving the balance can be seen to be through recruitment, training and, on occasion, redundancy.
Manpower planning requires data about employees. This is needed to identify the number of employees in each job, of each skill, their age and length of service and in which department they work.
Manpower planning model
The current and future required values can be measured and estimated to show any changes needed. This shows where more employees are needed and what training is needed. A company needs a model of its current and future manpower needs. Figure 90.3 shows a simple manpower model.
This model shows the employees in different job categories and how recruitment, promotion and leavers cause changes in the number of people in each category. By knowing the ages of employees the numbers retiring at given times can be estimated. The rate of labour turnover (proportion of workforce leaving per year) can be measured historically and used as an estimate for the future. A policy of compensation for early retirement can increase the rate of retirement if required.