Personnel Management in the 20th Century
The Personnel Management is a direct predecessor of the modern Human Resources Management we know and practice it today. The personnel management has the interesting history; it evolved as the requirement of the business to centralize the personnel administration, and recruitment and staffing, and provide hard skills training and development programs for managers and employees. It had no higher aspirations in the beginning, but the role of the Personnel Management Department has increased over time.
Moreover, organizations required building a strategic relationship with trade unions. The borderline between the Personnel Management and Human Resources is not sharp; there was a kind of a smooth transition between the personnel management and Human Resources.
The personnel management began its development at the beginning of the 20th century. The leaders of large factories realized that the organization can achieve tremendous savings if the employee related processes are centralized and managed using same procedures and principles for all. They also required to unify and upgrade the voluntary social care programs and initiatives. The centralization had many benefits.
Large factories run the social care programs for workers because it allowed employees to spend more time working and not being disturbed by any personal issues. The overall impact on the productivity was highly positive, and operating costs were kept at a reasonable level. As a side benefit, the workforce had been receiving some education about the products and processes of the factory. These programs had a positive impact on the employee satisfaction which had a measurable positive impact on the productivity and profits.
The centralization started as a personnel administration, and it developed into a healthy personnel management function. However, in the late 70s of the 20th century, the modern Human Resources Management has begun to evolve as the strategic response to the increased competition on the market.
The ambitions of the personnel management were not that challenging in the beginning; it was about the consistent improvement of employee related processes. It was the introduction of formalized people management processes (the huge milestone for Human Resources). All managers and employees received the same service and service levels were guaranteed. However, the personnel management is an important part of the history of human resource management.
The personnel management was focused on basic HR processes mainly in the area of the HR Administration, which we usually see as a standard today (see more on HR Roles and Responsibilities). According to the modern HR Model (see more about HR Models) by David Ulrich, the traditional personnel management would hit the segment called the Administration Expert.
As the personnel management was a successful phase of the HR Management History, it created many issues for modern HR Professionals. They usually do not like talking about the personnel administration as many old style manager still refer to HRM as the administration of personnel files. However, the personnel management was a significant change in the way we work with employees and people in the organization. It represented one of the best improvement of workplace conditions ever introduced.
What is the personnel management?
The real development of the personnel management begun after the 2nd World War in 1945. Most organizations stopped their rapid growth in the number of employees, but they realized the need to increase their productivity to stay competitive on the market. Organizations were pushed to voluntarily change their approach to employees to gain a competitive advantage over evolving competitors from other countries. At the beginning of the period, the USA was a dominating power that was losing its privileged position over time. The smaller and agile competitors were gaining the market share, and the profits were ruined; the strategic answer to these challenges was hidden in the proper and modern HR Management as we know it today.
There is no universal definition of the personnel management. However, the personnel management was the evolutionary step in the overall development of Human Resources Management. The personnel management was a pure administration of employees' files and kept files and processes compliant with the legislation. The personnel management started as a small agenda without any ambitions to develop a modern HR Management strategy.
The personnel management was about the introduction of effective policies and procedures, which unified many personnel-related processes like hiring, training, essential development courses for managers and fundamental principles of the remuneration in the organization. The key goal was in designing cost-efficient processes and kept the organization competitive on the market. A complete change of the approach to employees was not a primary goal of the introduction of the personnel management; it was a side effect as the company realized positive impacts on the performance and productivity.
The introduction of the centralized recruitment processes made the spread of the unified corporate culture easy. The personnel department was not recommending job applicants who were not compliant with the corporate values. Managers did not spend time reading tons of resumes; they were presented just a few candidates to choose from. It is a significant time and cost saving.
Organizations have not recognized the importance of employees in a full picture yet. They were managing the productivity through the optimization of processes. They were not interested in employee engagement; employees were easy to be replaced. They believed that employees can be changed easily, and more skilled workers can be hired within minutes. Organizations thought that wealth and productivity rise from process re-engineering and product innovations. The full value of employees was still ignored. A real revolution in the HR Management came later, just some 30 years later. This was the introduction of the modern Human Resources Management (see more on HR Management definition).
Personnel Management impact on Human Resources Management
The personnel management plays an important role in the entire history of the Human Resources Management. The key changes introduced include the proper and detailed induction of the new hires, detailed job grading, and unified recruitment processes for the entire organization. Finally, the introduction of the revolutionary personnel management made possible the development of real modern HR practices. Moreover, it allowed the development of first digitized personnel administration procedures.
Today, most organizations do not use the personnel management as they recognize it as obsolete. However, many personnel management practices are still the best practice in the HR Administration and HR Operations areas. Still, we can find the personnel management approaches quite common in the public sector; the state usually does not manage the workforce as strategic assets. Their motivation scheme works differently, and the PM is a suitable way to process HR processes.
However, the personnel management allowed recognizing the importance of employees because companies with the most developed PM practices were able to keep their growth sustainable. By following best practices, the real HR Management evolved.