An Analysis of the Historical Evolution and the Future of Human Resource Management

1. Introduction

Recently, Human Resource Management (HRM) is an increasingly vital area in any organisation, responsible for hiring, training, and rewarding the talent that creates competitive advantage and organisational growth (Losey, Meisinger, and Ulrich, 2005). During the past half century, there has been an evolution from Personnel Management to Industrial Relations to Human Resource Management (Leskin, 2004). Therefore, this paper aims to provide a general overview on the development of HRM and explore new emerging HRM issues for the future. In particular, this paper, first, focuses on the development of HRM and describes the historical evolution of HRM and outlines its genealogical foundations. Then, according to the case study, it emphasizes the strategic contribution of HRM as an organisation function. Finally, it provides insights into the challenges and opportunities for HRM in the future and presents some recommendations.

2. Background of HRM

The Human Resource Management (HRM) sometimes is considered to be a vague and elusive concept, because it seems to have a variety of meanings. This confusion reflects the different interpretations found in articles and books about HRM. For example, some themes about HRM can be found in the literature from the 1970s, such as "human capital theory" and "human asset accounting". However, the modern view of HRM first gained prominence in 1981 with its introduction on the prestigious MBA course at Harvard Business School (Price, 2007).

The definition of HRM covers a range of applications and varies from book to book and from organisation to organisation. Storey (1995, p.5) argued that HRM is a distinctive approach to employment management which seeks to achieve competitive advantage through strategic deployment of a highly committed and capable workforce, using an integrated array of cultural, structural and personnel techniques. Price (2007, pp.32-35) argued that HRM is a philosophy of people management based on the belief that human resources are uniquely important in sustained business success. HRM is aimed at recruiting capable, flexible and committed people, managing and rewarding their performance and developing key competencies. A broader definition considers that HRM includes anything and everything associated with the management of employment relationships in the firm (Boxall and Purcell, 2000).

Since the inception of modem management theory, the terminology used to describe the role and function of workers has evolved from "personnel" to "industrial relations" to "employee relations" to "human resources". While all of these terms remain in use, "human resources" most accurately represents the view of workers by contemporary management theory: as valuable resources managed in the same manner as other valuable resources (Mote, 2006). The historical evolution and development of HRM and genealogical foundations are described in more detail in the later section.

3. Historical Evolution and Development of HRM

The Origination of HRM

The earliest practices associated with HRM trace back to the beginning of mankind. More advanced HRM functions were developed as early as 1000 and 2000 B.C. And the apprentice system which is the earliest form of industrial education was started in ancient Greek and Babylonian civilizations during medieval times (Mote, 2006).

The Industrial Revolution

The need for an organized form of HRM emerged during the industrial revolution, as the manufacturing process evolved from a cottage system to factory production. For example, the United States shifted from an agricultural economy to an industrial economy, and companies were forced to develop and implement effective ways of recruiting and keeping skilled workers. Furthermore, the industrialization helped spur immigration and early HRM techniques aimed at helping immigrants adjust to their jobs and to life in the United States (Mote, 2006). In addition, other factors such as hazardous working conditions and pressure from labor unions also increased the importance of effective management of human resources. By the late 1800s, people problems were a very real concern in the workplace. Some industries experienced difficulty recruiting and retaining employees because of the poor working conditions. Therefore, some employers recognized that productivity was connected to worker satisfaction and the personnel profession attempted to solve worker problems with such basic personnel management functions as employee selection, training and compensation (Losey, 1998).

Industrial Welfare Movement and Scientific Management

In the late 1800s and early 1900s, there were two other particularly important contributing factors to the origination of modern HRM. The first was the industrial welfare movement, which represented a shift in the way that managers viewed employees from nonhuman resources to human beings (Kaizenlog, 2006). The second factor was scientific management. Frederick W. Taylor's, known as the father of scientific management, develops his ideas on scientific management in the early 1900s. In his a landmark book Scientific Management, he outlined management methods for attaining greater productivity from low-level production workers and advocated the "scientific" selection and training of workers. He also pioneered incentive systems that rewarded workers for meeting and exceeding performance standards. Although Taylor's focus primarily was on optimizing efficiency in manufacturing environments, his principles laid the ground-work for future HRM development (Kleiman, 2006).

Personnel Administration Movement

The first corporate employment department designed to address employee concerns was created by the B.F. Goodrich Company in 1900. In 1902 National Cash Register formed a similar department to handle worker grievances, wage administration, record keeping, and many other functions that would later be relegated to HRM departments at most large (Mote, 2006). The department also kept track of pending legislation and court decisions and these first personnel managers provided training for supervisors on new laws and practices. Other employers were looking for management solutions that would alleviate employee disenchantment. For example, Ford experienced employee turnover ratios of 380 percent in 1913; in 1914, the company doubled the daily salaries for line workers from $2.50 to $5, even though $2.50 was a fair wage at that time (Losey, 1998).

Industrial