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It is a well-known fact that behind a product or service production there involves a human brain, efforts and man-hour. A company is in constant search of employees who are talented, skilled and qualified for evolving the technology used at work for bringing out the end product or service.
According to (Armstrong, 2006) Human Resource Management is defined as a strategic and coherent approach to the management of an organisation’s most valued assets – the people working there who individually and collectively contribute to the achievement of its objectives. Storey (1998) believes that HRM can be regarded as a set of interrelated policies with an ideological and philosophical underpinning. He suggested four aspects that constitute the meaningful of HRM such as a particular constellation of beliefs and assumption; a strategic trust informing decision about people management; the central involvement of line manager and reliance upon a set of ‘levers’ to shape the employment relationship.(Armstrong, 2006)
According to Peter Drucker, Human Resource Management is the process maintained in an organization that oversees activities related to people management covering both soft and hard aspects of human resource management. These include functions of recruitment, retention, termination or retirement, training, payment management, performance management and change management along with maintaining relationship between employee and management. Thus HRM is focused on resource management to achieve outcomes of an organisation planning.
Whereas, Personnel management is the process that is focused on acquiring, utilising and supporting satisfied manpower within an organisation so that organisational, individual and societal objectives are fulfilled. (Wilton, 2016)
In this segment difference between HRM and personnel management will be outlined with the help of two examples i.e. McDonald’s and Eat Balanced. McDonald’s is a global leader in fast food industry with stores, restaurants across the world whereas Eat Balanced is a small pizza making company in Scotland, UK which provides nutritionally balanced recipes. McDonald’s manages its operations globally by dedicated Human Resource management approach whereas Eat Balanced being a small team functions with Personnel Management approach. McDonalds is the largest chain of fast food which was founded in the USA. Through franchisee, corporation of itself and affiliation the organisation McDonalds operates all around the globe. As the organisation has been operating over 68 million customers each day it requires proper management of the human resources to provide efficient services. Eat Balanced operates through consultancy with a small team. In this regard they perform personnel management along with simple core values.
Difference between Personnel and Human Resource Management according to Storey’s (1992) 27 point of difference
PM/IR East Balanced
Personnel management aims to work on written agreement details. Example, at Eat Balanced employees can expect every single detail followed which is in written contract.(Savaneviciene and Stankeviciute, 2013)
Human Resource management works beyond defined contract. It works for people management. Example, McDonald’s work out of way beyond contract to support its employees and their development.
Personnel management stresses on importance of clear rules.
Human resource management works on can do approach and does not stress much on rules.
Guide to management Action
Focuses on procedures. Example, Eat Balanced emphasise more on maintaining a structured procedure.
Focuses on meting business needs. Example, McDonald’s focus on dealing with change management to meet business needs. (Savaneviciene and Stankeviciute, 2013)
Focus on norms
Focus on business mission and vision
Managerial task vis-a-vis labour
Focus on monitoring employees. Example, Eat Balanced being start-up company focus on monitoring their employees to fulfil their business objectives.
Focus is on developing and nurturing employees. McDonald’s focus on developing their talent base to fulfil individual and business objectives.
Nature of relation
Focus on pluralist approach
Focus on Unitarist approach
Focus on relation with labour and their management
Focus on management of customer
Unsystematic measures that is periodical and changes with time
Initiatives are integrated
Decisions of corporate plan are centralised. Example, at Eat Balanced core decisions are taken by founder management. (Savaneviciene and Stankeviciute, 2013)
Decisions are taken by participation of employees. Example, at McDonald’s employee is empowered to participate in decision making.
Speed of decision
Line managers follow transactional role
Line managers focus on transformational leadership to create change
General line managers/Business development executive
Allows indirect communication between founders and employees.
Allows direct communication between top management and employees
Separate, marginal task
Selection is integrated
Linked to roles and responsibilities
Linked to performance
Based on negotiation
Based on Harmonization
Focus on collective bargaining
Focus on individual contract
Regularised with training and rewards
Flow of communication
Divided on labour
Depends on teamwork
Training and development
Strong focus on continuous learning
Approach and focus
Based on personnel procedures
Based on cultural, structural and personnel procedures
The human resource management functions at McDonald’s help them in controlling various operational activities to achieve organisational objectives related to quality of services, customer management and management of various activities of marketing, accounting, procurement etc. The usefulness of HRM functions in achieving these is assessed as:
Line managers are those who supervise employees or teams working under them who directly report them back. These line managers in turn report to top level management on the progress of work, performance and expected outcomes achieved by individual teams. Thus line managers have various responsibilities and they get involved into various human resource management functions. (Alfes, Truss, Soane, Rees and Gatenby, 2013) These are discussed below:
Thus line managers are important to maintain human resource functions to deliver better policies and practices effectively, to provide assistance for better human resource planning and to maintain controlled flow of work responsibilities. If line managers are not favourable to HR practices, then it would be difficult to maintain smooth flow of activities and implementation of policies because line managers are responsible for actuation. (Alfes, Truss, Soane, Rees and Gatenby, 2013)
Legal and regulatory frameworks are maintained within organization to facilitate employee empowerment by maintaining laws that govern relation between employees and employer and also safeguarding their interest, welfare and rights in workplace. (Bratton and Gold, 2012) Some of the legal frameworks and their impact are discussed below:
Thus these laws and norms help employees in McDonald’s to contribute effectively to their work under safe and healthy working conditions and practices that allows flexibility, anti-discrimination and job security making them valuable for organisation and its objectives.
Motivation is a term that is derived from the word motive which might be described as a human minds inner state that mobilizes and directs ones behaviour eventually making to act in a certain way. Motivation is basically internal and is mostly conveyed in the form of human behaviour and can be said as one’s readiness in exerting efforts towards attaining his/her goal. (Pearsall, Christian and Ellis, 2010)
According to Fred Luthans, ‘Motivation is a process that starts with a physiological or psychological deficiency or need that activates behaviour or a drive that is aimed at a goal or incentive’
Motivation theory is basically a concept describing the stimulation of certain human behaviours that are goal-oriented and are further assigned with devising the factors driving a person to work for achieving an outcome. An organization is interested in motivational theory because employees who are motivated are more productive eventually leading to more commercial use of resources.(Pearsall, Christian and Ellis, 2010)
Reward is something that is been given to employees of an organisation for acknowledging their contributions at work and further make contributions in the implementation of strategies by giving shape to an employee’s behaviour within the organisation. Furthermore, reward is a pay-off for performance and isprecisely concerned with motivation level and job satisfaction.
Employees being a human crave for been rewarded and encouraged for their contribution in driving an organisation towards success. The link between motivation and reward has been investigated by a number of researchers and amid all, the most famous is Maslow's hierarchy of needs developed by Abraham Maslow which has enabled the management of Virgin Media in having a clear understanding the types of rewards employees must be provided with for meeting the needs mentioned in the pyramid. It has been observed that Virgin makes use of both positive and negative reinforcement for employee motivation. The managers consider that by using positive approaches of motivation acts as an encouragement for the employees in producing more and improved quality of work. At Virgin Media, the HR department selects the outstanding performing employee as ‘Employee of the Week’ and offers him/her with a smiley. This technique applied not just recognises the employees’ contributions but also undoubtedly encourages the co-workers to try and win the smiley. However, there are also times when the managers have to impose negative reinforcement motivation form stopping the employees from acquiring a bad behaviour at workplace. At this time, the manager issues a written-warning for getting them to perform in a certain way. At Virgin, employees are being rewarded with both tangible goods and recognition. Take for example, the sale department employees are usually offered a monthly bonus to the ones who excel in meeting the giving targets. (Pearsall, Christian and Ellis, 2010)
In Virgin, tangible rewards necessarily do not come as financial; it can also include hosting of free lunches and distribution of company’s stuffs. Rewarding an outstanding performance is a task full of challenges and yet is fundamental for supporting performance developments that is desired through key actions of the management. A reward is expected to get the employees aligned with the organisational strategies of Virgin Media by offering the employees with incentives which further acts in the interest of the company needed for achieving the desirable goals. Virgin’s managers firmly believe in the Maslow’s need-hierarchy theory. However, they also believe that a rewards impact differs from employee to employee. Certain employees acknowledge to extrinsic rewards while others respond to intrinsic rewards. At Virgin Media, financial, non-financial and performance dependent rewards are offered to the employees apart from better performance appraisals, training, pay hike, promotion and increased job security for establishing employee motivation at workplace. Rewards positively affect employees’ motivation, thereby influence the overall performance of Virgin. In addition, Virgin also uses social rewards, internal, external and individual equity which greatly effect on motivational levels of the employees. (Pearsall, Christian and Ellis, 2010)
Job evaluation is the process in which jobs within an organization are rated and makes an endeavour in comparing therelated intrinsic valueof jobs of an organization. Job evaluation is a comparative process.(Yuan and Woodman, 2010)
International Labour Office states that “Job evaluation is an attempt to determine and compare the demands which the normal performance of a particular job makes on normal workers, without taking into account the individual abilities or performance of the workers concerned”.
British Institute of Management describes job evaluation as “the process of analysis and assessment of jobs to ascertain reliably their negative worth using the assessment as the basis for a balanced wage structure”.
The process of job evaluation has helped Virgin Media into establishing the proportionate value of the jobs within the company. A job evaluation comprises of two steps namely job description and job analysis where job description helps in determining the key aspects of a job likeroles and responsibilities, accountability, decision making, qualification needed whereas the process of job analysis identifies and determines in detail the duties and requirements of a certain job and the relative importance of these duties for a given job. Job evaluation is based on three key factors namely knowledge needed for effective performance, complication of the role of decision making and control needed within the position. At Virgin Media, the pay structure is developed based on these factors. Salary surveys is another crucial tool that is been used in Virgin where employees’ salaries and the company’s allowance policies are compared and cross sectioned with that of other employers in the company. Once it is done, this is further being analysed and subsequent changes are determined in the employee’s payment structure. Finally, the jobs are be integrated on the basis of jobs analysis within the company in terms of responsibility, education needed and physical involvement. (Yuan and Woodman, 2010)
At Virgin Media, reward system has been major managerial concern. The management firmly believes that effective reward management is essential in order to maintain employees’ motivation and also time is helpful in depicting the balanced style of management adopted by Virgin when compared to its competitors in the market. It has been observed that Virgin’s reward system incorporates financial and non-financial peripherals. (Gittell Seidner and Wimbush, 2010)
Key aspects of Virgin Media’s reward system
Effectiveness of reward system at Virgin Media
Employees’ performance at Virgin Media is been evaluated at both individual and team level. Evaluation of team’s performance is an essential activity of HRM where an employee’s performance is being evaluated in terms of whether or not the performance coordinates with the goals of the organisation as a whole. Employees’ performance is measured with the help of performance appraisal program. Moreover, Virgin ensures that reward system is been measured and monitored continuously and that the employees are provided with feedback from the line managers which act asan important tool for improving the levels of performance.(De Jong and Elfring, 2010)
Methods of monitoring employee performances at Virgin Media
In conclusion, HRM is extremely important for a successful running of a business and that the HRM practices should be incorporated with an organisation’s overall strategy for ensuring competent use of human resources which in return will provide better Return on Investment for every penny invested on them. For enhancing organisational performance, it is essential that HRM is involved in strategic plans and decision-making, rebuilding of organisation and work process. HRM is the most essential part in the business as the management of the human resources has become the vital aspect for the organisation to survive in the competitive market.Human resource management encapsulates the mission and vision of the organisation and run the business towards corporate achievements with maintaining the social responsibilities. The human resource management provides proper tools to assist the employees in realising the corporate mission on which their performances are dependent. The organisations have to follow proper legal framework in the HRM practices.
Alfes, K., Truss, C., Soane, E.C., Rees, C. and Gatenby, M., 2013. The relationship between line manager behavior, perceived HRM practices, and individual performance: Examining the mediating role of engagement. Human resource management, 52(6), pp.839-859.
Bratton, J. and Gold, J., 2012. Human resource management: theory and practice. Palgrave Macmillan.
Castilla, E.J. and Benard, S., 2010. The paradox of meritocracy in organizations. Administrative Science Quarterly, 55(4), pp.543-676.
Delahaye, B., 2015. Human resource development. Tilde Publishing.
De Jong, B.A. and Elfring, T., 2010. How does trust affect the performance of ongoing teams? The mediating role of reflexivity, monitoring, and effort. Academy of Management Journal, 53(3), pp.535-549.
Gittell, J.H., Seidner, R. and Wimbush, J., 2010. A relational model of how high-performance work systems work. Organization science, 21(2), pp.490-506.
Keyton, J., 2010. Communication and organizational culture: A key to understanding work experiences. Sage Publications.