Assignment on

Human Resource Management: The Chronological Development of HRM

Submitted to:

Prof. Dr. Mohd H R Joarder

Professor, School of Business and Economics

United International University

Submitted by:

Tanvir Ahmed

ID: 113222005

Executive Masters of Business Administration

November 19, 2022

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1. A brief history of human resource management and the chronological
development of HRM:
1.1 Human Resource Management:
Introduction:

Human Resource Management is the strategic approach to the effective management of people in
an organization which is designed to maximize employee performance in service of an
employer’s strategic objectives.

According to Armstrong (2006), Human Resource Management (HRM) is defined as a strategic

and coherent approach to the management of an organization’s most valued assets- the people
working there who individually and collectively contribute to the achievement of its objectives.
HRM is primarily concerned with how people are managed within organizations, focusing on
policies and systems (Collings and Wood, 2009). HR departments and units in organizations are
typically responsible for a number of activities, including employee recruitment, training and
development, performance appraisal, and rewarding (e.g., managing the pay and benefits system)
(Paauwe & Boon, 2009). HR is also concerned with industrial relations, that is, the balancing of
organizational practice with regulations arising from collective bargaining and governmental
laws (Klerck, 2009)

HRM is a product of the human relations movement of the early 20th century when researchers
began documenting ways of creating business value through the strategic management of the
workforce. The function was initially dominated by transactional work, such as payroll and
benefits administration, but due to globalization, company consolidation, technological
advancement, and further research, HR now focuses on strategic initiatives like mergers and
acquisitions, talent management, succession planning, industrial and labor relations, ethical
considerations, delivery, and inclusion. These, among other initiatives, contribute to the
understanding of Human Resource Management as a contemporary issue owing to their
sustained evolutionary nature.

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1.2 HRM History:

The modern history of Human Resources starts with the British Industrial Revolution. The
foundation of large factories increased the demand for the workforce significantly. In the 18th
century, the evolution of new people management begins. It is a vital milestone for HRM.

The world changed dramatically due to the rapid development of new industrial approaches and
new inventions to work. So, industries emphasize cheap and quick production. The factories
recruited thousands of workers who used to work up to 16 hours a day. Soon, it was found that
employees who are satisfied with their work are more productive than depressed employees. To
overcome this fact many entrepreneurs initiate voluntary programs for the employees to make
them comfortable and satisfied. In addition, the government started to introduce some basic
human rights and work safety legislation.

At the beginning of the 20th century, most of the organizations started to practice Personnel
Management and it is considered the second rapid development of HRM. The personnel
Management department was responsible for employee-related issues and compliance with the
newly launched law requirements. After the 2nd world war, armies developed many training
programs for new soldiers. After that the training department accepted and respected unit in the
personnel management department.

Organizations started practicing HRM in the 70s of the 20 th century. By adopting new
technologies, large multinational organizations started growing fast. As a result, a wave of
globalization started and the personnel management department converted into Human Resource
Management to manage the diversified workforce around the globe.

The introduction of the HR Business Partner Model is considered the second foremost significant
change in the history of HRM. The demand for the organizations changed dramatically as
economies of the wealthy western counties shifted towards the services economies.

Human resource management has changed in name various times throughout history. The name
change was mainly the reason for the change in social and economic activities throughout
history.

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1.3 The history of HRM is going through various processes:

Industrial Welfare:

Industrial welfare was the first form of HRM. In 1833, the factories act stated that there should
be male factory inspectors. In 1878, the legislation of regulating the working hours for children
and women by having a 60 hours/week, was passed. The forming of trade unions has been
started in this time. In 1868, the 1st trade union conference was held. In 1913, the number of
industrial welfare workers had grown so a conference organized by “Seebohm Rowntree” was
held. The welfare worker’s association was formed, and then changed to “Chartered Institute of
Personnel and Development”.

Recruitment and Selection:

During the First World War, Mary Wood was asked to begin talking to girls. Due to government
efforts, to promote the optimal use of people, personnel development has expanded throughout
the 1st World War. In 1916, it became compulsory to have a welfare worker in explosive
factories and was encouraged in munitions factories. The army forces put up a lot of effort in this
area. Along with another study on human dynamics at work, the armed forces focused on how to

measure intelligence and aptitude. The National Institute of Psychologists was founded in 1921
and disseminated research findings on training procedures, interviewing strategies, and selection
procedures.

Acquisition of other Personnel Activities:

During the 2nd World War, the focus was on recruitment and selection, followed by training,
morale and motivation, discipline, health, and wage policies. This meant that a personnel
department with trained personnel had to be established.

Industrial Relations:

During the war, the management and the labor began to consult with one another. Personnel
departments were now in charge of its organization and administration. The focus shifted to
health and safety, as well as the need for specialists. The need for specialists to deal with
industrial relations was acknowledged, so the personnel manager became the organization's

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spokesman when discussions with trade unions stewards were held. Industrial relations were
crucial in the 1970s. The tense situation during this time period stressed the importance of a
specialist role in industrial relations negotiations. The personnel manager had the authority to
negotiate pay and other bargaining agreements.

Legislation:
In the 1970s, employment legislation became stricter, and the personnel function took the
position of a specialist advisor. In the 1990s, a big trend appeared in which employers wanted
flexibility in employee work hours. The increased use of the internet in the year 2000 signaled a
shift to a 24-hour society. This resulted in the creation of new jobs in e-commerce while
eliminating jobs in traditional areas such as retail. This increased the possibility of employees
working from home. Organizations must consider these in a strategic manner. HR managers'
roles will evolve as circumstances change.

Figure Courtesy: Evolution of Human Resource Management – HRDictionary (hrdictionaryblog.com)

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2.0 Chronological Development of HRM:

2.1 Industrial revolution era:

The systematic development of HRM began during the industrial revolution in Western Europe
and the United States, in the 1850s. The old cottage system was replaced by the factory system.
The industrial revolution brought about many changes, such as centralized work locations,
mechanized production processes, workers migration, and indirect contact between factory
owners and workers. In the factory system, 3 HRM systems were developed for managing
people, such as worker recruitment, worker training, and worker control. However, the basic
management philosophy revolved around the master-servant relationship.

2.2 Trade Union Movement Era:

Following the emergence of the factory system, workers began to organize themselves based on
their common interests to form workers' associations, which became known as trade unions. The
primary goals of these organizations were to protect the interests of their members and to resolve
any problems that come. Owners and managers were forced to adopt employee grievance
handling systems, arbitration as a means of resolving conflicts between owners/managers and
workers, disciplinary practices, expansion of employee benefit programs, holiday and vacation
time, clear definition of job duties, job rights through seniority, and the implementation of
rational and defensible wage structures as a result of trade union activities.

2.3 Social Responsibility Era:

In the first decade of the 20th century, some factory owners began to take a more humanistic and
paternalistic approach to workers. Those industrialists who took a paternalistic approach,
provided a number of concessions and benefits to the labor force, such as reduced work hours,
improved workplace facilities, model villages for workers, and so on. All of these practices
contributed to the advancement of the social welfare aspect of labor management.

2.4 Scientific Management Era:

In the early 20th century, Taylor began researching the 'one best way of doing things', depending
on time and motion studies. He was able to significantly increase workers’ productivity using his

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experiments, and he wrote many papers and a book on scientific management, based on these
experiments. Some principle that are maintained in scientific management such as, replacing the
rule of thumb, harmony rather than conflict, cooperation, development of each person etc.

2.5 Human Relations Era:

Around the 1920s, management researchers focused on the human factor at work and the
variables that influenced people's behavior. This brief period was known as the "Industrial
Psychology Era". In 1924, a group of professors from Harvard Business School in the United
States, launched an investigation into the human aspects of work and working conditions. From
1924 to 1932, they conducted research. They concluded that, worker productivity was affected
by social factors at work, group formation and influence, the nature of leadership and
supervision, and improved communication. To improve productivity, management should focus
on human relations as well as physical workplace conditions.

2.6 Behavioral Science Era:

In contrast to human relations, which assume that happy workers are productive workers,
behavioral scientists have been goal-oriented and consider understanding of human behavior as
the primary means to that end. They have used a variety of sophisticated research methods to
better understand the nature of work and the people who work in it. Behavioral scientists'
contributions to management practices are primarily in the form of new insights rather than new
techniques. It has created or expanded a useful way of thinking about the manager's role, the
nature of organizations, and the behavior of individuals within them. They have given the
concept of human resource model as opposed to human relations model.

2.7 Systems and Contingency Era:

Systems and contingency approach has attracted maximum attention of thinkers in management
in the present era. It is an integrated approach which considers management of human resources
in its totality based on empirical data. The basic idea of this approach is that analysis of any
object must rely on a method of analysis involving simultaneous variations of mutually-

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dependent variables. This happens when systems approach is applied in managing human
resources.

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2.8 Human Resource Management Era:

When the factory system was implemented in production, a large number of workers began to
collaborate. It was felt that someone should be in charge of recruiting, developing, and
overseeing the welfare of these workers. For this purpose, most large organizations established
industrial relations departments that were primarily concerned with workers. As time passed, and
the complexity of managing human resources in large business organizations grew, the scope of
the industrial relations department was expanded to include supervisory and, later, managerial
personnel. The personnel department replaced the industrial relations department. People were
becoming more knowledgeable in the field of human resource management as competition for
market share, resources, including human talents, increased.

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3.0 Good HRM Practices bring competitive advantages to the organization
Yes, I do agree with the statement, the justification behind my stance is described as follows:

First of all, Competitive Advantages: Competitive Advantage means the position of an

organization, in front of other organizations, based on quality, cost, worthiness, and innovation.
It is the only key that brings financial stability, success, and growth to the organization.

Here are some of the many ways how the HR team can help create and maintain a competitive
advantage for the organization

 HR can use data to analyze turnover rates and determine where problems may lie, thus
allowing the company to more quickly find issues and get them resolved. For example, if
the data show that most turnover is from new hires, the team can focus on what problems
may be the cause of that. Or if the data show that one group has a higher turnover rate
than the rest of the business, the focus can be turned there.
 HR can help managers source the right talent to get the skills the company needs to grow
and be competitive. HR expertise can allow the organization to know where to look for
specialized talent when needed.
 HR can provide insight into the going market rates for talent and what it might take to get
high-quality hires on board. HR can review the competitive talent landscape and
determine what compensation strategy will be best aligned with company goals.
 HR can give insights into how other organizations within your industry are structured.
There may be information that can be useful in determining which positions the company
still needs to create or fill to become or remain competitive.
 HR can use data to show how the skill sets of the employees are evolving over time, and
to show business leaders where skills gaps may exist so those gaps can be addressed
proactively.
 HR can also design employee development pathways that take into account the strategic
and long-term needs of the organization, ensuring that key employees get the right
training before it must be utilized. This impacts retention and improves the skill sets for
the organization as a whole, all while ensuring the organization is addressing big-picture
competitive issues proactively.

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  HR can use data to find potential employee issues before they become problematic. By
tracking employee engagement scores over time, for example, HR can discover when
engagement levels are waning—hopefully before they have a significant impact on
morale and turnover—so the organization can take action sooner rather than later.
 HR can put together succession plans that take into account the organization’s strategic
goals. This can allow the organization to remain competitive even when there is turnover
in key roles.
 HR can analyze which employees are high performers and alert the management about
who should be fast-tracked for promotions and new projects.
 HR guidance on legal issues can keep the organization out of costly legal problems. This
not only saves the company money but it can also save the company from major setbacks.

Furthermore, nowadays, Organizations are to operate in a quick, competitive environment. If

they want to survive and grow, they must create and maintain a competitive advantage. A long-
standing source of competitive advantage has dropped significantly. People are now thought to
be the source of productivity. For that reason, good HRM practice is much
needed.

Considering the issues discussed above we can conclude saying that, good HRM practices bring
a competitive advantage to the organization. Because without good HRM practice, an
organization can’t have a competitive strategy, and without it, the organization can’t achieve
their goals.

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4.0 Relationship between HRM practices and Talent Management

Talent Management:

Talent management is a process that involves attracting and retaining high-quality employees,
developing their skills, and continuously motivating them to improve their performance, so that
they can achieve their and organization’s goals.

Talent Management and HRM has a relationship between each other. Talent management is a
part of Human Resource Management. In fact, when most of the people think of Talent
Management, they automatically think of HRM. There are 4 parts of Talent Management:
1. Recruit and Selection,
2. Training and Development,
3. Performance Management System (PMS)
4. Compensation and Benefit Package

These all 4 parts are managed by the Talent Management team as well as HR. Talent
management and Hmanagees the job recruitment and selection through interviews so that they
can select the best candidates for the job. They working together to create a training facility for
the employee’s so the employee’s developed their skills and work for the organization. HR
create the performance management system so that they can measure the performances of the
employees, and if some employee’s need help then Talent Management can help them. HR also
work on the compensation and gives various benefits to the employee’s so that the employee’s
get more motivation to do the work. For that reason, Talent Management also create a
development strategy for the staff members.

Talent management is very important part of HRM as well as an organization. Both HR and
Talent Management work together to train and develop the employees. HR designs and
implement policies and give facilities to the employee’s so that they can get motivated for the
work. Talent Management also develop the development strategy for the stuff members.
Managing the talent effectively is the most important part of achieving the organization’s
success. HR and Talent Management are both working on this together.

So, we can say that there is a very strong relationship between Talent Management and HRM.
An organization don’t achieve their goals without anyone of them.

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 5.0 HR professionals/Corporate leaders consider HR as the Strategic Business Partner
(SBP)

HR professionals consider HR as a Strategic Business Partner, I agree with this statement. In the
course of attaining organizational goals, HR plays a vital role in many ways. Some of them are
discussed as follows:

The major difficulties faced by contemporary organizations are competitive forces and will
continuously be faced in near future also. Ensuring competitive advantages is a vital objective
for these organizations. Competitive forces make an organization efficient and efficiency is
retained by efficient human resources (HR). This writing up examines the role played by human
resources as a strategic business partner.

5.1 Different roles played by human resources

HRM has been one of the staple departments for the last few years in modern organizations
because of various vital roles and responsibilities. HR people are considered key in the
determining productive capabilities of the workplace. These types of activities are known as
Administrative services, Business Partner Roles, and Strategic Roles.

When HR plays an administrative role, they are to implement and enforce regulation, design
policies, and maintain the benefits of employees, their insurance, leaves, and so on. As a
business partner, the HR department aid other departments for executing their business
models. Finally, it also plays an important role as a strategic partner of the organization. As a
strategic business partner, HR department contribute in the process of making decision by the
top level managers and it has given the department unparalleled status. To be exact, HRM is
not only planning strategic activities but also executing the formulation of those strategy for
the organization.

5.2 The use of human resources in both the financial and non-financial sectors is
supported by empirical data:

The aforementioned claims are backed up by a wealth of empirical studies. The function of
human resources in the financial and non-financial sectors is the main subject of these works.

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Organizations can maximize the value of their human capital by having human resources apply
methodically sound plans and processes. The balance between the vertically aligned company
strategies and functions and the horizontally aligned human resource management "processes" is
necessary for systemically sound strategies and processes. As a result, the concepts of "Human
capital" and "Human Investment" serve as the foundation for defining the function of human
resources in giving enterprises a competitive edge in terms of labor efficiency.

5.3 A dynamic human resource team to aid in strategic decision making

Overall, the role of human resources as a strategic business partner seems unparalleled in
terms of what needs to be done and the activities required to indulge in strategic decision-
making. There has been a general consensus that to cater to the dynamic business setups,
human resources need to create flexible program designs whilst also preserving a non-
discriminate and goal-oriented workplace. The recommendations provided above, despite
some disagreements, strongly support the claim that establishing a strategic business partner
should be an important role of human resources in contemporary organizations across the
globe.

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6.0 Theories of Human Resource Management

Human Resource Management or HRM is the strategic approach, which is more effective and
more efficient of people of the company or organization, who help to the organization to gain the
business to a competitive advantage. It is basically the management of development of human
skills, talent and use it for the organization’s grow and success.

There are many theories of Human Resource Management. Such as:

1. Organizational Life Cycle Theory,

2. Social Exchange Theory,
3. Strategic Contingency Theory,
4. Theory of Reciprocity,
5. Theory of Psychological Conduct,
6. AMO Theory: Ability, Motivation and Opportunities
7. Transaction Cost Theory,
8. Resource-based Theory,
9. Institutional Theory,
10. Human Capital Theory

6.1 Organizational Life Cycle Theory:

This is the first human resource management theory. Historians and academicians have observed
that organizations, just like that of living organisms, have life cycles. They are born, they grow
and develop, they reach maturity, they begin to decline and age, and finally, in many cases, they
die.

6.2 Social Exchange Theory:

It is another theory of Human Resource Management. It is the theory that a person gives
something to another, also take something from the another.

6.3 Strategic Contingency Theory:

It is the theory that focuses what needs to be done in the form of problems to be solved. If the
person doesn’t have the ability to solve the problem, then the person can’t be an effective leader.

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6.4 Theory of Reciprocity:

It is the theory that says we get the result of what we done. If we do good, we get the result is
good. If we do bad, we get the result is bad.

6.5 Theory of Psychological Conduct:

It is another interesting theory of Human Resource Management. It’s about how human
psychology is built. It’s about how people behave in a complicated situation where the person
has no instructions at all. The theory mainly focused on people’s ethics, behavior, etc.

6.6 AMO Theory: Ability, Motivation, and Opportunities:

The theory says that there are 3 important work components that shape employee characteristics
and contribute to the success of the organization. The employees can be very competent and
motivated. But if they don’t get the opportunities to make contributions, it affects their
performance in their job.

6.7 Transaction Cost Theory:

Transaction cost theory in human resource management is part of corporate governance and
agency theory. It is based on the principle that costs will arise when you get someone else to do
something for you.

6.8 Resource-based Theory:

The resource-based theory states that the possession of resources is valuable, difficult to imitate,
rare, and cannot be substituted. The resource-based theory suggests that organizations should
look inside the company to find the sources of competitive advantage through the use of their
resources.

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6.9 Institutional Theory:

Institutional theory is an approach to understanding organizations and management practices as

the product of social rather than economic pressures. It has become a popular perspective within
management theory because of its ability to explain organizational behaviors that defy economic
rationality.

6.10 Human Capital Theory:

It is another theory of Human Resource Management. It says that human beings can increase
their productive capacity through greater education and skills training.

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 References

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What is human resource -The Historical Background Of Human Resource Management

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Natalie Wickham – (April,2021) - HR as a Strategic Partner: The What, Why, and How of Strategic HR

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https://www.researchgate.net/publication/
340620672_The_Underpinning_Theories_of_Human_Resource_Management_Course_Advance_Human_Resource_Mana
gement_Prepared_by

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