What Is Human Resources?

Human resources is a relatively modern management term, coined in the 1960s. The origins of the function arose in organisations that introduced ‘welfare management’ practices and also in those that adopted the principles of ‘scientific management’. From these terms emerged a largely administrative management activity, co-ordinating a range of worker related processes and becoming known, in time as the ‘personnel function’. Human resources progressively became the more usual name for this function, in the first instance in the United States as well as multinational corporations, reflecting the adoption of a more quantitative as well as strategic approach to workforce management, demanded by corporate management and the greater competitiveness for limited and highly skilled workers.

Background

The use of the term, ‘human resources’ by organizations to describe the workforce capacity available to devote to the achievement of its strategies has drawn upon concepts developed in Industrial/Organizational Psychology and System Theory. Human resources has at least two related interpretations depending on context. The original usage derives from political economy and economics, where it was traditionally called labor, one of four factors of production although this perspective has shifted as a consequence of further ongoing research into more strategic approaches.[1] This first usage is used more in terms of ‘human resources development’ of the individuals within an organization, although the approach can also be applied beyond the level of the organization to that of industry sectors and nations.

History

The early development of the function can be traced back to at least two distinct movements. One element has its origins in the late 19th century, where organisations such as Cadburys at its Bournville factory recognised the importance of looking after the welfare of the workforce, and their families. The employment of women in factories in the United Kingdom during the First World War lead to the introduction of “Welfare Officers”. Meanwhile, in the United States the concept of human resources developed as a reaction to the efficiency focus of Taylorism or “scientific management” in the early 1900s, which developed in response to the demand for ever more efficient working practices within highly mechanised factories, such as in the Ford Motor Company. By 1920, psychologists and employment experts in the United States started the human relations movement, which viewed workers in terms of their psychology and fit with companies, rather than as interchangeable parts.

During the middle of the last century, larger corporations, typically those in the United States that emerged after the Second World War, recruited personnel from the US Military and were able to apply new selection, training, leadership, and management development techniques, originally developed by the Armed Services, working with, for example, university-based occupational psychologists. Similarly, some leading European multinationals, such as Shell and Phillips developed new approaches to personnel development and drew on similar approaches already used in Civil Service training. Gradually, this spread more sophisticated policies and processes that required more central management via a personnel department composed of specialists and generalist teams.

The role of what became known as Human Resources grew throughout the middle of the 20th century. Tensions remained between academics who emphasized either ‘soft’ or ‘hard’ HR. Those professing so-called ‘soft HR’ stressed areas like leadership, cohesion, and loyalty that play important roles in organizational success. Those promoting ‘hard HR’ championed more quantitatively rigorous management techniques in the 1960s.

In the later part of the last century, both the title and traditional role of the personnel function was progressively superseded by the emergence, at leat in larger organizations, of strategic human resources management and sophisticated human resources departments. Initially, this may have involved little more than renaming the function, but where transformation occurred, it became distinguished by the human resources having a more significant influence on the organizations strategic direction and gaining board-level representation.

Human resources purpose and role

In simple terms, an organization’s human resource management strategy should maximize return on investment in the organization’s human capital and minimize financial risk. Human Resources seeks to achieve this by aligning the supply of skilled and qualified individuals and the capabilities of the current workforce, with the organization’s ongoing and future business plans and requirements to maximise return on investment and secure future survival and success. In ensuring such objectives are achieved, the human resource function purpose in this context is to implement the organisation’s human resource requirements effectively but also pragmatically, taking account of legal, ethical and as far as is practical in a manner that retains the support and respect of the workforce.

Major trends

To know the business environment an organization operates in, three major trends must be considered:

Demographics: the characteristics of a population/workforce, for example, age, gender or social class. This type of trend may have an effect in relation to pension offerings, insurance packages etc.
Diversity: the variation within the population/workplace. Changes in society now mean that a larger proportion of organizations are made up of “baby-boomers” or older employees in comparison to thirty years ago. Advocates of “workplace diversity” simply advocate an employee base that is a mirror reflection of the make-up of society insofar as race, gender, sexual orientation, etc.
Skills and qualifications: as industries move from manual to a more managerial professions so does the need for more highly skilled graduates. If the market is “tight” (i.e., not enough staff for the jobs), employers must compete for employees by offering financial rewards, community investment, etc..
Recruitment

Employee recruitment forms a major part of an organization’s overall resourcing strategies, which identify and secure people needed for the organization to survive and succeed in the short to medium-term. Recruitment activities need to be responsive to the ever-increasingly competitive market to secure suitably qualified and capable recruits at all levels. To be effective these initiatives need to include how and when to source the best recruits internally or externally. Common to the success of either are; well-defined organizational structures with sound job design, robust task and person specification and versatile selection processes, reward, employment relations and human resource policies, underpinned by a commitment for strong employer branding and employee engagement strategies.

Internal recruitment can provide the most cost-effective source for recruits if the potential of the existing pool of employees has been enhanced through training, development and other performance-enhancing activities such as performance appraisal, succession planning and development centres to review performance and assess employee development needs and promotional potential.

Increasingly, securing the best quality candidates for almost all organizations relies, at least occasionally if not substantially, on external recruitment methods. Rapidly changing business models demand skill and experience that cannot be sourced or rapidly enough developed from the existing employee base. It would be unusual for an organization to undertake all aspects of the recruitment process without support from third-party dedicated recruitment firms. This may involve a range of support services, such as; provision of CVs or resumes, identifying recruitment media, advertisement design and media placement for job vacancies, candidate response handling, shortlisting, conducting aptitude testing, preliminary interviews or reference and qualification verification. Typically, small organizations may not have in-house resources or, in common with larger organizations, may not possess the particular skill-set required to undertake a specific recruitment assignment. Where requirements arise, these are referred on an ad hoc basis to government job centres or commercially run employment agencies.

Except in sectors where high-volume recruitment is the norm, an organization faced with sudden, unexpected requirements for an unusually large number of new recruits often delegates the task to a specialist external recruiter. Sourcing executive-level and senior management as well as the acquisition of scarce or ‘high-potential’ recruits has been a long-established market serviced by a wide range of ‘search and selection’ or ‘headhunting’ consultancies, which typically form long-standing relationships with their client organizations. Finally, certain organizations with sophisticated HR practices have identified there is a strategic advantage in outsourcing complete responsibility for all workforce procurement to one or more third-party recruitment agencies or consultancies. In the most sophisticated of these arrangements the external recruitment services provider may not only physically locate, or ‘embed’, their resourcing team(s) in the client organization’s offices, but work in tandem with the senior human resource management team in developing the longer-term HR resourcing strategy and plan.

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