- Explain the difference between Human Resource Management and HR Development
- Describe the evolution of HR to HRD
Previous chapters have reviewed the evolution of HR as well as the contextualization of modern practices. The culmination of the HR practice in the modern environment is the developmental organization. This term implies more than simply putting together the 15 functional areas. Human resource development is a cultural commitment to the improvement of both the individual and the organization. This is the apex of human resource management. In this chapter, we will explore what this looks like in practice.
A transition from HR Management to HR Development
Organizations, whether it be for-profit businesses, non-profits, or academic institutions are made up of people which mean every organization requires some human resource management. Human Resources (HR) is the function in charge of an organization’s employees. Typical HR responsibilities include areas such as recruiting and staffing, compensation and benefits, training and development, labor and employee relations, and organization development (“What is HR Management?” n.d., para.1). The purpose of this paper is to review what is known about HR, how HR evolved into human resource development, and why leaders of organizations are keenly concerned about this topic.
The Evolution of Human Relations Management
To trace the evolution of HR and HR management, one must begin by reflecting on the history of the American worker. Licht (1988) identified a number of factors important to the understanding of labor and the rise of the modern HR movement. 1) The tremendous labor unrest that abounded in the late 19th and early 20th centuries led by unsafe working conditions, long hours, and low wages, was fueled by worker resentment to increased immigration, urbanization, and developing mechanization. Labor and management had to learn to work together to quell this unrest in order to pursue economic conditions that benefitted both business and the worker. 2) The demographic profile of the American worker was also changing. In 1913, less than one-fourth of all adult women worked outside the home. Eighty-five years ago, women made up less than 20 percent of the workforce; today, women represent 50 percent. Immigration and the role of African-Americans also changed. Immigration, legal and illegal from Latin America and Asia has seen a dramatic rise in the proportion of foreign-born workers. In 1913, 90 percent of African-Americans resided in the South and worked as laborers and domestics. The dramatic shift of African-Americans to the north and west due to increased industrialization after World War II and the Civil Rights movement changed the face of the American workforce. 3) The need for increased safety and health brought significant change to the American worker. In 1970, Congress passed the Occupational Safety and Health Act, providing the Department of Labor a mandate to set guidelines to protect workers from work-related accidents. In 1971, the Occupational Safety and Health Administration (OSHA) was created to enforce those guidelines. 4) In addition to the need to enforce new standards mandated by the Department of Labor, OSHA also increased the need for greater human relations management. Corporate managers were now forced to consider alternatives to the stick approach of the 19th century and begin to find ways to provide employment interest and value beyond that of a paycheck. The need to create staff hierarchies, develop career paths, and offer new benefits such as family insurance programs began to emerge from the conflicts of the early 20th century, as well as the substantial shifts in the American workforce (Licht, 1988).
Thite, Kavanagh, and Johnson (2008) built on the work of Licht (1988) writing that there are five historical phases of HR management throughout the development of industry in the United States. 1) Before World War I, HR was more commonly known as the personnel department and dealt for the most part with clerical functions. The “Personnel Department” kept records of the employees’ information. The predominant management thought of the period was to maximize employee productivity. The quest for efficiency led to the search for science in management. Giants in this emerging field began to emerge. Frederick Taylor developed the concept that much of the conflict between management and labor was due to ignorance on both sides. Management looked for, and labor was ready to deliver a “fairs day work for a fairs day pay,” but neither side knew what constituted a day’s work (Wren and Bedeian, 2009). Taylor’s contribution to the science of management was his development of the time study, building on earlier work by Charles Babbage. Taylor’s work focused on what was possible during a production sequence as well as what were the best methods of achieving the desired results. The net effect was that management, and labor, now had a baseline to determine a “fairs day work for a fairs day pay” (Wren and Bedeian, 2009). Taylor’s work evolved to what became the standard measure for production and compensation, the piece-rate pay system. From an HR standpoint, the “personnel department” did little more than maintain records on health and safety as well as hours worked and payroll. Computers were non-existent with labor records kept on paper.
2) Following World War II, managers began to realize the significance of employee productivity and motivation on the firm’s profits. Job-satisfaction, recognition and other social and psychological factors started to emerge as employee motivational factors. McGregor’s X and Y theory of motivation served as a bridge from past concepts of human relations to a more modern view of the worker and motivation (Wren & Bedeian, 2009). Maslow’s hierarchy of needs concept contributed to the emergence of human relations as a discipline (Crainer, 2003). Herzberg’s two-factor theory of motivation added to how management began to think about, and design jobs (Robbins & Coulter, 2009).
A significant consequence of the wartime call-up in the military and industry that had been converted to support the war effort was the need for the classification of large numbers of individuals. The central component of this classification system was what is known today as the job description which listed the duties, tasks, and responsibilities of the person who held a specific job (Thite, Kavanagh, & Johnson, 2008). The net result of developing a job description for each particular task was it now became easier to evaluate individual performance, develop appropriate compensation programs, and provide the basis for termination when necessary. Employment laws as noted by Licht (1988) allowed the establishment of labor unions to bargain for better wages and working conditions. These developments began pushing the personnel departments to improve record keeping. The need to respond to requirements and demands of various governmental agencies and post-war demands from the military drove the need to adapt new technologies, requiring new skills within organizations personnel departments. Responding to increased legislation, employee unionization, and the need for increased focus on employee relations was the predominate themes of post-World War II personnel departments (Thite, Kavanagh, & Johnson, 2008).
3) According to Thite, Kavanagh, and Johnson (2008), the decades of the 1960’s, 1970’s and early 1980’s were a time of increased labor legislation in the United States that governed in many areas of employee – management relations. Organizations personnel departments were required to gather, analyze, and report on massive volumes of data to authorities ranging from discriminatory practices, the effective promotion of and utilization of occupational health and safety programs, retirement benefits and tax regulation. In order to prevent punitive damages for noncompliance, personnel departments had to ensure that the data was accurate, comprehensive, and up-to-date, adding to the responsibilities of personnel departments. Additionally, Thite, Kavanagh, and Johnson (2008) state that due to the booming post-war economy, unions successfully championed better employment terms, including wages, retirement and health care benefits. The resulting increased labor costs began pressuring personnel managers to start directing their focus away from employee maintenance to that of developing employees to justify the increased costs and drive for better productivity. The scope of the personnel department was changing, and human resource management began to emerge as a factor for strategic thinking departments (Thite, Kavanagh, & Johnson, 2008).
4) The period of the mid-1980’s through the early 1990’s according to Thite, Kavanagh, and Johnson (2008) witnessed a number of significant issues affecting the human management functions. The United States began to experience heightened competition from foreign companies. Many U.S. firms began focusing on cost reduction through automation while their HR personnel continued to deal with ever increasing legislative reporting requirements. The combination of corporate-wide cost reductions, increasing administrating duties, and rising employee costs created the need for human relations management to justify the costs of their operations and functions. The thought that human relations managers had seldom had to deal with before began to emerge; the capability to look at the total business, and think strategically. 5) Globalization, new competition from emerging markets, technological breakthroughs including the advent of the world-wide-web created the need to consider the makeup of the organization. The need to define a firm’s real competitive advantage began to emerge, with many organizations realizing that their people made the difference (Thite, Kavanagh, & Johnson, 2008). As a result, the people management of the organization continued to evolve with increased emphasis on attracting, hiring, developing, and retaining the right talent.
Salvatore, Weitzman, and Halem (2005) point out that changes in the United States law were factors in the dramatic need for change in the HR profession. Major legislation acts that included the 1993 Equal Pay Act, the 1964 Civil Rights Act prohibiting discrimination on the basis of race, color, sex, national origin, or religion, and the 1967 Age Discrimination in Employment Act drove the need for the HR function of organizations to begin to step up in their importance. More recent legal enactments such as the Americans with Disabilities Act of 1990, and the 1993 Family and Medical Leave Act now required HR professionals to begin learning how they could keep corporate managers out of legal areas with which management had little experience (Salvatore, Weitzman, & Halen, 2005).
The past decade witnessed dramatic cost increases in areas that traditionally resided within earlier personnel departments, and now, modern day human relations departments. The cost of health care coverage, once the staple of modern day employment began to emerge as a significant expense line item to many organizations. Companies were also now faced with increased competition from every corner of the world and began searching for ways to lower ever-rising costs. The result according to Rubis, Mirza, Fox, Shea, and Moss (2005) was a health care cost-shift from the employer to the employee. Additionally, employees now faced a dizzying area of health care choices ranging from health maintenance organizations, tax-advantaged flex spending accounts, association-based health care coverage options, and health reimbursement accounts, which requires education and training (Rubis et al., 2005). Another employee benefit, retirement planning, began to change and change dramatically. A number of corporate defaults of underfunded defined retirement pension plans led to a massive decline of these fixed monthly payment plans. The responsibility for saving and investing for retirement began to shift from the employer to the employees, through 401 (k) plans. The percent of workers participating in defined benefit’s retirement plans fell from 28 percent in 1979 to 3 percent in 2011 while the percent of employees participating in defined contribution plans increased from 7 percent in 1979 to 31 percent in 2011 (Retirement Issues, n.d.). These systems, typically managed by the finance department and designated investment professionals now required human relations department involvement through training, education, and record keeping. In many firms, negotiating retirement plans and the processes now resides within the human resources department (Rubis et al., 2005). These dramatic shifts in the role and requirements of the human relations department required a new look at an old function.
Fallon and McConnell (2014) state that due to the dramatic change in the field of labor, increased legislation, increasingly complex responsibilities, and the different types of work that had to be done, the personnel department evolved into what is today, the human resource department around the late 1970’s and the decade of the 1980’s. Many of the practitioners of traditional personnel functions had become overwhelmed by the tsunami of change, could no longer cope with the increased demands, became obsolete and were replaced by new professionals from the field of industrial psychology and graduates of modern business management programs (Fallon and McConnell, 2014). The title of Human Resource more accurately reflected the workload, improved the image and elevated the status of the work being performed while pointing to the degree of professionalism of the new practitioners who are now doing this type of work.
May (n.d.) states that the shift from “personnel” to “human resources” was accompanied by the need for HR to become more of a strategic partner with the other leaders of the business. HR is now being called to advise on important transitions, develop and demonstrate the value of the employee, and contribute to significant business decisions. In other words, while state-of-the-art human resource practices continue to be centered around five functional practices: 1) human resource planning, recruiting, and selection, 2) learning and change, 3) career development strategies, 4) performance management, and 5) compensation and rewards (Gilley and Maycunich, 1999), HR teams are now being challenged to deliver much more. HR is now being tasked in some organizations to play a role inside business units offering a variety of HR services directly to that particular work area. In these situations, the HR employee may report directly to the manager of that business unit rather than to the HR manager. This approach provides the HR representative the ability to take information from the primary HR group directly to the business unit, tailor and modify the service based on that business unit needs in conjunction with the business unit manager. In some organizations, HR is now being challenged to deliver a consulting model whereby their view is that of a client and take their client satisfaction as their measure of success. HR in some cases is now being held accountable for increasing line managers capabilities. This approach creates a tie between HR and line management, fostering closer involvement in the development of the employee (May, n.d.). These new roles for HR raise several issues with which the organization leaders must grapple. To deliver on these new and challenging HR roles requires strong HR leadership, one where the HR manager must sit at the executive level table and demonstrate the ability to provide value. In addition to strong HR leadership, making the shift to a new HR model, one for the 21st century, will require far more future orientation than in the past. What are the organization’s future HR needs? What are possible future trends that need to be taken into consideration? As rapidly as the world is changing, how can the business be responsive to the ever-changing needs of its clients? Globalization has created the need for business to respond rapidly to changing market conditions, adapt to new locations with employees from different cultures with different requirements and customs.
When viewing the evolution of human resource development, it is interesting to note that Peter Drucker, characterized as the guru of management practice (Wren and Bedeian, 2009) wrote that management is about human beings and that every successful enterprise is a learning and teaching institution (Drucker, 1973). Drucker (1973) wrote those words more than forty years ago and was delineating what Gilley and Maycunich (1999) describe as a learning organization which is characterized by a culture dedicated to improving workers, their productivity, and overall business performance by continuous lifelong learning. The evolution of human resource management is tied directly to playing a lead role in moving beyond just learning and teaching.
The Future of Human Resource Development and Why It is Important
Gilley and Maycunich (1999) write that three identifiable organization types exist along the plane of organizational evolution: 1) the traditional organization, 2) the learning organization, and 3) the developmental organization. The authors contend that organizations must move beyond the model of a learning organization to that of a developmental organization; one that promotes and rewards long-term individual and organizational growth (Gilley & Maycunich, 1999). The issue the author’s state is that evidence points to the fact that more than 80 percent of all organizations remain mired in the traditional mode. These organizations may deliver results that keep them afloat but fail to achieve consistent long-term growth while falling prey to lost market share, fail to respond to rapidly changing market conditions, lose profitability and are driven to attempt quick, short-term fixes rather than adhere to long-term strategic plans. From a human resource standpoint, traditional organizations tend to rely on training as a means to improve their workers skills, failing to connect employee growth and development with organizational renewal and competitive readiness (Gilley & Maycunich, 1999). While the 80 percent estimate of organizations stuck in the traditional model is likely not quantifiable, should that number be even remotely accurate, the future state of human resource management must first begin to move beyond that of the traditional mode to that of a learning organization before they can become a developmental organization. This table compares several factors that identify whether an organization could be classified traditional, learning or developmental.
|Capacity for Organizational
|Importance of HR
|Assumption of Growth & Development
|Training will enhance the organization
|Building capability to create through learning
|Continuous development is the key
|Expectation of growth and development
|Organizational renewal & competitive readiness
|Types of developmental activities
|Accidental, conversational, incidental learning
|Deutero-learning & action learning
|Focus on developmental activities
|Application and reflection
|Changes and continuous growth and development
|Outcomes of developmental activities
|Mastery and self-awareness
|New meaning, renewal, and performance capacity
|Market share, profits, productivity, margin
|Learning is key to improving business results
|Achieving business goals & objectives through employee growth and development
|Type of leadership
|Structure & work climate
|Departmental, formal, hierarchical, little employee participation
|Team/project oriented, encourage & reward individual & group learning
|Organizational system approach
|Holistic Thinker & development champion
|HR professional role
|Performance consultant and OD change agent
|Actions required to move the organization forward
|Focus on learning
|Focus on development
Note: Adapted from Beyond the Learning Organization, p. 8-9, by Gilley and Maycunich. Cambridge: Perseus Books
Table 1. Comparing Traditional, Learning, and Developmental Organizations provides a window as to why human resource development is vital to organizations and why today’s leaders have begun to place increasing greater importance on the topic. Traditional organizations have a low capacity for organizational renewal and rely on accidental, conversational, incidental and anticipatory learning as opposed to action learning or deutero-learning (Gilley & Maycunich, 1999). Action learning (Marquardt, 2014) is the dynamic process that focuses on a small group of people not just solving problems, but also focusing on what they are learning, and how their learning can benefit each group member, the group itself, and the organization as a whole. Action learning is a clear departure from traditional learning and an important step toward becoming something beyond that of a traditional organization.
For organizations to move beyond the traditional mode, Senge (1999) states that the fundamental difference between traditional authoritarian organizations and learning organizations is the mastery of certain basic disciplines. Those disciplines are 1) personal mastery – continuous learning by each individual, 2) mental models – the development of awareness of acquired patterns of thinking within organizations, 3) building shared values – creating visions of the future, 4) team learning – learning together so that the members of the team are more productive than they would be as individuals, and 5) systems thinking – the ability to see organizations, their problems, and opportunities as a whole (Economist, 2014). One could argue that while many organizations have mastered to some degree the disciplines of individual learning, awareness of patterns within the organization, the need to build a vision of the future, and the importance and role of team learning, few have mastered the discipline of systems thinking. The Gilley and Maycunich (1999) claim that 80 percent of today’s organizations remain stranded in the traditional mode regarding organizational renewal supports this concept. Systems thinking is defined as a method of critical thinking where managers can see repetitive patterns, the way certain problems appear over and over, and how systems have inherent built-in limits to growth. Systems thinking recognizes that that things are interconnected and that organizations are complex systems. Systems thinking enables you to analyze the relationships between the system’s parts to better understand the situation and to facilitate better decision-making (Crainer, 2003). For example, when a firm reduces their marketing expenditure to meet the company’s expense budget, did they take into consideration the connection to an appropriate degree of decline in revenue? When a company pulls a number of people off projects already underway to suddenly form a new team for a crash-course need, was there due consideration of the impact on existing projects with a potentially higher return on investment? Or consider the effects of the delay on existing projects due to reduced resources?
These type of actions that likely take place countless times a day around the globe lay at the heart of the importance of systems thinking. Senge (1999) wrote that systems thinking is the discipline that connects the other four disciplines and keeps them from being the latest in organizational fads. To become a learning organization requires a shift of mind. People, and departments within an organization, can no longer view themselves as separate with problems being created by others. Systems thinking is the ability to visualize how our actions, and those of our departments, are often the reason for our problems. Seeing how everyone’s actions are interwoven, the system, is the essence of a learning organization (Senge, 1999).
Simpson (n.d.) writes that the major human resource issue most organizations must deal with today is the failure to understand the complex interrelationships between the different elements of HR management and the other components of the business unit. The result inadvertently creates organizational tensions that constrict the organization from realizing its true potential. Gilley and Maycunich (2009) write that systems thinking require leaders, managers, and employees to consider, from a strategic standpoint, every aspect of organizational life. Silos can no longer be allowed to exist. Assuring that the corporate system and all its connections are integrated and no longer dysfunctional is the role HR leaders can, and should play. Only through systems thinking can human resource management step up and lead modern human resource programs that ensure all aspects of the organization work cooperatively for the betterment of all.
Story from the HR World – Hiring the right people
In the fallout of the Enron scandal in 2001, many working professionals in the energy markets were looking for new jobs. Most of them were not involved in the scandal, but rather were victims to the circumstances of poor ethical leadership. Marlon ran the HR department of an energy company headquartered in Kansas City. Seeing an opportunity, the door was open to hire many of these former Enron employees. After two years, the seven Enron employees that he hired to the company were gone. A serious gap in culture was to blame as the Enron employees simply did not adhere to the protocols or connect to the incentive structure of the organization. The culture of the organization was such that any sales or deals were paid out in bonus AFTER the deal was done and money was collected from the customer. The bonus payout was focused on a year in review scorecard. However, the Enron employees were a bad fit for two reasons. One, most of them had degrees from Ivy league, east coast schools and had an arrogant approach to coworker who graduated from moderate Midwest schools. What made the culture work at Marlon’s company was that most of the original sales team in fact graduated from midwestern schools and grew up in small towns and farms where the work ethic far exceeded many of their east coast peers. Humility and respect were highly valued in the company because the surrounding states valued these virtues (Nebraska, Iowa, Kansas). Second, the incentive structure these salesmen were used to at Enron paid them on the future projected cash flows of the deals. This lead to a conflict within the organization because Enron salesmen were expecting payout and did not see deals through to collection as a result. Marlon as the HR manager failed to connect the HR practices of talent acquisition with the overall strategy of the business.
- Explain the difference between traditional HR and HR Development.
- How can organizations benefit by embracing HRD?