In its broadest sense, the term “human resource management” (HRM) refers to any system that manages the people working in an organization . The fundamental requirement of HRM is to meet the organization’s goals and priorities and, at the same time, respect and promote the interests of its employees.
Using the term “human resources” to refer to the employees of an organization is not without debate. In recent years, critics have argued that the use of labour resources has ethical considerations that other resources such as raw materials, financial capital and technology do not have. They suggest that a more appropriate term would be to refer to the “capacities” that humans have, e.g. knowledge, skills, talents, creativity, aptitudes and values, which the literature refers to as the “human capital” that people bring into an organization.
Thus, the term “human capital management” (HCM) regards people as assets to be managed and invested in through training, mentoring and talent development including on-the-job learning. Nonetheless, the term remains open to criticisms of exploitation, particularly if investments in staff were seen as purely motivated by an organization’s business objectives.
HRM was previously referred to as “personnel management” that dealt mostly with the administrative areas of recruitment, payroll, leave management, discipline and employee records. HRM became a discipline in the 1980s with the emergence of two influential models on personnel management, namely, the Michigan and the Harvard models, respectively.
The Michigan model often described as the “hard approach” to HRM, attaches the highest importance to an organization’s business goals and objectives. Current and future business requirements guide the recruitment, selection, training and development of employees. Performance measures are mostly focused on short-term quantitative results such as service, growth and profits.
The Harvard model is associated with the soft approach to HRM. It balances the interests of shareholders and management with those of the employees and unions. In the short-run, the model prioritizes gaining employee job satisfaction and staff commitment to the organization’s goals which, in the long-run, lead to desirable outcomes such as organizational effectiveness, individual well-being and the promotion of societal values.
In practice, HR practitioners draw from both models as well as other emerging frameworks. The “strategic human resource management” approach, for example, is the traditional “personnel management” approach that now incorporates the strategic objectives of an organization into the deployment of its human capital.
There is continued debate on the appropriate term to refer to this important organizational function, i.e. “human resource management” or “human capital management” or of late, “people management”. Noteworthy is that the 2019 ISO standard that provides guidelines on human capital reporting, ISO30414, is called the Human Resource Management Standard.
Despite the differences in philosophies, emphasis and practices, Armstrong and Taylor note that human resource management continues to be the most common term that is readily understood as referring to the core function of aligning an organization’s goals and priorities with the promotion of staff needs and interests.