Personnel Management Vs. Human Resource Management: Functions, Differences, And HR Planning Process

Personnel Management

Personnel management refers to the process of procurement, development, compensation, application and maintaining of workforce in an organization (Klingner, Nalbandian and Llorens 2015). This part of management is mostly concerned with planning, organizing, directing, training, compensating and controlling the employees of any organization for the purpose of better performance of the organization. Personnel management is the traditional form of Human Resource Management (HRM), and it exists in small organization, who cannot afford to have a specific HR department.

 Features and functions of personnel management (Naff, Riccucci, and Freyss 2013):

• Main functions of personnel management are: manpower planning, recruitment, selection of right candidate, training and development of the employees and managing their wages and benefits.
• Personnel management revolves around the idea of manpower planning, that is, recruiting and developing the employees and managing their compensation.
• It is part of the general management of the company. It promotes and stimulates the workforce.
• It emphasizes on the idea that employees are inputs to the production process. Hence, it puts efforts on human orientation and motivation.
• Personnel management is more of a staff department than a formal HR department. Hence, they can give advice to line managers regarding business plans of the organization.
• Personnel management also deals with the grievances and other HR issues of the employees.

Human resource management is almost similar to personnel management. HRM is an essential part of any big organization. It refers to the specialized branch of an organization that deals with the hiring and developing manpower of an organization to get the maximum productivity out of the employees (Armstrong and Taylor 2014). HRM includes a broad range of activities, such as, analysis of jobs, planning the needs of the organization, orientation and training of the employees, managing the wages and other benefits and incentives of the workforce, performance evaluation, resolving conflicts and communicating with all levels of the employees in a company (Wilton 2016). It requires an extensive knowledge of the industry.

Main functions of HRM:

• Recruiting staffs
• Development of human resource of a company
• Managing compensations and benefits of the employees
• Maintaining a healthy interaction between top management and employees
• Designing safety and health benefit policies
• Dealing with discriminatory policies

Both of these concepts are interlinked. HRM is the modern approach of personnel management. However, there are some differences in the two concepts. Earlier when the structural form of human resource management was not present, then the recruitment, development and managing the wages and benefits were looked after by the personnel management team (Ivanovic and Collin 2015).

The key differences are as follows:

• The basic function of personnel management is to manage the relationship of the employees with the organization, while HRM focuses on the most effective utilization of the workforce to achieve the optimum level of output.
• Personnel management is the traditional approach while HRM is the modern approach of employee management.
• Personnel management addresses administration, welfare of the employees, while HRM addresses the attainment, motivation, growth and maintenance of the employees in an organization.
• Employees are considered as machines or tools in the production process in personnel management but they are considered as valuable assets for achieving success in the HRM approach.
• Decision making is slow in personnel management than in HRM.
• There are more training and development programmes for the employees under HRM than under personnel management.
• The wages are based on job evaluation in personnel management, while that is based on performance evaluation under HRM.
• A significant difference in personnel and HR management is that, there is collective bargaining for negotiations in personnel management, but, in HRM, there is individual contract with each employee.
• Personnel management is a routine function while it is strategic function in HRM.

Both the practices focus on management of people. However, small businesses often cannot afford to have a specific HR department due to higher cost. They tend to follow the personnel management process. The needs of a small organization are not as bigger and complex as that of a bigger organization. However, every organization, be it small or large, needs to hire efficient employees and must manage them well. Small organizations are less formal than bigger ones, they also make less efficient use of a formal HRM. In most cases, the small organizations take the help of external HR agencies to make the recruitments for them. The recruitment and selection process is often very informal. They also cannot afford to arrange training programmes for the employees unless they are making large profits. It is viable for such organizations to have personnel management as that is more cost efficient, deals on a personal level and also performs the basic duties of the HR management (Storey 2014).

Hence, it can be said, that, since this concerned organization is small, it is feasible for them to have personnel management rather than a bigger and formal HRM.

Functions of HRM to be applied:

The basic functions of Human Resource Management can be classified into three broad categories (Jackson, Schuler and Jiang 2014):

• Managerial functions,
• Operative functions, and
• Advisory functions.

It is one of the basic functions of the HR manager. He needs to perform fundamental functions such as, scheduling, organizing, directing and scheming of the employees of the organization (Tyson 2014).

1. Planning: to run the functioning of the organization smoothly, planning is very crucial. The manager must plan ahead to avoid any problems in the production issue. Planning involves the designing of the programmes that would help to achieve the goals of the organization.
2. Organizing: to carry out various process of operation, the HR manager must organize the actins properly. Grouping of tasks, assigning the right task to the right person, delegating the authority, and maintaining coordination among employees are part of the organizing tasks.
3. Directing: guiding and motivating the employees for various policies and goals of the company is an essential duty of the HR manager.
4. Controlling: it deals with the controlling of the regulation policies in the organization. Controlling completes the cycle of a production process.

Human Resource Management (HRM)

This is one of the secondary and significant functions that include the real time operation and functions which must be carried out that include employment, development, maintenance, compensation (Stredwick 2013).

1. Employment:  Employment is one of the basic functions of the Human Resource Department. It involves contacting, reporting, and recruiting the suitable option for the organization. The employment of manpower is carried out by the human resource department. The selection and appropriation is a necessity which successfully carries out the supply of labor.
2. Development: This is the function which follows right after the employment of new personnel. Development is one of the necessary aspects that provide the right training for the right skills to be displayed in the organizations. Training modules both during the on-the-job-training and off-the-job-training which must be prepared much before new recruits are been made.
3. Maintenance: One of the important factors of keeping a HR department in an organization is the capacity to integrate, manage and maintain the relationship between employee and employer. Therefore there must be great conditions at work which will help in determining and influencing the employees in a positive sense which is performed by the Human Resource.
4. Compensation:  Just like rewards and recognition, the compensation is also a crucial determinant for the efforts of the personnel. Monetary compensation is the first element that sufficient and reasonable remuneration system. It can also be non monetary in terms of the affording level of wage and the provisions that entail it.

The advisory functions include the other relevant function which does not necessarily require the official operations and documentation. He acts as the link between the management and the workforce (Tyson 2014).

1. Advice to Departments and Management: He is the one who is responsible to the management for its day to day activities. In fact the advice to the departments and management becomes the only source of communication between any discrepancies that arise between the employees and the employer.
2. Advice to the Recruits: There are various departments in an organization and many recruits are employed during several phases. The recruits often need assistance in their developing and training patterns which can be resolved by advising regarding many issues to the recruits.

In an organizational structure the significance of line managers is inevitable. The direct manager or the line manager is the one who is accounted for the providing quality inputs to the business by incurring as minimum of cost as possible (Sikora, Ferris and Van Iddekinge 2015). The line manager is responsible for causing the integration with many recruits, vendor, clients and several relevant aspects of profit that it provides to the organization (Alfes et al. 2013). The roles and responsibilities of line managers are as follows:

1. Identifying positions to fill in the concerned departments and locating the prospective hiring sources.
2. Maintaining and regulating the requirements and priority goals of the organization because the overall affects are brought about by the line manager.
3. Communication and proper interaction with all the departmental managers that will aid in comprehending the requirements and requisites for the proper flow of work.
4. Coordinating and operating any raising issues with employees to guarantee job rotation and curtail assignment exposure gaps.
5. The line manager must ensure performance feedback and quality standards in all the departments that has an overall impact on the production.
6. Establishing more integration and monitoring performance indicators among the organization.
7. Reviewing and assessing employee and Customer satisfaction among the organization.

The organization runs on several determinants which help in acknowledging the functions of the economic policy, trade policy, tax and politics (Armstrong 2014). The operations must be controlled by some key legislation. There is some framework that binds the business provided by the organizations which are regulated by the following:

• Fair Labor Standard Acts policies:The current employment and payment scenario is very significant for the business operations.  The regulations set by the government must be followed by the operation heads of the organization along with the human resource department which recruits new opportunities that must comply with the fair standards of labor.
• Zero Tolerance Policies:This is an important regulation while deciding the aspects of human resource. The actions and activities driven by the human resource personnel includes the zero tolerance policies which is a regulatory guideline that keeps regulation on the rights of the employees and raising voices for any kind of intolerance.
• Employee Recruitment Income Security Act:This is one of the regulatory procedures that pay the efforts of the employees even after their serving period is complete. This act of security in terms of monetary benefit helps the employee even after they are out of service. This is one of the benefits that have helped in making the plans and other reservations for the employees.
• Patient Protection and Affordable Care Act:The involvement of this act helps the employees with medical benefits which they are eligible for being a part of the organization. The Affordable Care Act provides the benefits and other guides according to which the employees shall receive compensation during medical emergencies and also providences for their family members.

Reasons for Human Resource Planning in Organization:

The significance of the most important body which helps in regulating the flow of the organization is the human resource department. It is the maintaining body of affair integrating a number of operations (Armstrong and Taylor 2014). The significance is as follows:

• Strategy: The strategies adopted by the human resource recover the objective of the organization with its line of knowledge.  The resource of the appropriate humans and how it can be capitalized in achieving the success of the organization is managed by this department. The strategies and practices that allow the human resource to participate in decision relating to the corporate structure are essential in continuing an organization.
• Hiring decisions: Apart from looking after the benefits or the liabilities of that underlies within the current staffing  system, it also is the main body that decides and assess the decisions regarding hiring patterns, remuneration slabs and other official procedures that  must be fulfilled while joining or leaving any workforce.
• Safety and employee satisfaction: This is the most vital part which signifies the workplace rules and how the following actions are determined in the course of the work. The safety of the employee is ensured by this department therefore one should proceed with the planning of the human resource so that the employee satisfaction is effectively achieved.

Stages of planning HR Requirements:

There are six stages of the planning of HR requirements. The first thing is to do is choosing the right candidate for the right job. Those can be presented in the diagram as follows (Delahaye 2015):

Figure 1: Stages of Human Resource planning

Analyzing organizational objectives:

The analysis of objectives of the company in the fields of production, budgeting, expansion and growth, marketing and sales are presented in this stage.

Inventory of Present Human Resources:

It refers to the proper planning of the current employee base of the organization to fill various job requirements and maximum utilization of their potential.

Forecasting demand and supply of human resource:

This means proper estimation of the requirements of the workforce and management of the recruitment process.

Estimation of workforce gap:

HR manager must anticipate the gaps between the demand and supply of workforce. When there is deficit of employees, people should be hired and when there is surplus, people should be terminated.

Formulation of HR action plan:

The plan depends on the employee strength of the company. According to the number of people available, the action plans should be formulated.

Monitoring, control and feedback:

It refers to the implementation of the human resource plan. Employees are allocated duties based on job requirements and other resources are updated. Monitoring is a crucial part to identify the deficiencies.

Comparison between recruitment and selection process in two organizations:

Recruitment is the process of finding out the potential candidates and sending them the job details to inspire them to apply. Selection is the employment of the short listed candidates. The recruitment and selection process is different in two different organizations. The author compares the hiring process of the concerned organization with that of a larger organization, say XYZ Enterprise. XYZ has a specific HR department for conducting recruitment and selection process, while author’s organization is a small one and hence does not have a specific HR department. The HR policies are more informal here than in XYZ enterprise. The number or employees are also less here than in the bigger organization. The concerned organization does not go to the job fairs unlike the bigger organization (Aswathappa 2013). The smaller company defines the job profile clearly, it does not hire college graduates for higher posts and selection process is done by HR manager himself. Hence, it can be said that XYZ has an efficient and specific HR department to conduct the recruitment and selection process, while author’s organization lacks the formal procedures of HR planning and actions.

Functions of HRM to be applied

Evaluation of two recruitment and selection processes:

The author found out that the bigger organization, that is, XYZ Enterprise has a more formal recruitment and selection process. It has a specific HR department which handles the hiring process for the company. It has properly defined HR policies, regarding employee benefits, bonus and incentive policies, grievances address system, reward systems, and most importantly it maintains transparency in its actions. On the other hand, the concerned organization is small. It cannot afford to have a specific HR department and therefore, assigns an external recruitment agency to perform the hiring process for them. There are discrepancies in their HRM policies. The legal and regulatory frameworks are not properly defined and maintained. The employees do not get much benefit which can stop them from leaving the company.

Link between motivational theory and reward:

Motivational theories, such as, Maslow’s hierarchical needs theory, defines the behavior of the human nature to be motivated by internal and external factors and processes. Reward is the benefit and accomplishment that the employees receive from their jobs. It can be financial benefit or nonfinancial benefit in the form of recognition, promotion and praise (Knowles Holton III and Swanson 2014).

The link between motivational theory and rewards is that, rewards are external factors that help to motivate the employees. If a company provides a substantial reward to the employees who perform good job, then not only those employees, but others are also motivated by that reward system. If the company provides retirement benefits, then employees tend to be loyal to that company and they generally stay with the company (Shields et al. 2015).

The pragmatic recommendations for improving workforce motivation are as follows:

• Recognizing good work
• Setting achievable goals
• Positive attitude
• Co-operative environment
• Recreational breaks
• Medical facilities
• Understanding the bigger picture
• Providing scope for creativity
• Promoting teamwork
• Rewards system

Job evaluation and factors determining pay:

Job evaluation is the technique of determining the value of a particular job in relation to other jobs in that organization (Shields et al. 2015). The importance of job evaluation is as follows:

1. It helps to rate the job in terms of importance and complexities and also helps to determine the pay structure accordingly.
2. It encourages a healthy relationship between employer and employees by eliminating inequalities within the organization.
3. Evaluation of jobs leads to minimization of costs of recruitment and selection process, as well as of production. As it helps to retain the employees, the cost of new recruitment reduces. That also helps to improve productivity of the employees and that reduces production cost.
4. Job evaluation focuses on the needs for training and development depending on the requirement and complexity of jobs.

Hence, it is very important for any organization to do job evaluation on a regular basis. Not only it brings a positive attitude among the employees, it also helps to reduce the costs of the company.

Effectiveness of reward systems:

Rewards in a company can be classified into four categories: transactional, relational, communal and individual. Transactional reward is the financial reward and it is tangible. Payment of any type of financial benefit is one of the most important ways to reward the performance, but not the only one. Other ways are intangible and called relational rewards. Apart from payment, the other forms of rewards are: Recognition of good work, promotion, award certificates such as, ‘employee of the month’, positive feedbacks, good work environment and these are called intangible rewards (Lepper and Greene 2015).

Every organization must evaluate their rewards system to see if those are working properly to serve their purpose. It has been found that, despite providing high salaries and benefits, employees can leave the company due to high level of attrition. Sometimes the company position is not good in the market even if it has good rewards system. Again, if the employees are leaving, the company must evaluate their reward process (Hossain 2015).

Line Managers

To evaluate the rewards system, companies organize surveys among the employees about their feedbacks. Sometimes those are anonymous surveys. Some companies do exit interviews while an employee is leaving. Organizations can also assign external companies to evaluate their rewards system in comparison to that of other companies. The key to have a good rewards system is to match the rewards with performance of the employees and also to ensure that the rewards policy is at par with the industry standard (Cullen et al. 2014).

Performance appraisal methods:

There are various methods for performance appraisal apart from the ranking system. Those can be listed as follows (YourArticleLibrary.com: The Next Generation Library 2015):

• Checklist
• Paired comparison
• Field review
• Confidential report
• Grading
• Forced distribution
• Forced choice
• Management by objectives
• Cost accounting method
• Performance assessments.

For a small organization like the mentioned company, checklist method for performance appraisal would be better. A questionnaire should be prepared by HR with questions relating to the job specifications and employees need to answer with Yes or No. This is one of the easiest traditional method for performance appraisal and very much suitable for a small organization.

Reasons for cessation of employment in an organization:

The reasons for successive employee exist from the organization are as follows (Knowles Holton III and Swanson 2014):

• Not meeting job expectations: This is the primary reason for the exit of the employee from the organization. The job profile, work environment and relative factors might not suit the employee therefore they seek for better opportunities and resign from the workforce.
• Compensation and due payments: This can be cited as one of the significant reasons for the employees to resign.  This is quite obvious that if the efforts and attempts of the workforce do not have its productive value, the employees are bound to leave.
• Limited opportunities: Often stagnant job profile is cited as the prime reason for the drastic shift of the employees from one organization to the other. The limited opportunities will increase the risk of any significant career development of an individual.

The recommendations for reducing employee turnover are as follows:

• Creating a comfortable environment:  This challenge can be reduced by creating a comfortable environment. The working environment can be improved by including initiatives that help in creating a nepotism free environment.
• Recognition and appraisals: This is one of the most important amendments that need to be brought about by the appropriate recognition and appraisal systems to the employees. This enhances the employee-employee relationship quite effectively.   

Exit procedures and exit interview:

The exit process of the employees might differ from one organization to the other. Apart from regular methods of exits, such as, resigning for better opportunities, an organization might force an incompetent employee to resign; the dismissal may be fair or unfair; in some organization the jobs are contractual, short term or long term; thus, there are differences in the exit processes in the companies (DeNisi and Smith 2014).

Usefulness of exit interview:

Exit interview is the survey which is conducted with an employee while he is leaving the organization. It is useful because an organization gets to know from the employee about what needs to be improved or changed or kept as it is. This information helps the companies to reduce employee turnovers, increase productivities, improve job profiles and reduce job dissatisfaction, improve hiring process, change management and HR policies, modify the salary and incentive structures and sustain performance of the existing workforce (Qualtrics Support 2016). Hence, every organization which wants to improve and grow in the business must emphasize on the exit interview.

Impacts of regulatory and legal frameworks on employee redundancy and dismissals:

The current regulatory and legal framework of the company has the policies, like, any employee will get medical benefit for himself or herself only and not for anyone in the family; the notice period is for two months where one month is without any pay; number of casual leaves is one in a month and there is no sick leave. These do not comply with the laws protecting employee benefits. Hence, these policies stimulate the employee redundancy and dismissals (DeNisi and Smith 2014).

The company must change its employee benefit policies.

• It should provide medical benefits to the families of the employees.
• Leave policy should incorporate more casual leaves in a year and there should be a certain number of sick leaves also.
• Notice period should be reduced to one month and that should be a paid period. The period should be fifteen days for the employees who are still in probation.

Conclusion:

The assignment deals with various aspects of human resource management. It enables the learners to distinguish between personnel and human resource management functions. It also provides an in-depth knowledge and understanding of recruitment and selection procedures in various organizational structures, methods for job and performance evaluation and mentions different types of regulatory and legal frameworks to deal with the cessation of employment.

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