Items Description of Module Subject Name Paper Name HUMAN Module Title EVOLUTION OF HUMAN RESOURCE MANAGEMENT Module ID Module 2 Pre-Requisites Understanding the Evolution of Human Resource Management Objectives To study the Evolution of Human Resource Management Keywords Hawthorne Studies, , Human Relations

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1. Module : 2; EVOLUTION OF HUMAN RESOURCE MANAGEMENT 2. Learning Outcome 3. Evolution of Human Resource Management 4. Future of Human Resource Management Summary

1. Module : 2: Evolution of Human Resource Management 2. Learning Outcomes After studying this module, you shall be able to . Know the evolution of Human Resource Management . Understand the Industrial Revolution and the Factory system . Comprehend the impact of Hawthorne Studies on HRM . Understand the significance of Scientific Management . Become aware of the . Know the nature of Human Resource Management . Understand the value of Strategic Human Resource Management . Become aware of the future of Human Resource Management

3. Introduction The field of Human Resource Management as it is today has passed through several stages of evolution. The industrial revolution from the late of 18th century to the second half of the 20th century wholly changed the way people earned their living and replaced human effort and skill by the work of machine. The Hawthorne studies emphasized the importance of informal groups in increasing the . The Scientific Management represented a new attitude towards management and contributed greatly to the formalization and specialization of management based on clearly defined laws, rules and principles. Human relations movement and employee strengthened the process of employees’ need identification and motivation. During this period, behavioral scientists and management practitioners investigated the concepts like job enrichment and job enlargement to enhance workers’ commitment and reduce job boredom. The Human Resource Approach assumed that the job itself is the basic source of satisfaction and motivation to employees. The human resource approach emphasized on the individual involvement in the decisions made in the and considered the employees as the invaluable resources for the organization. The challenges today for HR managers are in the recognition of talent and nourish it with care to achieve significant gains in productivity over a period of time. The organization is nothing without skilled workers.

4. The Evolution of Human Resource Management

The evolution of human resource system went through the following phases:

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(Source: HRdicionaryblog.com)

4.1 Industrial Revolution and the Factory System

Before the industrial revolution, the first HRM initiative was taken in England when workers of different trades formed guilds and used their unity to improve their work conditions and increase their bargaining power. The industrial revolution took place in different countries from the late of 18th century to the second half of the 20th century. Industrialization wholly changed the way people earned their living and replaced human effort and skill by the work of machine. The industrial revolution brought with it the ’factory’ system, an organization, based on wage labor and fixed capital, created centralized workplaces and brought unrelated people together. Factories increased the production to a large extent and created a new class of workers and managers. The factory system carried with it several changes in the organization of industry:  Put out the self-employment household and handicraft workers  Brought together many workers with no ownership of means of production and no other way to earn a living  Created rationalization and specialization of work  The necessity of supervising large number of workers  Autocratic Personnel practices  Labor was considered a commodity  Aimed to maximize the employer’s profits  Focused upon materials, markets and production  Totally neglected human factor

The factory owner delegated responsibility of management to the first line supervisor who was made responsible for of workers and successfully running the factory by the use of force and fear.

During the industrial revolution the major HR issues were working conditions and social patterns of behavior of employees. However, the responses of nations and were different in addressing those problems. For instance, an HR policy in the form of a code of discipline was introduced in Britain just to set up a standard behavior among the untrained workers. Later, employers in some countries voluntarily introduced labor welfare measures out of their own self-interest and humanity. Companies like Cadbury and Rowntree employed industrial welfare workers to take care the welfare of employees. Thus the growth of HRM was uneven for all time and all nations

4.2 The Hawthorne Studies (1927-2932) The Hawthorne plant in Chicago of Company conducted a number of similar experiments for about 12 years from 1927 by a team under the of Elton Mayo, a Harvard Professor. In the beginning the researchers attempted to investigate the impact of level of illumination on the job performance. The researchers noticed that the factors outside the job were affecting the work performance. They later performed various controlled experiments. In fact, the presence of informal groups in the organization had the influence on the employees’ behavior and productivity. A group of employees worked under different degrees of illumination. Production increased as the illumination was increased to a certain point, after which it became stable. However, when the illumination intensity was decreased, job performance stayed at the same level, even when light became equal in intensity to ordinary moonlight. Later, investigation of this phenomenon found the norm of a proper day’s work and continued to perform at that level even when conditions were not conducive. The researchers ultimately came to the conclusion that the collective decision of the members of the informal groups and not just pay and perks the formal organization offered, influenced the performance of workers. This revelation made organizations to have a closer look at the social factors that influenced the employees’ behavior. This conclusion greatly influenced the attitude and approach of HRM thinkers and practitioners towards the employees. From this time, firms realized the significance of informal groups in the organizations. This helped in the recognition of unions as the representative of employees.

4.3 Scientific Management

Scientific management proved to be further stride to deal with labor and management inefficiencies through reorganization of production process and removal of unreasonable elements of work. Welfare work made efforts to deal with labor issues by improving conditions of work. Industrial applied psychological principles for increasing the efficiency of industrial workers. F.W. Taylor, originator of scientific management, was concerned with worker inefficiency and the need for managers to acquire the co-operative achievement of the employees. Taylor the elements of jobs, removing unnecessary motions and timing in the tasks, aimed to discover the method and the least time a worker could perform a particular task. Time and motion studies got in the center of scientific management and represented a way of precisely fixing the amount of work a man could do.

Scientific management is an analysis based on scientific systems and breakdown of work into tiny mechanical elements and to arrange them again into their most efficient combination. Taylor suggested that employees selected to perform the tasks should be as fully matched, physically and mentally, to the needs of the task as possible and that overqualified persons should be excluded. Supervisors should train employees fully to

ensure that they perform the task minutely as specified by prior scientific analysis. A Taylor advocated for a differential piece rate system to provide an incentive for to employees to observe the detailed procedures supervisors specified. Taylor declared that SM constituted a drastic change in the attitude of workers and managers. He summed up that scientific management consists of science, harmony, cooperation and maximum output. SM demonstrated a fresh attitude towards management. Taylor argued that management is a true science based on clearly defined laws, rules and principles. Despite its contributions, scientific management had its limitations:

 It had an undue bias for the job to the neglect of the worker and looked upon worker as a cog in the machine who could adapt to the job and saw no need to incorporate human factors in its system.  The scientific management considered the worker as complete economic man motivated to maximize his economic gain to the neglect of the basic social and psychological motives of employees.  The scientific management turned to be a form of industrial autocracy and control by management over the workers. Management did all the planning of work and workers had to accede.

4.4 Human Relations Movement Human relations movement and gathered momentum during this period. Several theories underlining the importance of human relations movement were developed during this period. For instance, Theory X and Theory Y of Douglas McGregor advocated the significance of participative approach to decision-making. Similarly, Abraham Maslow’s Hierarchy of Needs theory strengthened the process of employees’ need identification and motivation. During this period, behavioral scientists and management practitioners investigated the concepts like job enrichment and job enlargement to enhance workers’ commitment and reduce job monotony. Besides, organizations demonstrated more interest in conducting organizational-level collective bargaining with unions and in a gradual manner dissuaded the practice of participating at national-level collective bargaining negotiations through employer federations. These developments really increased the importance of the personnel department for an organization. In fact, firms began to rely on personnel managers for developing industrial relations policies and also for successfully conducting collective bargaining negotiations.

4.5 Human Resource Management During the early 60s the ‘pet milk theory’ of human relationships, advocating that happy workers are productive workers had been largely rejected. The researchers recognized the fact that workers are unique and complex in their own way in respect of individual differences and individual needs with different wants, needs and values. What motivates one employee may not prove to be a motivating factor for another and being happy may have little or no influence on the productivity of other employees. Slowly but firmly, the trend towards recognizing employees as resources and as assets firmed up. ‘The Human Resource approach presumes that the job or the task itself is the basic source of satisfaction and motivation to employees. The human resource approach emphasized on involvement of the individual in the decisions made in the organization.’ Additionally, this approach laid stress on the following points: o Individuals do not inherently dislike work but if they help establish objectives they want to achieve.

o Most people can exercise a great deal more self-direction, control from within and creativity than are needed for their ongoing jobs. o The managers’ basic job is to utilize the untapped human potential in the service of the organization. o The manager should create a healthy environment wherein all subordinates contribute to the best of their capacities. The environment provides a healthy, safe, comfortable and convenience place to work. o The manager should provide for self-direction by the subordinate and they need be motivated to participate entirely in all important matters. o Expanding subordinates’ influence, self direction and self-control will result in improvement in operative efficiency. o Work satisfaction may improve as of subordinates make full use of their potential.

Contemporary human resource management focuses on gaining a competitive advantage in the work through human resources. To overcome the challenges arising out of increased , organizations undertook radical change in their HR policies and procedures with the intention of increasing their employees’ efficiency and loyalty. The focus of contemporary HR management is on developing HR strategies, aligning them with strategy at the corporate level and effective achievement of organizational goals. Modern organizations tend to keep few hierarchies and more dynamic HR policies. They constantly carry out organizational changes by adopting measures like total , reengineering business processes, , development of learning organization, and constantly revamping their work culture. In addition, organizations are adding global dimensions to HR management. They are now focused more on fine-tuning their HR policies and practices to effectively supervise and control employees working across national boundaries. Due to the increased globalization of business, international human resource management is gradually gaining importance in organizations.

4.6 Strategic Human Resource of strategy is a significant step from the point of view of optimum utilization of human resources. At this stage, the management begins to plan strategic use of human resources for achieving business goals. Strategic use of human resources is the sole responsibility of the top management in the scene of the turbulent market in order to achieve its goal. Unless the top management takes a decision in this respect, it is difficult to find a strategic HR plan. Therefore, once a well defined strategy comes into existence at the top for HR, pleasant tone is set for harmonizing HR planning with corporate strategic planning. So the significant areas of acquisition, assignment, reward, as well as development are properly aligned to the corporate plan of the business. According to Michigan Business School, strategic approach to HRM is very necessary for strategic HRM issues like organizational culture, resourcing of employees and their development for the ultimate development of the organization. HRM play a central role in creating competitive advantage for the organization. It requires that sub-systems of HRM-selection, reward and incentive systems and training- must support each other. Organizations that work for strategic use of HRM primarily focus on development of people to improve the organizational performance. This sounds too good an idea, but its critics differ on the ground that organizational performance is not only a function of competent human resource but also of the dynamic, fast paced market forces and the changes in the government policies, technology as well as employers’ contract of employment. In other words, the human resources are only one factor of production and

therefore, the other factors of production may have a more significant impact on organizational performance. So, the human resources are not to be blamed for low organizational performances. The fact remains that it is a matter of concern for the top HR managers to convince the CEO about the respective role of people/function. HR along cannot be expected to achieve business goals. Its role must be understood in the correct respective.

5. Future of Human Resource Management: Human Resource Management is considered as a process that causes people and organizations come together so that the goals of each are attained. The challenge of HR managers today is in the recognition of talent and nourishing it with caution to achieve significant gains in productivity over a period of time. In order to create value continuously for the organization and maintain competitive advantage, organizations must proactively manage its human capital including identifying, selecting, developing and retaining capable employees who demonstrate skills and realize more productivity and earn higher incomes. Thus, the achievements of these employees encourage others for high achievement. Furthermore, organizations should be alert in investing in employees based on the contribution of their current and projected company. It also necessitates the identification of key organization positions and the positioning and development of quality support for these positions. Talent is higher than average giftedness towards a task with which an employee creates added value in his or her work (Shoemaker and Jonker (2004) and is the description of those people who regularly demonstrate their skills and gather outstanding achievements over a range of activities and situations or in a specialized area of expertise (Williams (2000). They consistently show high level of competence in the areas of activity that strongly suggest transferable, comparable skill in situations where they are yet to be tested and proved to be very effective. Talented people cause a difference to organizational performance through their immediate contribution and in the long term indicating a higher level of their potential In order to strategically manage talents, organizations should adopt a holistic approach involving a process of linking organizational strategy with a clear talent management strategy (Rothwell & Kazanas (2004). Talented organizations are adept at defining talent needs various discoveries of talent resources, the development of individual and collective talents of the organization, deployment of talent in ways that engage people to achieve objectives (Cheese ET al.2008). When these talent management skills are highly integrated, in line with the business strategy of the organization and embedded in its operations, it constitutes a particular organizational capability and a sustainable source of competitive advantage (Cheese et al, 2008). Thus, human resource management has an important and crucial role to play in organizations in the new economy. The role of the HR management has changed in response to the environment depending on the social, economic, political, conditions and advances in technology and it is still developing dynamically. The relative importance of many activities has changed from the external environment affecting the needs of organizations and it is still a dynamic area where methods of organizing the HR function change and evolve. This can help us to understand the diversity of roles that have in the organization. The most important roles are to review current issues that will consider the development of human resources in the future. To fulfill this role, organizations will need to assess their existing human resources, focused to skilled human resources with the best.

Summary

The evolution of human resource management has taken place through several stages beginning with the industrial revolution through the Hawthorne studies, scientific management, human relations movement, human resource management to the present time of strategic human resource management. The future of human resource management depends upon the management of talent in the organizations. . During the industrial revolution the major HR issues were working conditions and social patterns of behavior of employees. . The Western Electric Company experiments came to the conclusion that the collective decision of the members of the informal groups and not just pay and perks the formal organization offered, influenced the performance of workers. . Scientific management suggested a systematic analysis and breakdown of work into its tiny mechanical elements and arrange them again into their most efficient combination. . The behavioral scientists and management practitioners focused on the concepts like job enrichment and job enlargement to enhance workers’ commitment and reduce job monotony. . The Human Resource approach presumes that the job or the task itself is the basic source of satisfaction and motivation to employees. The human resource approach emphasized on involvement of the individual in the decisions made in the organization . Organizations that work for strategic use of HRM primarily focus on development of people so that it leads to improvements in organizational performance.