European Journal of Economics, Finance and Administrative Sciences ISSN 1450-2275 Issue 29 (2011) EuroJournals, Inc. 2011 http://www.eurojournals.

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Current Trends and Future Directions of Human Resource Management Practices: A Review of Literature
Ogunyomi, O. Paul Department of Industrial Relations & Personnel Management University of Lagos, Nigeria E-mail: yomipaul@mail.com Shadare, A. Oluseyi Department of Industrial Relations and Personnel Management University of Lagos, Nigeria E-mail: seyidare2001@yahoo.co.uk Chidi, O. Christopher Department of Industrial Relations & Personnel Management University of Lagos, Nigeria E-mail: krischidi2002@yahoo.com Abstract The management of people at work has evolved over a long period of time right from the period of scientific management by Frederick Winslow Taylor. The label used to describe the management of people at work has been in a state of flux in response to the dynamic business environment. It began as labour administration at the turn of the 20th century, and then changed to labour and staff administration in the 1920s. The label later changed to personnel administration in the 1950s. In the 1960s the descriptor for people management changed to personnel management. In the 1980s as a result of the influence of globalization, the adopted descriptor for the management of people changed to human resource management. As of now many commentators are of the view that the label be called human capital management as humans are viewed as assets and not cost that requires investment to impact on the bottom line. The HRM is a combination of themes and concepts drawn from a long history of work, more recent management theories and social science researches. There is an avalanche of literature on HRM; the process of convergence of divergent views in the field of HRM makes it an interesting area of study. The focus of this paper is therefore to review the available literature, and to evaluate the current trends with a view to projecting the future directions of human resource management.

Keywords: Human Resource Management; Current Trends; Future Directions.

1.0. Introduction
The management of people at work has evolved over a long period of time right from the period of scientific management by Frederick Winslow Taylor. The label used to describe the management of people at work has been in a state of flux in response to the dynamic business environment. Strong time related element exists in association with the accelerating changes in todays world of business. The adequacy of today cannot be guaranteed to ensure the sustainability of the resources in the nearer

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future. Human resource management plays a strategic role in ensuring the adequacy and adaptability of the organisation to its complex environment in this rapid changing world. At the organizational level, reorganization of work, processes and the way employees affairs are dealt with are integral parts of todays work-life. The philosophy guiding how people are selected, appraised, trained, motivated and developed is continuous subject to changes in the operating milieu. Human Resource Management (HRM) is a multi-disciplinary subject which draws its theories and practices from many sources. It is an evolving discipline and it keeps changing in scope and nomenclature. It is always responding to changes in the environment in order to keep pace with the ever turbulent and unstable micro and macro business environment. According to Fisher, Schoenfeldt and Shaw (2007), the history of HRM can be divided into two; the evolving state from craft system, scientific management, the human relations approach, the current organization science; human resources approach and the twentieth century development with the transformation to its present form engendered by business and social dynamics of the 1960s and 1970s. Armstrong (2001) posits that nothing has changed in the way people in work organizations are managed, but HRM has had to adjust itself to the changing environment of global competition, new technology, and new methods of working and organizing work. HRM emerged in the early 1980s as a response of US to the economic success of Japan (Jones, 1996). Blyton and Turnball (1992) distinguish two approaches to HRM; namely Harvard Model which has great influence on academics and Michigan School. Harvard model emphasises the need for line managers to accept more responsibilities for ensuring the matching of competitive strategy and personnel policies and to develop policies that encourage the development and implementation personnel activities which make them interwoven. Michigan school on the other hand suggests that HR systems and organisation structure should be managed in such a way that makes possible the alignment with organisational strategy. This paper set out to review relevant literature on human resource management practices, as well as the periodised history of human resource management with a view to identifying current trends and future directions of human resource management.

2.0. Review of Relevant Literature

According to Beach (1975) as cited in Fajana (2002), industrial revolution of the early 1800s made the management of people at work a complex and challenging field of endeavour. Managing people at work has evolved through the following labels. Labour Administration Labour and Staff Administration Personnel Administration Personnel Management Human Resource Management Strategic Human Resource Management Human Capital Management Labour Administration era was when workers were treated as just one of the factors of production. It is entrenched in the division of labour and payment of wages as incentives to increase output. The managers in this era were considered generalist (Ubeku, 1978). Labour and Staff Administration Period: This is an extension of the labour administration era. The period was characterized by relatively stable employment, hence the staff was added. The physical conditions of employment were the major source of conflict at this period. Personnel Administration as a label was adopted when paradigm shifted from viewing workers as mere factor of production. Hawthorne studies conducted by Elton Mayo, the leader of Human Relations School, greatly influenced the practice of people management at this period. Workers ceased to be seen as mere economic agent or machine but social being. Majority of scholars whose work held sway at this period were mainly motivational theorists.

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Personnel Management era was greatly influenced by the events of the Second World War, which brought about untold hardship on workers as well as their scarcity. According to Fajana (2002), the label; Personnel Management was adopted from the 1940s until the 1970s. The dominant management thought and practice at this period were premised on the recognition of individual differences and personality traits. Human Resource Management era recognized the impact of contextual variables (environment) on the practice of managing people. The identified contextual variables are globalization, market, technology, economy etc. Many scholars suggested at this period that based on the large scope and complexities in personnel functions, the label HRM would be the most appropriate. Issues such as Total Quality Management (TQM), Globalization, Work Flexibility, Outsourcing, Re-Engineering etc dominated this period. Strategic Human Resource Management (SHRM) era was the one in which scholars saw HR as a potential source of competitive advantage, since employees are one of the many strategic resources according to the resource based approach. SHRM is responsible to align HRM activities to corporate strategy. 2.1. Strategy and Human Resource Management Boxall (1992) contends that integrating strategy and HRM is problematic as both concepts are controversial and contested. Identifying the key elements in the theory of HRM, Guest (1989) highlights strategic integration, high commitment, high quality and flexibility. Legge (1989) argues that the contradictions which exist in HRM are more of representations of the fundamental contradictions of capitalism than anything else. Taking a different position, Ahlstrand and Purcell (1988) see SHRM as discrete activities such as Manpower Planning or Training and Development. Instead SHRM is concerned with those fundamental choices which fundamentally influence employee relations outcomes such as decisions about location and deployment of personnel management at corporate, divisional or establishment levels and the integration or separation of internal labour markets. Distinguishing strategic and non-strategic HRM, Miller (1991) suggests that non-strategic HRM can be identified by a number of characteristics; separate from the business; reactive and shortterm; of no interest to the Board of Director; constrained by a legalistic and institutional definition that focuses on lower-level employees. However, many scholars have noted HRM as a source of potential competitive advantage and the matching model Forbrun, Tichy & Devanna (1984) is based on the view that human resource practices should match and support business strategy. Kamoche (1994) points out that the application of business models leads to an emphasis on shortermism and financial rationalization which is against developmental humanism aspects of HRM. Hence, SHRM is propelled by organizational imperatives of immense managerial control through the legimatory device of strategy and HRM practitioners attempting to achieve higher status. 2.2. Movement from Personnel Management to Human Resource Management Jones (1996) observes that the emergence of HRM as a concept at the beginning of 1980s encouraged most British universities and business schools to establish departments of HRM. Despite this, it remains cloudy that the practices of Personnel Management have been overtaken by HRM.Torrington and Hall (1991) note that the use of the term HRM has encouraged the dispassionate view of the functions in two senses: The first one is that there has been a paradigm shift from the conventional personnel focus with staff welfare issue of identifying with economic, psychological and social needs of employees to more attention on a business centre approach. Jones (1996) observes that employees see personnel staff as nice people who help them to adjust to unpleasant circumstances of life. The new business centred HRM focuses more on the achievement of the set goals than staff welfare. The second way HRM has led to dispassionate of personnel role is taking decisions based on the result of research exercise and not on the need to pacify employees.

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The Changing Practice of Functional Areas of People Management The extent of changes may not be appreciated in the practice of people management until they are examined in the operative functions of people management namely; Manpower Planning, Recruitment and Selection, Compensation Management, Training and Manpower Development, Employee Appraisal, Employee Motivation, and Industrial Relations. 2.3. Training and Manpower Development to Human Resource Development The competence of an organizations workforce has become increasingly important to its performance, competitiveness, and innovation (Lawler, Mohrman & Ledford, 1998). Training is defined as the systematic acquisition and development of the knowledge, skills, and attitudes required by employees to adequately perform a task or job or to improve performance in the job environment (Lathan, 1988). However, training is often criticized for being too expensive and not improving the bottom line. In view of some perceived shortcomings of training and manpower development, strategic approach to HR shifts attention to HRD which is defined as a set of formal organizational and individual practices that are designed to enhance the potential contribution of human resources to the organization (Holton, 2000). In addition, it is claimed that the dynamic external environments in which many businesses currently operate within requires that they develop a capacity to learn more effectively and faster than competitors and to find methods and skills to solve complex problems. Although, according to Jones (1996) the HR department still controls the core curriculum of training: business awareness programs supervisory skills, team building, First Line Managers (FLMs) have responsibility for the more technical/specialist training. The management and strategy literature claims that organizational competitiveness in the long term depends on the effective learning at both individual and organization levels. Most organizations do not want to train these days but rather buy the type of employees they require through external recruitment. 2.4. Recruitment and Selection to Employee Resourcing /Human Capital Resourcing Unlike in the past when the personnel managers duties were summarized as hire and fire, and the organization is bloated with high labour cost, the current trend is to device means of reducing the workforce to a few number of competent, sound and knowledgeable employees with abundant functional skills. The earlier commitment to provide a permanent job has changed drastically and short term contracts, outsourcing and temporary or agency staff are being used in more recent times. The short-term contract (pink) staff are engaged for periods of up to 2 years, but there is no security and can be terminated at any time if the company wishes (Jones 1996). Job freeze is in vogue in most of the strategic oriented companies. Changes in employment policy of most organizations which place greater emphasis on short-term cost-savings at the expense of long-term investment will inevitably result in a decline in the number of employees on their pay roll. The change in the area of recruitment is widespread; though differences exist due to the changes in the labour market and economic environment. 2.5. Wages and Salary Administration to Strategic Reward Management Reward management is concerned with, according to Armstrong (2007) with the formulation and implementation of strategies and policies that aim to reward people fairly, equitably and consistently in accordance with their value to the organization. Basically, reward management has three major objectives; To attract skilled manpower to the organization To motivate and maintain employees to higher performance To retain skilled employees An employee reward forms a major part of cost of production, which takes a significant part of profit hence; employers keep an eagle eye on what is being paid to employees. Employees on the other

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hand expect pay that will enable him/her to have a decent life. The employee reward has three major components, namely basic pay, benefits and incentives. To gain a competitive advantage, organizations shifted attention from mere wages and salary administration to strategic reward management. Reward strategy defines the intentions of the organization on how its reward policies and processes should be developed to meet business requirements. Since payroll costs constitute major part of total costs incurred by an organization, this necessitates the need to adopt a strategic approach to reward which ensures that there is adequate return on investment in pay. 2.6. Employee Performance Appraisal to Performance Management Hitherto, employee performance appraisal is done centrally and annually after the input of the immediate supervisor. The outcome is then determined by the personnel office. With the strategic HRM in focus, appraisal is now the sole responsibility of first line managers (FLMs), getting support when requested from the HR department (Jones 1996). Hence, FLMs are actively encouraged to take greater responsibility for the appraisal and reward of their own staff.
HRM and major HR activities

Resourcing

Appraisal

HRM

Development

Reward
Source: Adapted from Price (2004) HRM in Business Context.

HRM links four major people management activities resourcing, appraisal, development and reward. There is also the emergence of upward appraisal and the 360 degrees appraisal system as against the conventional superior-subordinate appraisal which in most cases are not open but confidential.

3.0. Conclusion and Future Directions

The expectation and demand that personnel should be seen to add value to the business in the same way as any other department, is a driving force for change. This has placed greater demand on HR professionals to be concerned more on business issues than the welfare vote. Schuler and Jackson (1987) posit that the major difference between personnel and HR Management is the degree at which employee related issues are integrated into corporate and business strategy. From the literature reviewed, it is evident that there has been a contraction of personnel activities, with staff welfare issue being relegated to the background and business-centred approach to employee relations being given prime of place. The pressures from the external environment of business have also influenced to a great extent the practice of people management. The future of people management will continue to witness a lot of changes as long as the internal and external environments of business are dynamic. As business

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managers grapple with these challenges, so will they formulate and implement strategies that will place them at a competitive advantage. Changes in the employment of staff will place greater emphasis on short-term cost-savings at the expense of long term investment which will make business organizations to constantly trade-off with make or buy strategies. Unlike in the past when fresh graduates were employed without the requisite skills and subsequently trained, most organizations now prefer to poach experienced staff from competitors without having to place huge investment on staff training and development. Implementing HR strategy, most organizations will operate lean organization with most of non-core activities either outsourced, part-time or contract staff or are handled by temporary staff in such units. The social contract that promised job security in exchange for psychological contract and employee loyalty has been a thing of the past. Most business organizations strategically downsize, right size, restructure, and lay off due largely to harsh economic realities engendered by global economic meltdown which started in the US and spread to other parts of the world. Information technology has necessitated the need for todays workers to be not only computer literate but computer expert. It is now knowledge -based economy with players highly equipped with technical skills. To remain relevant and strategically necessary, HR practitioners must keep on updating their skills and should not be complacent in confining themselves in the performance of their traditional roles but should, as a matter of necessity be ready to be a jack of all trades; master of all. The era of arm -chair HR management is over, they should be ready to demonstrate quantitatively and qualitatively their contributions to the bottom-line; which is profit to relevant shareholders. It is when they have successfully done this that Chief Executive Officers (CEOs) will accord them the deserved recognition, and cease to see them as cost centre vis--vis cost raising professionals. Not only as the study of dynamic environment of business remains pertinent, it is the propeller that dictates the pace and type of strategy business organisations adopts in order to have competitive advantage hence; its study and mastery cannot be overemphasized for HR managers that know their onions. Business organisations are becoming diversified in terms of personnel and operations. The import of this for HR managers is a whole knowledge of the different nationals, gender, generational gap, occupational groups, who have been assembled in business organisations due to the forces of globalisation and dynamic but turbulent business environment. Labour is becoming more mobile occupationally and geographically hence; even if organisation wants to offer job security as a membership motivational tool, workers are not ready to spend their entire life in one organisation and location as the current and future work-force is upwardly mobile and itchy-footed. The future HR manager must be technically and quantitatively sound; must be able to use metrics to drive home the points of being strategically relevant to the profitability objective of the organisation. HR must be able to justify every dime being spent on employees in form of training, incentives and other non-financial rewards. HR management is about to witness highly automated activities in which the whole HR department of large organisations even multi-nationals will be run by just four or five specialists. Hence, sound knowledge of informational technology (IT) that goes beyond just entering data but computer programming is a necessity. Moreover, an HR manager that will succeed in future will know more than HR; sound business knowledge and its language will be one of the prerequisites for relevance and survival of practitioners.

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