Items Description of Module

Subject Name Management

Paper Name HUMAN RESOURCE MANAGEMENT
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, Scientific Management, Human Relations
 QUADRANT –I

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 Human Relations Movement
 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 productivity. 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 motivation 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 organization 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:
 4

(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 control 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 organizations
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 Western Electric Company conducted a number of
similar experiments for about 12 years from 1927 by a team under the leadership of
Elton Mayo, a Harvard Business School 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 psychology 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 engineering 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 employee motivation 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 competition, 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 quality
management, reengineering business processes, performance management,
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 Management

Development 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: Talent 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.