MANAGING HUMAN CAPITAL AND ENTREPRENEURSHIP

LONDON SCHOOL OF COMMERCE

DHAKA AUGUST 2016

MHCE
Task 2
Udaya Jayasinghe

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LONDON SCHOOL OF COMMERCE
DHAKA AUGUST 2016

Introduction 3
Research methodology 3-4
HRM / SHRM 4-5
Personal Management 5-6
HRM 6-8
PM Vs HRM Comparison 8-9
HRM 9
HRM Vs SHRM 10
Conclusion 11
Summary 12
Understanding 12
Stand / Justification 12
References 13
Bibliography 14
Interviews 15

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DHAKA AUGUST 2016

INTRODUCTION

TOPIC
This is a report on understanding if SHRM is adding value to an organization
compared to Personnel Management.

STATEMENT
Critically examine how the HR function can be expected to add incremental
value to organizations performance as business transition from personal management
to strategic human resources management experienced.

KEY WORD FROM QUESTION

Personal management

Human resource management

Strategic human resource management

SOURCES
The author has gone through a number of sources such as books, journals,
websites and online database to understand the topics.

BOOK ARMSTRONG

BOOK HISRICH

BOOK JOHNSON ET AL

BOOK KOTLER & KELLER

JOURNALS

WEBSITES

VIRGIN

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RESEARCH METHODOLOGY

LITERATURE REVIEW & CRITICAL ANALYSIS

H UMAN R ESOURCE M ANAGEMENT
DEFINITION
Human resource management is a department within the organization which
combined with employment, development of the people who working in organizations
(Armstrong 2011, p.4).

STRATEGIC HRM
DEFINITION
Boxall (1996) explained that strategic HRM ‘is the interface between HRM and strategic
management’. It describe that as a strategic, integrated and coherent approach and
develops that in line with the concept of strategic management. This is an approach to
management that involves taking a broad and long-term view of where the business or part of
the business is going and managing activities in ways that ensure this strategic thrust is
maintained.

DISCUSSION
As stated in above the HRM role in the firm handling a key part like managing
people in a organised manner to succeed its goals and task. Activities like recruiting,
salary and other remunerations, reducing the absenteeism & labour turn over & the
current people are few examples. Furthermore, HRM covers training, coaching and
counselling and making sure the work place is safe and compliant with standards.
Gaining the employees trust and confident is also another key element so that people
will give their best to the organization willingly. Human resource is an important asset
and how well this asset is managed and looked after lies in the hands of HRM.

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DHAKA AUGUST 2016

PERSONNEL MANAGEMENT

DEFINITION

Personnel management is mainly involve with administrative function of an

organization that exists to provide the personnel needed for organizational activities
and to manage the general employee-employer relationship.

KEY RESPONSIBILITIES IN PERSONAL MANAGEMENT

 Involve with to advise and assist the staff in personnel matters.

 Motivates the employees through its effective incentive plans so that the
employees provide fullest co-operation
 Make sure the workforce is well trained and up to date in skills and knowledge
by conducting individual assessments and engage them with training and
educational programs. This also explains teaching the employees their rights,
and company and government policies related to human resource
management.
 Human resource also actively involved to ensure company maintains healthy
and safe working environment physically and mentally.
 Align and modify company policies, approach, addressing issues and workers
accessibility to human resource management teams to ensure their issues,
matters and concerns are duly attended and addressed.
 Developing inter department relationships at work place among the workers
in different sections, layers, or departments that will eventually contribute to
the value chain. Hence it is vital the work force is driving towards meeting
company’s common goals.

THE DIFFERENCE

Even 2 terms sound very similar and link the same field and area it has a
considerable difference between the 2 terms that can only identify with an in-depth
view on side by side.

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DHAKA AUGUST 2016
There are questions and views in the industry that the term Human Resource
Management is another term sounds bit complex and heavier than the traditional well
known personal management. But the experts says there is a significant qualitative
difference between the traditional personal management and human resource
management.

Traditional personnel management generally focuses on managing a workforce from

an administrative perspective. The key functions are to ensure workers are recruited,
orientated, enrolled, paid on time and have their issues and requirements addressed.
Whilst, Human Resource Management consider employees as a resource or an asset
and it is HRM's responsibility to develop this human capital to achieve the
organization's goals, which makes HRM more 'people-oriented.'

In summary, the modern HRM will carry all the characteristics of traditional personal
management and modified same to develop in focus to achieve more corporate goals,
strategies and objectives with more people based back ground.

The key differences between the traditional personal management and modern HRM
are the concept, scope, approach and execution.

PERSONAL MANAGEMENT VS HUMAN RESOURCE MANAGEMENT

COMPARISON CHART 1

Task Personnel Management Human Resource Management

Approach Traditional Modern

Treatment of manpower Machines or Tools Asset

Type of function Routine function Strategic function

Basis of salary Specific task Evaluation Performance Evaluation

Management function Transactional Transformational

Communication Indirect Direct

Collective Bargaining
Man power Management Individual Contracts
Contracts
Initiatives Piecemeal Integrated

Management Actions Procedure Business needs

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DHAKA AUGUST 2016

Decision Making Slow Fast

Job Design Division of Labor Groups / Teams

DEFINITION OF PERSONAL MANAGEMENT

It can be defined as obtaining, using and maintaining a satisfied workforce. It is a

significant part of management concerned with employees at work and with their
relationship within the organization. According to Flippo, “Personnel management is
the planning, organizing, compensation, integration and maintenance of people for the
purpose of contributing to organizational, individual and societal goals.” And also
According to Brech, “Personnel Management is that part which is primarily
concerned with human resource of organization.” Also personal management having
3 key elements that are Organization, Job, People

Operational function:

In the case of operational function in personal management are can be describe

as below procurement activities , Development , promotion, transfer & termination
functions , compensation activities, welfare task ,collective bargaining function ,.

Managerial function:

According to the Luther Gullick personal management is involve with

following task is called POSDCORB which means personal planning , Organizing
,staffing , Directing , coordinating, reporting and budgeting.

DEFINITION OF HUMAN RESOURCE MANAGEMENT

The first definition of HRM is that it is the process of managing people in
organizations in a structured and thorough manner. And it is a well-structured and
organized team of management which is concerned with the acquisition, development,
utilization, maintenance and coordination of people in an organization to give their
best to the enterprise. It refers to a strategic function of planning for the human
resource needs and demands, selection, training, compensation, and performance
appraisal, to meet those requirements.

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DHAKA AUGUST 2016
Human Resource Management involves in a continuous process to ensure the
availability of ideal and positively willing workforce to carry our organizations tasks
in the most efficient and effective way. HRM covers a wider spectrum of activities
that includes:

Assessing employment requirements

Recruitment and Selection

Training and Development

Employee Services, counselling

Salary and Wages

Industrial behaviors

Compliance and safety

Health and working conditions

Appraisal, assessment and recommendations

KEY DIFFERENCES BETWEEN PERSONNEL MANAGEMENT AND

HUMAN RESOURCE MANAGEMENT
The following are the major differences between Personnel Management and Human
Resource Management:

 The part of management that deals with the work force within the organization
is called Personnel Management. The team of management, which widely
focus on the best possible use of the organization’s man power is known as
Human Resource Management.
 Approach towards the workers in personal management is traditional while
HRM’s approach is more of modern approach.
 Personal management functionality is more of routine or on any specific
matter based whilst HRM is more of strategic based and towards meeting its
goals.
 Management role in personal management is more towards transactional and
HRM’s on transformational role.

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DHAKA AUGUST 2016
 In personal management the workers are rather pushed to perform their duties
and results where HRM is more on pulling the man power by training,
coaching motivating to deliver the results.
 Decision Making is slow in Personnel Management, but the same is
comparatively fast in Human Resource Management.
 In personal management, the pay is based on job evaluation, while HRM basis
of pay is performance evaluation. So better the performance, higher the pay
and man power is motivated to give their best.

HRM VS SHRM
Strategic HRM can be regarded as a general approach to the strategic management
of human resources in accordance with the intentions of the organization on the future
direction it wants to take. What emerges from this process is a stream of decisions
over time, which form the pattern adopted by the organization for managing its human
resources and define the areas in which specific HR strategies need to be developed.
HR strategies will focus on the specific intentions of the organization on what needs
to be done and what needs to be changed.

1. Talent management- how organization planning to win the talent people.

2. Continuous improvement –provide the focus and continuous incremental
innovation for sustainable period of time
3. Knowledge management – creating , acquiring, capturing ,sharing and used
knowledge to enhance the learning & performance
4. Resourcing – attracting & retaining the high talented human resources.
5. Learning & Development –creating an environment to encourage the people to
learn & develop
6. Reward polices- defining what the organization need to be in a long term scale
and implement policies, practices, and processes that will help for further
achievement in relate with the business goals.
7. For the shareholders - highlighting the importance of the employee relation
defining that intention of the organization what needs to be done what needs to
be change in order to manage their employee & trade unions.

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FIGURE 1: SHRM FREAME WORK

According to the above figure SHRM start from the business environment and then it
comes to organization vision, strategies, priorities & goals. To achieve that need to
have capability. In case of capability it comes to capable person it called talent. to
make an talent organization must have diversity environment & strategic & tactical
decision because talents can be identify through the organizational development ,
Performance development , Work force planning & staffing , Learning &
development & employee relation

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DHAKA AUGUST 2016
 CONCLUSIONS-
In 1990’s the industry was using the method called Personal Management to
manage the workforce in the organizations. As the industry got evolved, more
advanced and efficient methodologies were also introduced over the old management
theories and practices that were in place.

Accordingly Human Resource Management was superseded the Personal

Management giving it a new face, new meaning and most importantly a new value.
The definition itself carries a broader aspect that represent the theory, compared to
Personal Management.

Improvement has no limits or boundaries so is the management theories. Hence, the

Human Resource Management has further developed to the current Strategic Huma
Resource Management, adding more values, giving it a better position in the value
chain by making contributions and value additions through a proper human resource
management.

We have already noticed in the above studies, quotes, references the differences in
traditional personal management and HRM and further improved to SHRM.

It is the right practice to get all the forces, assets actively contribute in their own
unique ways to the total value chain and the process.

SUMMARY

Summarizing the expert’s quotes on PM, HRM, SHRM which shows below will give
a clear picture in a nutshell.

 Personnel management is a more of an administrative record-keeping function

that aims to establish and maintain equitable terms and conditions of
employment.
 Human resource management integrates the traditional personnel management
functions to corporate goals and strategies, and performs additional people-
centered organizational developmental activities.

Significant difference exists between personnel management and human

resource management in terms of scope, approach, and application.

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DHAKA AUGUST 2016
 SHRM is about aligning human resources with the strategic objectives of the
organizations that means that it provides the opportunity to integrate HRM
practices into its strategic plans by incorporating a HRM perspective into the
decision making. Strategic HRM explains how the work force will be aligned
to achieve company’s goals and objectives. It is based on three objectives as,

UNDERSTANDING

Author well understood the definitions, theories, practical applications and the
benefits that an organization and its workforces can gain over the 3 subject matters we
discussed, PM, HRM, SHRM

STAND

The author agrees partially with the question that SHRM is the best way to add value
instead of Personnel management.

JUSTIFICATION

Through the primary and secondary research, the author has the right to take this
stand.

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Reference

1.   "Functions Of Personnel Management: 1. Managerial Functions 2. Operative

Functions". YourArticleLibrary.com: The Next Generation Library. N.p., 2014. Web. 22
Aug. 2016.
2. "Human Resource Management (HRM) - Definition And Concept".
Managementstudyguide.com. N.p., 2016. Web. 22 Aug. 2016.
3. "Strategic Human Resource Management: HR Strategies". S-h-r-
m.blogspot.com. N.p., 2016. Web. 22 Aug. 2016.
4. "What Is Personnel Management? Definition And Meaning".
BusinessDictionary.com. N.p., 2016. Web. 15 Aug. 2016.
5. Clarkson, N. (2015). Richard Branson: Why delegation is crucial for success.
[online] Available at: https://www.virgin.com/entrepreneur/richard-branson-
why-delegation-is-crucial-for-success [Accessed 10 Aug. 2016].
6. KEARINS, K., LUKE, B. and CORNER, P., 2004. WHAT CONSTITUTES
SUCCESSFUL ENTREPRENEURSHIP? AN ANALYSIS OF RECENT
AUSTRALASIAN AWARDS EXPERIENCES. Journal of the Australian and
New Zealand Academy of Management, 10(2), pp. 41-55.
7. Kunert, K, Okole, B, Vorster, B, Brewin, N, & Cullis, C 2012, 'A general
model for training the next generation of biotechnology entrepreneurs based
on recent experience of USA-UK-South Africa collaborations', Journal Of
Commercial Biotechnology, 18, 3, pp. 62-66, Business Source Premier,
EBSCOhost, viewed 26 July 2015.
8. Maslow, A. H. (2012). A Theory of Human Motivation, Start Publishing LLC,
USA.

9.

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DHAKA AUGUST 2016

BIBLIOGRAPHY

1. http://s-h-r-m.blogspot.com/2010/07/hr-strategies.html
2. https://www.google.com.bd/search?
q=SHRM+models&biw=1366&bih=635&source=lnms&tbm=isch&sa=X&ved=0ahUKEwi2mNz
7ltXOAhVELY8KHSBzBR8Q_AUIBigB&dpr=1#imgrc=MoLvEz5EYF6CiM%3A
3. https://www.google.com.bd/?gws_rd=cr,ssl&ei=rISbV72jNsX8vATugpjoAQ#q=SHRM+models
4. http://www.academia.edu/11189754/The_Different_Models_of_Strategic_HRM
5. https://rphrm.curtin.edu.au/2009/issue2/integrated.html
6. http://www.academia.edu/4226708/Strategic_Human_Resource_Management_0_Strategic
_Human_Resource_Management

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DHAKA AUGUST 2016

APPENDIX A PRIMARY RESEARCH INTERVIEW WITH CEO NEW LINE

CLOTHING
Interview with Zakir Chowdhury (CEO / MD) of New Line Clothing Ltd.

Zakir, explained the industry when he started his small scale garment factory in 1990 with 2
Production Lines. He was a merchandiser when he start the career that was in 1990 at that
Bangladesh is little child in apparel industry. At that time Personal management was not so important
then as they were primarily engage in recruiting workers on just verbal interviews and all the data
maintenance were done manually. It was more of a supporting division to handle workers, their basic
working conditions, salaries and other payment processes etc. Production team and industrial
engineering team will share their man power needs and personal department done the recruitments
and manage them.

But since then we hear many new things added in to traditional personal management theories, the
name itself has changed to human resources, and term itself carries much weight. They get more
responsibilities entrusted, in to their JD’s and more than managing, the attitude was changed to
coaching, guiding and a “stand by” team of work force. He highlight that now a days in HR there is
separate designation created for the welfare officer who involve with directly sewing operators to
minimize absentee & turnover rates which is directly impacted factory performance. To reduce that
two areas he decided to give lunch facility for the workers, grievances collection desk, birthday
celebration & annual picnic which help to retain the skill workers within the organization.

He addd the his perception for the compliance he now actively involved in the compliance and safety
managements which is highly discussed in the industry nowadays. In compliance now a days
compliance has three main areas

1. Social compliance
2. Technical compliance
3. Fire & safety

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