The Development of HRM in Historical and International Perspective
Abstract and Keywords
The human resource function in the business enterprise has its origins in the rise of modern industry in the late nineteenth century. This article provides a survey of its historical development both as a functional area of management practice and as an area of research and teaching in universities. Although, for reasons to be described, the bulk of attention is on the United States, The article endeavors to put the subject in an international context. Also provided is an account of the field's progress, shortcomings, and controversies.
The human resource function in the business enterprise has its origins in the rise of modern industry in the late nineteenth century. In this chapter, I provide a survey of its historical development both as a functional area of management practice and as an area of research and teaching in universities. Although, for reasons to be described, the bulk of attention is on the United States, I endeavor to put the subject in an international context. Also provided is an account of the field's progress, shortcomings, and controversies.
(p. 20) 2.2 The Origins and Early Development of HRM
Viewed as a generic activity involving the management of other people's labor in production, human resource management (HRM) goes back to the dawn of human history. The first visible roots of the HRM function as practiced today in modern business organizations appeared in the late nineteenth century more or less contemporaneously in England, France, Germany, and the United States. Japan experienced a broadly similar development a decade or so later.
The generic practice of HRM does not require a formal human resource department or any specialized personnel staff. This was the arrangement practiced in most late nineteenth- to early twentieth-century enterprises, even in large-size factories and mills employing several thousand people. The HRM functions of hiring, training, compensation, and discipline/termination were performed in alternative ways. Considerable reliance was placed on the labor market, for example, to set pay rates and provide motivation for hard work (through the threat of termination and unemployment), while other HRM functions were done by the owner or plant manager or were delegated to foremen and inside contractors. Interestingly, this arrangement is still the norm today in many small firms. In their national survey conducted in the mid-1990s, for example, Freeman and Rogers (1999: 96) found that 30 percent of the American workers were employed in firms that had no formal HRM department.
The modern HRM department grew out of two earlier developments. The first was the emergence of industrial welfare work. Starting in the 1890s, a number of companies started to provide a variety of workplace and family amenities for their employees, such as lunch rooms, medical care, recreational programs, libraries, company magazines, and company-provided housing (Eilbirt 1959; Gospel 1992; Spencer 1984). Frequently, a new staff position was created to administer these activities, called a ‘welfare secretary,’ and women or social workers were often appointed. The impetus behind welfare work was an amalgam of good business, humanitarian concern for employees, and religious principle. German companies were pioneers in welfare work in the nineteenth century, but employers in all the industrializing countries participated.
The second antecedent was the creation of some type of separate employment office. These offices, often staffed by one or several lower-level clerks and supervisors, were created to centralize and standardize certain employment-related functions, such as hiring, payroll, and record-keeping. The introduction of civil service laws in several countries also led to the creation of employment departments in various levels of government. A stand-alone employment office reportedly existed in large European companies as far back as the 1890s. Farnham (1921) (p. 21) reports, for example, that the German steel company Krupp had a long-established Personnelbüro to handle staff administration, while the French steel firm Le Creusot had a similar Bureau de Personnel Ouvrier. The earliest employment department in America is reported to have been established at the B. F. Goodrich Co. in 1906 (Eilbirt 1959). The movement to create a separate employment department in American firms started to coalesce in 1912 with the formation of the Boston Employment Managers Association. Quickly the term ‘employment management’ became the accepted descriptor for this new management function and in 1916 it had spread widely enough to support the creation of a nationwide Employment Managers Association.
The rise of the employment management function is tightly linked with another seminal development—the emergence of the doctrine and practice of scientific management (SM). The first professional/scientific writings on business organization and management appeared in the early 1880s in the United States, authored primarily by engineers. The engineers sought to use principles of science to increase the efficiency of business production systems. Inevitably they were led to consider the ‘people’ side of production, including methods of employee selection, job assignment, supervision, work pace, and compensation. This new approach found its most influential and strategic formulation in the writings of Frederick Taylor, particularly his book Principles of Scientific Management (1911). In America, employers' interest in applying SM to labor management was substantially heightened by two new and much publicized empirical findings reported in the early to mid-1910s. The first was the huge cost of employee turnover (often in excess of 100 percent annually); the second was the cost savings from the recently inaugurated industrial safety movement (Jacoby 1985).
The First World War had a great impact on the development of the HRM function throughout the industrial world (Eilbirt 1959; Kaufman 2004a). The major combatants sought to harness their economies to maximum war production, greatly stimulating the pressures to rationalize management and achieve higher productivity. Governments in several countries sponsored research on industrial fatigue and instituted screening tests for new recruits into the armed forces (Baritz 1960; Niven 1967). Likewise, war production led to an economic boom and dramatically higher employee turnover rates, escalating wage pressures, and problems with discipline and work effort. Finally, labor unrest, strikes, and union organizing greatly mounted—factors that, with the Bolshevik Revolution in Russia in 1917, caused widespread concern that the ‘Labor Problem’ was on the verge of boiling over into revolution in other countries. Out of this fear was born, in turn, a new movement for industrial democracy (Lichtenstein and Harris 1993). In response, companies expanded welfare activities, created new employment departments, and in hundreds of cases established shop committees and employee representation plans.
In the American context, two new terms for labor management quickly emerged. The first of these was personnel management (or personnel administration). By the (p. 22) end of the war many American firms took the two functions of welfare work and employment management and combined them into a new department called personnel management. At the time, this was framed as bringing under one roof both the ‘employment’ and ‘service’ parts of the HRM function. Some European firms also used the ‘personnel’ term, but particularly in Britain the most common descriptor through the 1920s remained ‘welfare work.’ Illustratively, the first professional employment association in Britain was the Association of Welfare Workers, established in 1913, and it did not change its name to Institute of Labor Management until 1931 (Niven 1967). The ‘personnel’ term, in turn, did not become widely accepted until after the Second World War (Chartered Institute of Personnel and Development 2005). In continental Europe, a number of firms established employee ‘social’ departments, again emphasizing the welfare side of personnel management.
The second new term was industrial relations (occasionally also called ‘employment relations’). The industrial relations term came into widespread usage in the USA and Canada in 1919–20, not coincidentally at the same time as corporate worries about labor unrest and government regulation were at a peak. The term was not, however, widely adopted in other countries until after the Second World War and then typically with a narrower (union management) meaning.
In early usage, the subject domain of industrial relations was the entire employer–employee relationship (Kaufman 2004a). In the corporate world, it was conceived as representing a more broad-based and strategic (‘management policy’) approach to labor management, including the subject of workforce governance. Industrial relations thus subsumed the narrower employment function of personnel management, just as personnel management subsumed employment management and welfare work. In this vein, Kennedy (1919: 358) states, ‘employment management is, and always must be, a subordinate function to the task of preparing and administering a genuine labor policy, which is properly the field of industrial relations.’
During the sharp recession of 1920–1 many companies disbanded their newly formed personnel departments, partly as a cost-saving measure and partly because employee turnover and the threat of unions dissipated. The setback was temporary, however, and over the rest of the 1920s the personnel/industrial relations movement gradually regrouped and resumed growth. Jacoby (1985) provides these suggestive data: in 1915 perhaps 3–5 percent of workers employed in medium–large firms (over 250 employees) had a personnel/IR department; by 1920 this figure had increased to 25 percent and to 34 percent by 1929. By 1929 over one-half of firms with over 5,000 employees had a formalized HRM function. In the vanguard of the movement were leading corporate giants in the 1920s Welfare Capitalist movement, such as AT&T, Standard Oil, Dupont, and General Electric, and small- to medium-size firms run by progressive owner/entrepreneurs, such as Dennison Manufacturing and Plimpton Press. These firms abandoned the pre-war ‘market’ (p. 23) model of HRM, in which labor was traded and used more or less like any other commodity, and moved to what labor economist John Commons (1919) described as a combination of a ‘machine’ (scientific management), ‘good will’ (high commitment), and ‘industrial citizenship’ (democratic governance) model. Also noteworthy, Commons (1919: 129) used the term ‘human resource’ to connote the idea that investment in human skills and education makes labor more productive and counseled employers to take a strategic approach to labor, observing that ‘[employee] goodwill is a competitive advantage’ (1919: 74).
If there were two themes that pervaded the 1920s HRM literature, it was that labor must be looked at as a distinctly human factor and that the central purpose of HRM is to foster cooperation and unity of interest between the firm and workers (Kaufman 2003a). To achieve these goals, the leading practitioners of Welfare Capitalism created extensive internal labor markets (ILMs), complete with what Leiserson (1929) called the ‘crown jewel’ of the Welfare Capitalist movement—the employee representation plan. These plans were early forerunners of modern forms of participative management and employee involvement (Taras 2003; Kaufman 2000a). Many of the specific employment practices in these companies were tactical in nature and administered by lower-level personnel staff. The overall design and mission of these new HRM programs, however, was done at the highest executive level with clear-cut strategic goals in mind. Indeed, the need to take a strategic approach to HRM was widely cited in the 1920s. For example, in the first article in the Harvard Business Review on the new practice of HRM, titled ‘Industrial Relations Management,’ the author (Hotchkiss 1923: 440) tells readers, ‘When, however, we pass from tactics to the question of major strategy, industrial relations management is essentially functional rather than departmental. … [It] deals with a subject matter which pervades all departments. … [and] must to succeed exercise an integrating, not a segregating, force on the business as a whole.’
Not only did the practice of HRM take root and start to develop in major companies in the USA in the 1920s; so too did a supporting infrastructure of journals, associations, consulting firms, and university teaching and research programs. After the Industrial Relations Association of America folded, a new association called the National Personnel Association was founded. It later became the American Management Association. Also founded in 1922 was the Personnel Research Federation which promoted academic and industrial research and published it in the Journal of Personnel Research. In 1926 industrialist John D. Rockefeller, Jr. donated funds to start the nation's first large-scale (non-profit) HRM consulting/research organization, Industrial Relations Counselors, Inc. (Kaufman 2003b). In the academic world, the first personnel textbook appeared in 1920, Personnel Administration by Tead and Metcalf, and was shortly followed by several others. In 1920 the University of Wisconsin was the first to offer an area of study in industrial relations (comprised of coursework in personnel management, labor legislation, industrial (workforce) government, and unemployment) and (p. 24) in 1922 Rockefeller donated funds to Princeton University to establish an Industrial Relations Section, the first academic unit in an American university dedicated to research on HRM practices in industry. During the 1920s a number of business schools also introduced courses on personnel management. Institutional labor economists were the largest contingent of researchers and teachers on labor management, but a small cadre of academics from industrial psychology and commerce were also active in the field (Kaufman 2000b).
The development of HRM in other countries during the 1920s was slower, more piecemeal, and less strategic. Industrialization, for example, was less advanced or on a smaller scale in a number of countries. Australia is a case in point. In the mid-1920s there were perhaps six full-time welfare workers in the entire country (Hinder 1925) and only during the Second World War production boom did labor management departments start to appear (Wright 1991). Even in countries with large-scale industry, HRM lagged behind. One person estimated that the development of labor management in Britain in the early 1920s was five years behind America (Fryer 1924). Also illustrative is the remark of Mary Fleddérus, a Dutch welfare manager (quoted in Journal of Personnel Research, 1/1: 175) who stated in 1922, ‘Broadly speaking, welfare work in Holland seems to me, as in other countries, to have arrived at a transition state. I have the impression that it chiefly looks to America for the lines on which it will go on working.’ In a similar vein, Englishman Harold Butler (1927: 107) observed, ‘The American literature on the subject [industrial relations] probably exceeds that of the rest of the world put together.’
To be sure, there were advances in HRM research and practice outside America in the 1920s. German academics and industrial researchers, for example, pioneered a new field called Arbeitswissenschaft (science of work) which explored subjects such as ergonomics, fatigue, and job satisfaction (Campbell 1989). Next to the USA, Germany was also the most active site for work in the new fields of industrial psychology (called ‘psychotechniks’) and industrial sociology. In Britain, little work was pushed forward on labor management or industrial psychology and sociology in universities during the 1920s, in part due to the tepid interest of the British in scientific management principles (Guillén 1994). Burns (1967: 198) notes, for example, that British academics had an ‘ideological bias against business and against internal studies of business undertakings.’ Some vocational training and applied research in labor management was sponsored, however, by the government, the Institute of Welfare Work, and technical schools. Limiting the development of HRM in not only Britain but all of Europe was, in addition, the fact that these countries were more advanced than the USA with regard to labor legislation, social insurance programs, and trade unionism, all of which reduced the opportunity and incentive for European employers to take a more individualized and strategic approach to labor management (Rodgers 1998; Kaufman 2004a).
Perhaps the country outside the USA that saw the most significant advance in HRM practice during the 1920s was Japan. Japan was an early and enthusiastic (p. 25) adopter of Taylor's credo of scientific management and, more so than in England, France, and Germany, Japanese employers strove to implement it (Merkle 1980; Tsutsui 1998). In the 1920s a number of individual employers and government-sponsored business groups from Japan visited the USA specifically to observe American industrial practices and they took back and adopted (with modifications) a number of elements of the Welfare Capitalism project. An association of academics, business managers, and government officials, called the Kyochokai (Society for Harmonious Cooperation), was formed to promote improved industrial relations practices, and the first labor management consultants appeared (Gordon 1985; Kinzley 1991). Japanese firms began to develop ILMs, created personnel/IR departments, and started numerous HRM practices such as recruiting programs, hiring tests, incentive wage plans, job evaluation programs, and shop committees (Dore 1973; Hazama 1997; Jacoby 1991). These practices were also fostered by the American corporations that had branch plants in Japan.
A notable event in the history of HRM is the world's first international conference devoted to the subject. Held in Flushing, the Netherlands, in 1925, it was titled International Industrial Welfare (Personnel) Congress. The conference lasted seven days and featured first-hand reports on the status of the welfare/personnel movement in twenty-two countries. The conference organizers chose to call it a congress on ‘welfare work,’ since this title was the most common in Britain and British colonial territories (India, South Africa, etc.), but put the word ‘personnel’ in parentheses in recognition of the shift in nomenclature in the United States. The conference proceedings explained that the term ‘welfare work’ was used in a broad sense to include personnel management activities, but nonetheless its use gave emphasis to what was described as the ‘paternal and social side’ (p. 45). It goes on to say that the term ‘personnel’ as used in the USA stresses that the function is ‘recognized as part of the Management’ and that personnel is not just a staff function but includes ‘anyone who supervises employees, from the assistant foreman to the president’ (p. 46). Several years later the association abandoned both the welfare and personnel terms and adopted the name ‘International Industrial Relations Association’ (Kaufman 2004a).
2.3 The Middle Period: 1930–1965
From its birth in the mid-1910s to the late 1920s, the new management function of HRM made considerable progress and was quite favorably viewed by academic observers in the United States. Illustratively, labor economist and mediator William Leiserson (1929: 164) concluded, ‘when the contributions of personnel (p. 26) management are recapitulated in some such fashion as we have attempted, the result is bound to be an impressive sum.’ Stated another labor scholar (Slichter 1929: 432), ‘modern personnel methods are one of the most ambitious social experiments of the age.’
Over the next ten years, however, the prestige and influence of HRM, and particularly the strategic ‘goodwill’ version associated with the Welfare Capitalist movement, took a dramatic nose-dive. The Great Depression began in late 1929 and the economy went into a downward spiral until in early 1933 gross domestic product had fallen 30 percent and one-quarter of the workforce was unemployed. The economies of other countries followed suit and, indeed, Great Britain had started the descent earlier.
Companies had no choice but to retrench and look for deep cost savings. The term ‘rationalization’ became an oft-used phrase on both sides of the Atlantic. Thus, smaller, less profitable, or less progressive companies first began to cut wages, make lay-offs, and disband their personnel programs. Then the pressures of competition and imminent bankruptcy forced the others to fall in line, leading even the vanguard of Welfare Capitalist companies to start liquidating labor (Cohen 1990). Doing so of course meant losing their costly investment in employee goodwill, but without profits they could not afford a progressive HRM program and mass unemployment solved the turnover and selection problems and provided a highly effective alternative method for inducing hard work and compliant behavior. Surveying the wreckage created by the Depression, Leiserson (1933: 114) observed, ‘depression has undone fifteen years or so of good personnel work.’ Presciently, he also noted, ‘labor is going to look to legislation and not to personnel management for a solution of the unemployment problem.’
Public policy in the United States made a dramatic U-turn in order to solve the economic debacle. The Roosevelt administration launched the New Deal in mid-1933 and attempted to stimulate purchasing power by raising wages and household income through minimum wage laws, social insurance programs (unemployment and old age insurance), mass unionism, and public works spending. Government intrusion into employment relations thus noticeably increased. Most worrisome to business, the New Deal encouraged workers to join unions and they did so by the millions. In the space of five years, union density almost doubled in the United States and the bulk of the mass production industries were unionized. Suddenly, unilateral employer determination of wages, conditions, and employment procedures through HRM was replaced by joint determination through collective bargaining. To help ensure that collective bargaining displaced the Welfare Capitalist non-union HRM model, the employer-created representation plans were legally banned (Kaufman 2000a). The extent of change was even greater in some other countries, such as Germany and Japan. Fascist governments came to power, banished opposition political parties and trade unions, extended a tight grip of state control over industry, and mobilized their economies for war.
These events had both positive and negative repercussions on the HRM function (Jacoby 2003). On the positive side, the rapid spread of collective bargaining actually worked to the advantage of HRM in several ways. For example, in an effort to avoid unionization many companies quickly established or strengthened their personnel programs. Also, once the companies were unionized they needed to add personnel and labor relations staff to conduct collective negotiations with the union and administer the contracts. And, finally, unions pushed for wage standardization, job classification systems, formal grievance systems, and written employment rules, all of which required personnel/labor relations staff to develop and administer. The new government labor and social insurance laws had much the same effect.
But there were also several distinctly negative effects. The early part of the 1930s effectively eviscerated many corporate labor programs and left others badly weakened. The HRM function had also lost a great deal of professional prestige, worker confidence, and public approval. Now HRM appeared to many people as a largely empty promise, a set of techniques to manipulate workers, and a covert tool for union avoidance. Most damaging, however, was HRM's loss of power and influence at the strategic level. While the tactical and administrative parts of HRM may have experienced net growth in the latter part of the 1930s, the new collective bargaining model had little place for the strategic component built on the unitarist/mutual-gain (and paternalist) vision of Welfare Capitalism. Collective bargaining was now widely seen as the preferred method to govern and administer employment, unions were the new source of innovation and strategic change, and cooperation and goal alignment were replaced by conflict of interest, power balancing and adversarial negotiations (Kochan et al. 1986). Indicative of this new viewpoint is the dramatic turn-around of opinion of Leiserson. By the late 1930s he has abandoned the non-union HRM model and declares: ‘Popular judgment now favors collective bargaining … The organization of labor and collective bargaining [are] necessary and inevitable’ (1938: 40, 43).
The events and pressures associated with the Second World War amplified and extended these disparate trends in HRM in the United States. In most of Europe and Asia, HRM had gone into arrested development in the 1930s and then largely disappeared amidst the economic devastation of the Second World War. Illustratively, the International Industrial Relations Association continued to hold conferences in Europe in the 1930s but the topics shifted from plant-level personnel work to world economic planning, and then, with the outbreak of war in 1939, the association disbanded (Kaufman 2004a).
During the war both collective bargaining and government regulation of employment expanded and solidified in the United States, thus further limiting HRM's independent room for maneuver. But there were also a number of positive developments. The hiring boom set off by the war created a need for recruitment and selection specialists, while concerns with holding down turnover grew apace. (p. 28) Likewise, the mushroom growth in new war-related production plants and hiring of inexperienced workers created a huge need for training programs and staff. In order to comply with government wage control programs and prevent strikes, companies also had to implement new job evaluation procedures and systematize and formalize their compensation procedures. And, finally, employee benefit programs proliferated during the war since benefits fell outside the government's wage control program. The net result was a considerable expansion of personnel programs and departments. Data provided by Jacoby (1985), for example, show that only 39 percent of companies in 1929 with 1,000–5,000 employees had a personnel department, while in 1935–6 this ratio rose to 62 percent and then to 73 percent in 1946–8.
The United States emerged from the Second World War as the undisputed world economic leader. Much of Europe and Asia lay in ruins. Over the next fifteen years American industry enjoyed a golden age, Germany and Japan picked up the pieces and started on a sustained industrial recovery, Great Britain slowly advanced in absolute terms but declined in relative terms, and many nations in South America, Asia, and Africa started to join the industrial world.
In a number of respects the two decades after the Second World War period saw further advance in American HRM. Nonetheless, the field entered the 1960s with a pervading sense of low status and marginal importance.
In the 1920s many large-sized firms still did not have any organized HRM function; by the mid-1950s nearly every medium–large-size company had one. Furthermore, these departments were adding staff, taking on new duties, and growing in importance. American firms grew in size during this period, partly as plant size expanded to take advantage of economies of scale and partly due to mergers, acquisitions, and the rise of the conglomerate corporation. As Jacoby (2003) notes, the 1950s was the era of the ‘organization man,’ symbolized by the rise of mega-corporations, such as General Motors, IBM, and Sears Roebuck, and the swelling ranks of middle management and white-collar technicians and staff. With increasing corporate size came a need for more systematized and centralized personnel practices.
Application of industrial psychology, industrial sociology, and ‘human relations’ to employment problems also emerged in the 1940s as a hot topic and created new opportunities for HRM (Wren 2005). The human relations movement grew out of the pioneering Hawthorne experiments at the Western Electric Company, led by Elton Mayo. Whereas most of the focus of industrial psychologists in the 1920s had been on narrow ‘technique’ applications, such as employee selection tests and the relationship between work hours and fatigue, in the 1940s the focus among behavioral scientists shifted to more overtly psycho-social topics, such as the relationship between morale and work effort, interpersonal dynamics in small work groups, and the role of non-financial incentives. These topics had many potential applications to HRM and spurred the founding of a new applied research (p. 29) journal, Personnel Psychology. According to Brown and Myers (1956: 89) coming out of human relations research was ‘a pervasive belief in the existence of a positive correlation between the degree of “morale,” “job satisfaction,” or “loyalty,” on the one hand, and the productive efficiency of the enterprise on the other hand.’ These were the key variables that personnel management in the 1950s was enlisted to promote.
The 1950s also saw the high water mark in union density and collective bargaining. The most popular title for the corporate HRM function in large companies, particularly in the union sector, was ‘industrial relations.’ The industrial relations department was typically divided, in turn, into the labor relations (collective bargaining) section and personnel (employment) section (Heneman and Turnbull 1952: p. iii).The idea that industrial relations should be practiced in a strategic manner, first articulated in the 1920s, was not lost on writers in the 1950s. Economist E. Wight Bakke, for example, wrote on this theme in an article aptly titled ‘From Tactics to Strategy in Industrial Relations’ (1948), while the practitioner-oriented Personnel Handbook (Mee 1951: 3, emphasis in original) counsels readers on the first page, ‘the detailed work of employee testing, of job evaluation, or other day-to-day personnel operations is of little value unless these activities are welded together in a carefully planned, well-integrated, efficient, and effective program to help achieve the objectives of the business.’ But given the importance of union–management relations at the time, the strategic focus in HRM was most often oriented toward unions and collective bargaining (Kochan and Cappelli 1984).
However, as union density began to recede in the late 1950s and collective bargaining became routinized, resources and programs began to move back toward the personnel part of the HRM function (Jacoby 1985). In non-union companies, the HRM function was sometimes called personnel and sometimes industrial relations, but the primary focus at the strategic level was union prevention and maintaining a stable, motivated workforce. Personnel departments in the top tier of progressive non-union corporations tended to be influential players, given that these companies developed highly structured internal labor markets and gave great emphasis to maintaining employee morale and job satisfaction (Foulkes 1980; Jacoby 1997). At the large bulk of American companies, however, the personnel department typically had little contact with strategic business and employment policy and instead focused on tactical administration of various personnel activities. Often the personnel function was regarded as one of the lowest rungs in the management hierarchy and a place for low-level administrators and clerks. For example, Peter Drucker (1954: 275) characterized personnel as ‘partly a file clerk's job, partly a housekeeping job, partly a social worker's job and partly “fire-fighting” to head off union trouble or to settle it.’ Twenty years later, Foulkes (1975: 74) noted that only 150 of the Harvard Business School's 39,000 graduates were employed in a personnel position. He explained this anomaly by noting, ‘Many of them [the graduates] feel the personnel field is “low status” and “bad news”.’
A similar pattern developed in Japan after the Second World War. Japan developed a ‘dual’ industrial sector with giant national and multinational firms in the primary sector and small- to medium-size subcontractor and supplier firms in the secondary sector. Primary sector firms developed a distinctive employment system with highly developed and formalized ILMs featuring lifetime employment, seniority wages, extensive job rotation, and enterprise unions (Shirai 1983). Powerful personnel departments were created to administer these ILMs. According to Hirano (1969), these Japanese personnel departments had more authority and range of responsibilities than the personnel departments of the leading American companies in Japan. In the secondary sector, on the other hand, personnel programs in Japanese firms were far more informal and less developed. In the 1980s the Japanese economy experienced a ‘productivity miracle’ and many foreign observers concluded that a large part of the explanation resided with the ability of the Japanese HRM system to foster loyalty, cooperation, and hard work. Books and articles on Japanese management practices proliferated and now it was the Americans and Europeans who were trekking to Japan for plant tours and management seminars. Largely lost from sight, however, was the fact that many of the pillars of the Japanese management model were imported from America, including not only the scientific management and total quality management principles of Taylor and Edwards Deming but also the unitarist ‘goodwill’ employment model pioneered by leading American writers and practitioners of industrial relations in the 1920s (Kaufman 2004a; Wren 2005).
In Europe, by way of contrast, HRM only slowly recovered and developed from the disasters of the Second World War, even as European industry rebounded. F. T. Malm (1960) wrote a survey of personnel management in Europe. He observed that ‘personnel administration does not have the professional status in Europe it enjoys in the United States, except for the United Kingdom’ (1960: 77). With respect to Europe, he provided this overview (1960: 72):
Many European enterprises do not appear to think in terms of an integrated personnel and industrial relations program. In some countries, the social welfare approach to employee relations problems has received special attention. In others, the ‘personnel department’ turns out to be the ‘lohnbüro’ or payroll office having no concern with basic personnel problems. In still another, the ‘personnel officer’ saw his function as that of a records manager. … In the United States, modern consideration of personnel staff departments emphasizes the variety of functional roles: advisory, service, coordinative, and analytical (or ‘control’). European personnel departments are often limited to the ‘service’ concept, and have too low status and recognition to permit effective participation in problem-solving and policy-formulation.
Malm went on to observe that (1960: 79), ‘The most serious and basic of the problems affecting European personnel administration are those in executive development and management education … The problem in much of Europe is the lack of a professional approach to management.’ He also noted, however, that a more (p. 31) American approach to HRM was slowly taking hold in Europe due to the substantial transfer of management methods to Europe initiated under the Marshall Plan and then carried forward through the 1950s sponsored by American foundations and the American government. Many American business people and academics traveled to Europe as members of productivity mission teams and for sponsored consulting and teaching, while numerous Europeans came to the USA for professional management training at universities and companies.
Shifting attention to the status of HRM in universities, a distinctly mixed picture emerges. Outside of the USA, HRM received little attention in either research or teaching, most particularly with respect to the personnel management part of the subject. Malm notes, for example, that ‘Relatively little material on “personnel management” is included in the curricula of universities in Europe, or even in technical institutes or graduate schools of business and economics’ (1960: 78). One reason for this situation is that in many European countries, such as Germany, the employment relationship was (and still is) heavily regulated by labor law, making legal education more important than management education for personnel directors. A partial exception to this situation existed in Great Britain. Universities gave very modest attention to personnel management per se, but significant vocational training was provided by technical schools and professional groups, such as the Institute of Personnel Management (Chartered Institute of Personnel and Development 2005). Also, relative to other European countries universities in Britain provided greater teaching and research in human relations and industrial relations (and, correspondingly, relatively little in labor law, reflecting the light degree of legal regulation of employment in Britain). Industrial relations, however, was typically defined narrowly in Britain to include only labor–management (union) relations, although starting in the mid-1960s the subject of management began to garner more attention (Gospel 1992; Kaufman 2004a).
The 1945–65 period in the USA was a boom time for HRM broadly defined, but a relatively stagnant time for personnel management per se. Into the 1950s the term ‘industrial relations’ continued to be defined broadly in America to include all aspects of employment, including personnel. Prior to the Second World War only a handful of universities had formal programs in industrial relations; after the war several dozen new industrial relations centers and institutes were established (Kaufman 2004a). The impetus for these new programs came foremost from the dramatic spread of unionism and the pressing problems of collective bargaining, dispute resolution, and contract administration. But also important was the swelling interest in industrial human relations and its applications to management and organization design. These new industrial relations programs greatly expanded teaching and research in the HRM area and drew thousands of students to the subject. The programs were multidisciplinary, had a social science orientation, and sometimes were housed in business schools but more often were established as free-standing units in the university (in order to ensure impartiality between labor (p. 32) and management). According to a curriculum survey (Estey 1960), the four core courses in these industrial relations programs were: labor economics, collective bargaining, personnel management (and human relations), and labor law. It is fair to say, however, that the emphasis was on labor–management relations.
The personnel management side of the field was not held in high regard during this time period and did not attract many students. A foundation-sponsored assessment of American business education in the late 1950s reached this scathing conclusion: ‘next to the course in production, perhaps more educational sins have been committed in the name of personnel management than in any other required course in the business curriculum’ (Gordon and Howell 1959: 189). Also indicative is this remembrance of a former student at the Institute of Labor and Industrial Relations at Illinois (Weber 1987: 15): ‘When I studied at Illinois in 1950–1951, there were a few students at the institute who were taking personnel; they were déclassé by definition. I would approach these fellows and quizzically ask why they were going into personnel. … They always gave one of two answers which were descriptive of the field: (1) “I did it in the Army,” or (2) “I like people.”’
2.4 The Development and Internationalization of Contemporary HRM
In the post-Second World War period HRM in the USA experienced a low point in its fortunes during the 1960s. Then the field slowly revived and expanded and by the early to mid-1990s was at a new high in energy, activities, and reputation. Yet, as century's end neared there were also signs of continued problems and perhaps some slippage in HRM in both industry and academe. Beginning in the early 1980s, the modern version of HRM also quickly spread beyond North America and was transplanted to Europe, Asia, and other parts of the world. The subject is now taught at universities in all parts of the globe and the term ‘human resource management,’ either in English or translated into the national language (e.g. Gestión de Recursos Humanos in Spanish), is increasingly the name companies everywhere use to label their people management function.
The ‘doldrums’ experienced by HRM in the 1960s had several sources. I focus on the academic end. As previously described, HRM was through the 1950s subsumed as part of industrial relations. After 1960, however, the two fields gradually drifted apart with IR more narrowly focused on unions and labor–management relations and HRM on the functional parts of employee management. Accompanying the (p. 33) divorce of IR and HRM was a divorce between labor economists and scholars from management and the behavioral sciences.
Up to the 1950s in the USA, economics was regarded as the foundation discipline of business education, per the statement of Craig (1923: 36) that ‘Business has always been recognized as a branch of the subject of economics.’ Thus, personnel management was widely regarded as ‘applied labor economics’ and through the 1950s many of the most recognized authorities on personnel, and authors of leading personnel texts, were labor economists (broadly defined) and industrial relations specialists (Kaufman 2000b, 2002). These economists, such as Heneman, Myers, Strauss, and Yoder, were affiliated with industrial relations and tended to emphasize the macro (‘external’), governance, and strategic dimensions of HRM, typically with an emphasis on labor markets and labor relations. But by the late 1950s these people were either retiring from academe or moving away from HRM to other topics, while the new generation of neoclassical labor economists had little interest in management.
As the economists exited, the HRM field became increasingly the preserve of scholars from management and the behavioral sciences. Naturally, their interests in employment had a more organizational (‘internal’) and psychological orientation and were centered on subjects such as organizational design and control, leadership styles, effective management principles, and the psychological and social aspects of human interactions in the workplace. In the 1950s this group of researchers, such as Arensberg, Argyris, McGregor, and Whyte, was most often affiliated with the human relations movement, not HRM per se. In the early 1960s human relations was absorbed in the new field of organizational behavior (OB), and its offshoot organizational development (OD), and most of the leading behavioral scientists in management and business schools became active in it (Wren 2005). The net result was that the HRM field in the 1960s—largely perceived at this point as personnel management—was left in a rather marginalized position. On one side, the economists and IR scholars drifted away, while on the other the behavioral scientists and management scholars gave their time and attention to the new field of OB. Both groups looked down on PM as a largely a-theoretic subject dealing with a collection of largely disconnected administrative procedures and employment tools (Mahoney and Deckop 1986). Tangible evidence in support of this verdict is provided in the volume Classics in Personnel Management (Patten 1979). The articles in it illustrate the intellectual dominance of OB, the absence of economists, and the depressingly low-level administrative nature of PM.
From this low point the field of HRM embarked on a slow but cumulatively significant upward movement in intellectual substance, vigor, and participation in the academic world. To a large degree, the status of HRM in the practical world of industry mirrored this trajectory.
The term ‘human resource management’ first appeared in the textbook literature in the mid-1960s in the USA (Strauss 2001). The inspiration for the term appears to (p. 34) come from a published lecture given several years earlier by economist E. Wight Bakke entitled ‘The Human Resources Function’ (1958), although as noted the phrase ‘human resources’ has an earlier origin. It is worthwhile to quote Bakke's conception of the human resources function for it bears on later debates about the meaning of the term. He states (1958: 5–6, emphasis in original), ‘The general type of activity in any function of management … is to use resources effectively for an organizational objective … The function which is related to the understanding, maintenance, development, effective employment, and integration of the potential in the resource ‘people’ I shall call simply the human resources function.’ He also states (1958: 4, emphasis in original), ‘The first thing that we ought to be clear on is that there is nothing new about the managerial function of dealing with people. … Like other sub-functions of management … it has been carved out of the general managerial function, not put into it.’
For the next fifteen to twenty years the terms personnel management and human resource management largely coexisted and were often used interchangeably, albeit with some sentiment that HRM reflected a more up-to-date terminology and conception of the people management function. But then, starting in the early 1980s, two separate lines of thought developed. The first followed tradition and argued that HRM and PM were largely different labels for the same subject. But according to a second line of thought, the HRM term represented a new model and philosophy of people management that was fundamentally different from the traditional approach of PM and IR.
An early and influential expression of this position was by Harvard management professor Michael Beer and colleagues in the book Managing Human Assets (1984) and by Beer and co-author Bert Spector in an article entitled ‘Human Resource Management: The Integration of Industrial Relations and Organizational Development.’ In the book and article they describe what is called ‘a new HRM paradigm.’ In their article they list fourteen characteristics that distinguish the traditional employment management model, which they identify as ‘industrial relations’ (including personnel), from the new paradigm they label ‘human resource management.’ For example, they claim IR/PM are reactive, piecemeal, part of a command and control employment system, mediators of conflicting interests, and take a short-term perspective; HRM on the other hand is proactive, integrative, part of an employee commitment and participation system, creator of a unity of interest, and takes a long-term perspective. They summarize the new HRM paradigm as reflecting (1984: 292) ‘the emerging view that people are an asset and not a cost’ and ‘an HR function fully aware of and involved in all strategic and business decisions’ (1984: 293).
Where did this second conception of HRM come from? Two intellectual developments were key.
The first, as suggested by the title of Beer and Spector's article, is the melding of theories and insights from OB/OD into traditional IR/PM. This process began in (p. 35) the 1960s, per the comment of Dunnette and Bass (1963) that ‘many of the leading schools of business and industrial administration have shifted from the descriptive study of current personnel practices to the application of principles of the social sciences to the analysis of organizational problems. … The behavioral sciences are making rapid strides and are moving to a central position in the study of industrial behavior.’ A decade later Martin echoed this observation, stating (1975: 150), ‘Personnel administration and management as taught in collegiate schools of business changed drastically during the 1960s. This change stemmed in large part from two 1959 foundation-sponsored studies of business schools, which argued persuasively that business school curricula should incorporate more of the behavioral sciences.’ Martin found that the five most cited academic authors in the practitioner personnel literature were all behavioral scientists associated with OB/OD: Herzberg, McGregor, Porter, Maslow, and Argyris.
The common denominator in the writings of these OB/OD scholars is that organizations can gain higher productivity and performance by designing work and practicing management in ways that take into account that employees are people with psychological and social needs and aspirations, rather than the traditional model that (allegedly) follows economic theory and treats employees as akin to an inert factor input and the self-interested ‘economic man.’ This duality is captured, for example, in McGregor's (1960) ‘theory X and theory Y’ management system (command and control versus consensual and participative) and Walton's (1985) influential article ‘From Control to Commitment in the Workplace.’ The bedrock idea is that by treating employees as organizational assets rather than disposable commodities, structuring work to make it more interesting and self-controlled, and creating mutual-gain forms of compensation the employment model is transformed from an inflexible, high-conflict, and low-productivity system (the traditional pluralist IR model) to a flexible, low-conflict, and high-productivity unitarist HRM system. This new organizational/management model became widely known by various labels, such as ‘high-commitment’ workplace and ‘high-performance work system’ (HPWS), and the new HRM paradigm that emerged in the 1980s was the ‘people management’ component. As such, HRM was clearly positioned as different from traditional IR/PM and also as a superior performer, as extolled in books such as In Search of Excellence (Peters and Waterman 1982), The Ultimate Advantage: Creating the High-Involvement Organization (Lawler 1992), and Competitive Advantage through People (Pfeffer 1994). The influence of OB became so strong that in many universities HRM gravitated toward a course in ‘applied organizational behavior.’
The second key event that heavily influenced and shaped the new HRM paradigm was the development and popularization of the strategic management concept (Boxall and Purcell 2000). Strategic management—earlier called strategic planning and earlier still management policy, originated out of work by Michael Porter, H. Igor Ansoff, and others (Wren 2005). It was soon imported into personnel/HRM. (p. 36) In one of the earliest contributions, for example, Devanna et al. (1982: 11) say of the traditional personnel function, ‘The recent popularity of human resources management is causing major problems for traditional personnel departments. For years they have been explaining their mediocre status by bewailing their lack of support and attention from the CEO.’ They then go on to outline a new approach, saying: ‘Whether the human resources component survives as a valuable and essential contribution to effective management will largely depend on the degree to which it is integrated as a vital part of the planning system in organizations. In large part, the management of human resources must become an indispensable consideration in both strategy formulation and strategy implementation.’
The next two decades witnessed a veritable explosion of writing and research on strategic aspects of HRM, leading in short order to the creation of an entirely new subfield called ‘strategic human resource management’ (SHRM). As with the term HRM, some authors define SHRM as a generic practice/approach, while others give it a more particularized meaning. Wright and McMahan (1992: 298), for example, state that SHRM is: ‘[t]he pattern of planned human resource deployments and activities intended to enable an organization to achieve its goals.’ This conceptualization is generic since it encompasses all types of organizations and systems of people management and requires only that the HRM deployments be chosen in a forward-looking, integrated fashion in order to achieve the organization's goals. It also suggests HRM and PM are largely equivalent (since by logical inference if SHRM is strategic then HRM is largely tactical, like PM). Other authors, however, define SHRM more narrowly so it is effectively coterminous with the employment model in the HPWS. In this spirit, McMahan et al. (1998: 197) state, ‘Today, what we call strategic human resource management may well be “second generation” employee involvement with a relationship to firm strategy and performance.’ This conceptualization of SHRM is both narrower and more prescriptive—narrower since it seems to limit the room for strategic choice to some permutation of the HPWS and more prescriptive since it suggests that a strategic approach to HRM should incorporate employee involvement and other HPWS practices.
Regardless of definitional disputes, what can be unambiguously stated is that the development of the SHRM concept led to a substantial resurgence of academic interest in the HRM function and strengthening of both the theory and practice of people management. In the area of theory, for example, SHRM provided intellectual support for the idea that a firm's employees and HRM system can potentially provide a long-run source of competitive advantage (Boxall 1996; Wright et al. 2001)—a contention that appeared to receive empirical support in studies that found a positive link between advanced HRM practices and firm performance (e.g. Huselid 1995; Becker and Gerhart 1996).
HRM in all guises was also promoted by several developments outside academe. One example is the large-scale growth of government regulation of employment (p. 37) in the post-1960s period, including legislation regulating discrimination and equal opportunity, pensions, treatment of disabled employees, and family medical leave. Companies typically assigned compliance and administration of these new laws to the personnel/HRM department, thus leading to new staff positions and responsibilities.
Also important was the ongoing decline of the union sector. Companies gained new opportunity to switch from defensive union avoidance and a pluralist collective bargaining approach of employment management to a more proactive, unitarist, and high-performance approach. Many companies, to signal this shift, relabeled their personnel and industrial relations departments as human resources departments. Likewise, in the USA, the field's major professional group, the American Society of Personnel Administrators (ASPA), changed its name in 1989 to Society for Human Resource Management (SHRM).
A final factor that had a large impact was the tremendous economic success enjoyed by Japanese industry in the 1970s–1980s and the widespread conviction that a key ingredient was the Japanese HRM model built on high-performance practices, such as participative management, extensive investment in employees, and a mutual gain philosophy (Thurow 1992).
By the early to mid-1990s the practice and study of HRM had clearly experienced a rejuvenation. This trend was clearly evident in universities. Student enrollment in HRM courses was booming, business schools were hiring dozens of new HRM professors, membership and participation in the HR Division of the Academy of Management steadily rose, the leading management scholarly journals (e.g. Academy of Management Journal) were featuring far more HRM-related articles, and new HRM field journals were born (e.g. Human Resource Management Review) or renamed and strengthened (e.g. Human Resource Management). Adding to the sense of resurgence was the palpable decline of the once-dominant industrial relations field and its rival approach emphasizing a social science, multidisciplinary curriculum.
Amidst this upbeat mood arose two other developments in the 1990s that threatened the comfortable status quo and brought into light some long-standing deficiencies and vulnerabilities that all the hoopla about SHRM and HPWS had temporarily masked.
The first of these developments was the return of economists and industrial relationists to the HRM field. In the late 1980s a new subfield of labor economics emerged, called the economics of personnel, and quickly grew in terms of participants and publishing activity. Using the tools of neoclassical microeconomics, these economists, led by Edward Lazear, developed a wide array of sophisticated models to explain a plethora of personnel practices, such as different forms of compensation, mandatory retirement rules, and screening models of employee selection (Lazear 1999; Gunderson 2001). Other economists, coming from an institutional and industrial relations perspective, have developed insightful models (p. 38) that explain the choice of employment systems across firms (Begin 1991; Marsden 1999) and the ‘make versus buy’ choice with respect to producing HRM services in-house or purchasing these services from an external provider (Kaufman 2004b). On one hand, the return of economists to the HRM field was a ‘plus’ for it substantially added to and strengthened the theoretical and empirical work in the area, particularly with regard to the macro (external) dimension. But also brought to light were unmet opportunities and potential vulnerabilities. Evidence reveals, for example, that the economics and management/behavioral science wings of the field were often like the proverbial ships passing in the night, either unaware of or uninterested in the other and thus forfeiting intellectual gains from trade (Mitchell 2001; Kaufman 2004b). Also, a good deal of the management literature, particularly at the textbook level, continued to be heavily descriptive and prescriptive and thus vulnerable to encroachment by economists.
A second development also introduced a discordant note into the otherwise bright picture. Even as the academic and practitioner literatures were brimming with books and articles extolling the new HRM paradigm, evidence was also accumulating that while individual HPWS practices were widely diffusing, relatively few firms had adopted the full package (Freeman and Rogers 1999; Osterman 2000). Further, many companies continued to practice HRM in a fairly traditional manner not much distinguishable from PM and IR. Indeed, while some companies were moving toward the human capital/mutual-gains HRM model, many others moved in the opposite direction. For them, ‘high performance’ was gained by repeated downsizings, re-engineering programs, and corporate restructurings, accompanied by large lay-offs, the end of employment security, the dismantling of ILMs, the externalization of employment to temporary workers and contracted employees, and the roll-back or elimination of many benefit programs (Cappelli 1999; Purcell and Purcell 1999). Accompanying this movement were, in many cases, major reductions in the size and influence of corporate HRM departments and the externalization of HRM services to call centers, temp firms, consultants, and independent contractors (Jacoby 2003).
This scenario of events led to a degree of intellectual schizophrenia in HRM. For example, if HRM is built on the idea that employees are assets then what type of labor management system is being used at all the companies practicing downsizings and lay-offs? PM? IR? Likewise, if HRM is synonymous with a HPWS employment model, then are companies such Wal-Mart and McDonald's using non-HRM? Most writers sidestepped these thorny conceptual issues, or focused only on paradigmatic ‘best practice’ cases.
Also evident in the 1990s was a certain sense of desperation and prescriptive boosterism in academic and practitioner writings on HRM. Part of the outpouring of research on SHRM was a thinly veiled attempt to defend and enhance the organizational survival of HRM in universities and companies (Kaufman 2004b). Prescription also became wrapped up with a somewhat apocalyptic vision that (p. 39) HRM faced a stark choice of ‘transform or die.’ A number of articles, for example, appeared with titles such as ‘Repositioning the Human Resource Management Function: Transformation or Demise?’ (Schuler 1990). Also illustrative is the article by David Ulrich in the Harvard Business Review (1998). He states (1998: 124), ‘Should we do away with HR? … there is good reason for HR's beleaguered reputation. It is often ineffective, incompetent, and costly; in a phrase, it is value sapping. Indeed if HR were to remain configured as it is today in many companies, I would have to answer the question above with a resounding “yes—abolish the thing!”’ Ulrich's statement suggests that despite all the much ballyhooed emphasis on HRM as a strategic business partner, in many companies the function (apparently) remains not much different from the low-level, administrative version so often criticized in the past. One could also easily read this statement and reach the mistaken conclusion that the function/practice of HRM is equivalent to the staff and activities of the HRM department. The two, however, are quite distinct (if overlapping), as recognized by writers from the earliest days of the field.
Before ending I want to briefly discuss the movement of modern HRM outside North America. To give this topic the coverage it deserves, however, would require another chapter.
Through the 1960s and 1970s the subject and practice of personnel management had a secure if small and relatively low-status position in business firms and universities outside of North America. In Britain and Australia, for example, personnel courses were offered in universities as part of a commerce program and a small number of personnel texts were available. The subject, however, suffered from both an overall neglect of management as an academic discipline and the dominant position of industrial relations and collective bargaining (Wood 1983; Bacon 2003; Kelly 2003). But the situation markedly changed in the 1980s and early 1990s, not only in these countries but many others, and opened the door for contemporary HRM to enter. Relevant factors include: growing national interest in new management methods to stimulate productivity, industrial performance, and competitive advantage in the world economy; the swing in public opinion and national economic policy—epitomized by the coming to power of the Thatcher government in the UK—away from labor collectivism and toward a neo-liberal policy of open markets and individualized employment relations; the widespread perception that American management methods were ‘best practice’ and thus to be imported and emulated; the beginning of American-style professional business schools; and a new research program on management by a small set of industrial relations scholars. At this time the Japanese were also opening up new plants in Britain and elsewhere with their own version of HRM and this further heightened interest in the subject.
Although personnel slowly gave way to HRM in America over a twenty-year period beginning in the mid-1960s, the switch-over was more sudden and controversial in a number of other countries. I focus on Britain and Australia. In Britain (p. 40) the term ‘HRM’ started to appear in the mid-1980s (e.g. Hendry and Pettigrew 1986; Guest 1987) in journal articles. A particularly influential early book was John Storey's edited volume New Perspectives on Human Resource Management (1989). As recounted by Kelly (2003), the topic of HRM entered academic discourse in Australia in a significant way only in the late 1980s. She cites several influential papers, such as Boxall and Dowling (1990). Common to both countries was an initial period of hot debate and deep skepticism about this new import from America. Kelly states, for example, that the response of many Australian academics was (p. 152) ‘dismay, doubt, and deep concern. Scholars rejected the foundations of HRM, the suggestions to integrate their field with HRM, and even notions that the emergent field of study should be taken seriously. Debate followed debate.’ A number of British authors wrote highly critical assessments of HRM, suggesting it was little more than ‘rhetoric,’ ‘ritualism,’ and ‘religious fervor’ (Strauss 2001).
Why did HRM engender such a sharp and divided reaction? In part it was because HRM threatened the well-established industrial relations group and in part because HRM was seen as a stalking horse for union avoidance and Thatcherist neo-liberalism (Guest 1987; Purcell 1995). But also crucial to the debate was the ambiguous and to some degree contradictory definition and model of HRM that had come over from America. Was HRM a generic concept covering all forms of labor management, another name for personnel management, or a new ‘human asset’ model of labor management? The Americans tended to say, either pragmatically or uncritically depending on one's viewpoint, that HRM was all three and ‘let's get on with it.’ Nor were American HRM scholars interested in a deeper probe of the new paradigm's underlying normative and ideological principles. What went largely unquestioned in America, however, did not go unquestioned by scholars in Britain and elsewhere. A minority view was that HRM was largely a repackaged version of PM and thus not anything to get excited about. But many British and Australian writers opted for the view that HRM was indeed a substantively different model built on unitarism, individualism, high commitment, and strategic alignment (e.g. Guest 1987; Storey 1995). Given this, several strands of critical commentary and outright rejection emerged. One criticism, for example, was that HRM is inherently flawed because it mixes positive/descriptive with normative/prescriptive (Legge 1989); a second was that HRM is practiced in only a distinct minority of workplaces and may thus be of small practical significance outside the USA (Sisson 1993); a third was that HRM focuses only on corporate goals and ignores employees' interests (Mabey et al. 1998); and a fourth was that HRM did not seem to deliver the advertised positive performance effects (Hope-Hailey et. al. 1997).
From the early 1990s onward, the dust started to settle and HRM became more firmly established and less controversial in Britain and Australia. The boundaries and content of HRM remain unsettled to the present time, but a growing body of thought holds that for HRM to be a useful intellectual construct across counties (p. 41) it must be defined in a broad, generic, and value-free way. Representative is the statement by Boxall and Purcell (2003: 1) that HRM represents ‘all those activities associated with the management of the employment relationship.’ Illustrative of HRM's rising fortunes, Britain is home to two well-recognized scholarly journals, Human Resource Management Journal and International Journal of Human Resource Management, a number of British universities have established departments and chairs of HRM, numerous HRM textbooks are available, and most universities offer HRM courses.
In the 1990s HRM also spread rapidly to continental Europe, Asia, Latin America, and Africa. As was true in the British case, in each of these regions the concept of HRM and the mode of teaching and research reflects differences in university systems and economic and political environments (Lawrence 1992). Also arising out of the globalization of HRM is a new subfield of research on international and comparative HRM. Numerous articles and books have appeared in recent years, for example, on the practice and structure of HRM in Europe (e.g. Brewster 1995), comparative differences in the HRM systems and practices in American, British, German, and Japanese companies (e.g. French 1995), and strategic HRM from an international perspective (e.g. Schuler et al. 2002).
The practice and academic study of HRM has made huge progress over the last century. At the turn of the twentieth century the concept of human resource management had not yet been invented, its practice in industry was highly informal and often grossly inefficient and inequitable, and no organized research or teaching on HRM existed. At the beginning of the twenty-first century, the situation is transformed. Not only has the idea of HRM spread across the world, it is now recognized and practiced as a fundamental part of business, is the subject of a voluminous academic and practitioner research literature, and has greatly promoted efficient enterprise and more equitable and harmonious employee relations. This is surely quite a positive record.
But the evolution of HRM is not without problem areas and shortcomings. Some of these remain today. Compared to some other areas of business management, such as finance, marketing, and accounting, HRM has often ranked lower in strategic importance, corporate investment, and professional status. Likewise, while some companies ‘walk the talk’, view employees as organizational assets, and make HRM a strategic driver of competitive advantage, many others have either significantly scaled back their investment in employees and HRM or (p. 42) continue to practice people management in a largely tactical, administrative, and cost-focused manner. With regard to academic research, this last issue highlights the fact that at any point in time a wide frequency distribution of firms exists ranked by their breadth and depth of HRM practices. This frequency distribution also varies in systematic ways among countries, depending on their respective histories, business institutions, legal environments, and cultures. A considerable portion of recent academic research on HRM has been focused on the top tier of companies in a small number of countries, leading to an unbalanced and overly ethnocentric and normative (prescriptive) account. But the evidence provided in this review also suggests that the progress of research in these areas is surely in the right direction.
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