- Chetan Parikh
Evolution of HR
Updated: Jul 25, 2022
Last week, we talked on the topic is-hr-only for-large-companies and saw how even an entrepreneur even with 2 or 3 employees needs to have good HR practices. This week, let's walk through the interesting and transformational journey in the evolution of HR.
Human Resource Management (HRM), popularly known as HR is the strategic approach to the effective and efficient management of people in a company or organisation such that they help their business gain a competitive advantage.
Robert Owen had raised the demand for ten-hour day in year 1810 and instituted it in his New Lanark Cotton Mills. By 1817 he had formulated the goal of the 8-hour day and coined slogan 8 hours labour, 8 hours recreation, 8 hours full rest. The 8-hour day movement forms part of the early history for the celebration of the Labour Day, and the May Day in many nations and cultures.
Frederick Taylor, known as the father of scientific management, played a significant role in the development of the personnel function in the early 1900s. In his book, Shop Management, Taylor advocated the "scientific" selection and training of workers. He also pioneered incentive systems that rewarded workers for meeting and/or exceeding performance standards. Although Taylor's focus primarily was on optimizing efficiency in manufacturing environments, his principles laid the groundwork for future HRM development.
It's believed that the first personnel management department began at the National Cash Register Co. in the early 1900s, according to an HR Magazine article. After several strikes and employee lockouts, NCR leader John H. Patterson organized a personnel department to handle grievances, discharges, and safety, as well as training for supervisors on new laws and practices.
The Hawthorne Studies, which were conducted in the 1920s and 1930s at Western Electric, sparked an increased emphasis on the social and informal aspects of the workplace. Interpretations of the studies emphasized "human relations" and the link between worker satisfaction and productivity.
The passage of the Wagner Act in 1935 contributed to a major increase in the number of unionized workers. In the 1940s and 1950s, collective bargaining led to a tremendous increase in benefits offered to workers. The personnel function evolved to cope with labour relations, collective bargaining, and a more complex compensation and benefits environment. The human relations philosophy and labour relations were the dominant concerns of HRM in the 1940s and 1950s.
Many companies established departments devoted to maintaining the welfare of workers. The discipline of industrial psychology began to develop. Industrial psychology, along with the advent of World War I, lead to advancements in employment testing and selection.
The interpretation of the Hawthorne Studies' began to have an impact on management thought and practice. Greater emphasis was placed on the social and informal aspects of the workplace affecting worker productivity. Increasing the job satisfaction of workers was cited to increase their productivity.
In the U.S., a tremendous surge in union membership between 1935 and 1950 lead to a greater emphasis on collective bargaining and labour relations within personnel management. Compensation and benefits administration also increased in importance as unions negotiated paid vacations, paid holidays, and insurance coverage.
The Civil Rights movement in the U.S. reached its apex with passage of the Civil Rights Act of 1964. The personnel function was dramatically affected by Title VII of the Civil Rights Act, which prohibited discrimination based on race, colour, sex, religion, and national origin. In the years following the passage of the CRA, equal employment opportunity and affirmative action became key human resource management responsibilities.
Three trends dramatically impact HRM. The first is the increasing diversity of the labour force, in terms of age, gender, race, and ethnicity. HRM concerns evolve from EEO and affirmative action to "managing diversity." A second trend is the globalization of business and the accompanying technological revolution. These factors have led to dramatic changes in transportation, communication, and labour markets. The third trend, which is related to the first two, is the focus on HRM as a "strategic" function. HRM concerns and concepts must be integrated into the overall strategic planning of the firm to cope with rapid change, intense competition, and pressure for increased efficiency.
If we talk about HR in India, we have absorbed managerial ideas and practices from around the world. The world’s first management book, Arthashastra, written by Chanakya three millennium before Christ, codified many aspects of human resource practices in ancient India. Here Chanakya mentioned various aspects of HR like job analysis, selection, procedures, executive development, incentive systems, performance appraisal etc.
The minimum wage rate and incentive wage plans were included in the Babylonian Code of Hammurabi around 1800 B.C. The socio-cultural roots of Indian heritage are diverse and have been drawn from multiple sources including ideas brought from other parts of the old world.
Human resource management in India dates to the Report of the Royal Commission on Labour in India (1929-31) which recommended the appointment of labour officers to deal with recruitment in order to check corrupt practices in industries in India with respect to selection of workers. They were also accountable to represent the workers and to protect their interests.
We saw how HR has been constantly evolving over many decades and continue to evolve.
In the era of globalization, nations collaborate, and organisations become less country specific. Now, the corporate culture cannot be country specific, but it must encompass the different orientations, mindset, specific practices of different gender, ethnicity etc. Now, more and more people at the top and senior management are willing to relocate. And yet be competitive and produce desired results for the organisations they work for. So, the company policies cannot be country specific but must be global, in the true sense. This is where HR has excellent opportunities to prove their mettle in talent acquisition, devising compensation and benefits, work on higher retention ratio, talent management etc.
Even in the last two & half years, on one side, Covid-19 pandemic brought disaster to many organisations of all sizes, millions of employees and on the other side, HR evolved at a supersonic speed to sail through the turmoil of the pandemic. HR along with other stakeholders of the organizations reworked on the strategy, redefined business processes, and adapting to new normal, supported the organisations not only to maintain stability, but even grow during this time and be future ready.
The future of Human Resources is bright. We shall see how HR embracing the new technologies continue to evolve and make things possible which once upon a time couldn't be even visualised. In an organisation where a multi generation (from Generation X born in late 1960's to Generation Z - born during end of the last century) workforce co-exist, policies created as one size fits all won't be at all effective. Understanding the preferences, motivating factors, adaptation of new technologies, freedom at work etc. of the employees who are at the different stages of their career and delivering customisable, personalised experience to them is the need of the hour.
If you are a part of the board of directors, in the top or senior management or working as an employee, have a look at the following diagram and see where is your organisation in the HR evolution?
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