The role of human resource management (HRM) in contemporary organisations has grasped the attention for the past previous years. The priority of most academics and practitioners has been extenuating HRM value to the firm. This claim is supported by the emergence of several experiential studies, exploring the impact of different HRM practices on organisational performance. However, despite the quantity and variety of these studies, the influence of HRM practices on performance gained slight attention not only as concept, but also in understanding its mechanism. (Theriou & Chatzoglou (2009))
HRM professional practitioners struggle to guarantee that each member in an organisation – a private firm, a government agency, or non-profit organisation – adds as completely and efficiently as possible to the accomplishment of the organisation’s mission. The organisation cannot coexist without HRM. Nowadays HRM is well-known not only by solely administrative functions, but also by its concern for organisational strategy and the skills and competencies required to perform that strategy. (Campus France, 2009) Basically, HRM can be divided into Administration of human resource such as payroll, contracts, and legal and regulatory compliance, and development of human resources as partnership with operational managers such as career development, recruitment, training, and competency management. As a result, HRM extends over several disciplines and shapes every part of organisational life. (Campus France, 2009)
Research about HRM in developing countries and especially in Egypt has been little relative to developed ones. Through this paper the researcher wants to add to such emptiness.
One of the essential strategic areas of an organisation is human resource management (HRM). Human resources play a crucial role in developing the resource capability of an organisation so as to meet its objectives and for upcoming improvement (Armstrong as cited in Ho, 2009). Many organisations have initiated new approaches to management, especially a shift from personnel management PM to HRM, as a response to increased competition and instability in the markets (Storey as cited in Ho, 2009). The key characteristic of HRM is that it aims to incorporate the management planning of the organisation with its PM functions. Over the past decade, private business and industry has widely employed such type of management strategy, linking with the long range direction and development of an organisation. (Ho, 2009)
It is appropriate to start by exploring where HRM was back in the late 1960’s, and it is not surprising to find that personnel management was the subject that mostly referred to, while HRM was not even on the agenda (Marchington, 2008). Personnel Management can be simply defined as “obtaining, organising, and motivating the human resources required by the enterprise” (Armstrong as cited in Armstrong, 2006, p.2). A broader definition describes personnel management as
The phase of management which deals with the effective control and use of manpower as distinguished from other sources of power. The methods, tools, and techniques designed and utilised to secure the enthusiastic participation of labour represent the subject matter for study in personnel administration. (Yoder as cited in Reddy, 2004, p.1)
A review of early issues of Personnel Management “specifically Late 1960s – Early 1970s” showed that the key topics included training, industrial relations, pay, job design, and manpower planning. The terminology of personnel was used in the majority of adverts which is shown through searching the job pages, in addition there were examples of training, industrial and labour union, yet HRM was not mentioned (Marchington, 2008).
At the end of 1980s, the term HRM was emerged in UK, after its appearance in the USA. At that time, articles on topics such as training and development, pay and the role of the personnel/HR function where published by Personnel Management. Also it was the period where HRM articles started to slightly appear, for instance the article of Pettigrew, Sparrow, and Hendry in 1989. (Marchington, 2008) Perhaps more considerably, the term HRM was started to appear in job adverts, particularly in appointments at superior levels, however the huge majority still referred to personnel, training and employee relations. (Marchington, 2008)
In 2008, HRM is entrenched both as an academic subject and as a terminology that is broadly used by practitioners. According to Marchington, (2008, p.5) Personnel Management is not used in major textbooks anymore, and even those like Torrington et al who started with personnel management as their headline have now changed it to HRM (Marchington, 2008). HRM can appear to be a vague and subtle concept, not least as it has a range of definitions. In fact, pinning down on satisfactory definition can look as if you are trying to strike a moving target in a fog (Price, 2007).
HRM can be simply defined as “a notion of how people can be managed in the interests of the organisation” (Armstrong as cited in Price, 2007, p.30). A broader definition could describe HRM as a “distinctive approach to employment management which seeks to achieve competitive advantage through the strategic development of a highly committed and capable workforce, using an integrated array of cultural, structural and personnel techniques” (Price, 2007, p.30) According to Storey in the handbook of human resource management, HRM can be considered “as a set of interrelated policies with an ideological and philosophical underpinning”. (Armstrong, 2006, p.3). The significant form of HRM as Storey suggests comprise four aspects: a specific collection of beliefs and assumptions; a strategic power informing decisions regarding people management; the central contribution of line management; and dependence upon a set of ‘levers’ to shape the employment relationship. (Armstrong, 2006).
The core roles which contribute to the HRM concept includes; strategic perspective, change management, training & development, career management, and performance management. It is essential to take a look at the definition and the linkage of those aspects to HRM. According to Dessler, “Strategic human resource management means formulating and executing human resource policies and practices that produce the employee competencies and behaviours the company needs to achieve its strategic aims” (2008, p.13). Being a “people specialists” in a definite area that brings traditional HR services is no longer the picture for HR professionals. They must be experienced in several areas including strategic decision making processes. This is argued by many scholars including the well-known piece of research by Ulrich et al., who explored the need for twenty-first century oriented HRM and presented a practical conceptualization of the way that the HR function itself is emergent. (Lemmergaard, 2009) Second the change management aspect, a perfect example could be the transformation occurred in Zegna – an Italian menswear business – where HR team had to create the changes itself to facilitate the achievement of business change objectives. They needed to recognise the existing perception of HR as well as the business strategy and future plans. (Tyler-Cagni & Hills, 2009) Third, Management development concerns “any attempt to improve current or future management performance by imparting knowledge, changing attitudes, or increasing skills” (Dessler, 2008, p.310). Fourth, Career management deals with “the lifelong series of activities that contribute to a person’s career exploration, establishment, success, and fulfilment” (Dessler, 2008, p.378). The fifth and last aspect is performance management, which can be defined as “taking an integrated, goal oriented approach to assigning, training, assessing, and rewarding employees’ performance” (Dessler, 2008, p.294). Performance management is not based on management by command, instead it is based on the principle of management by agreement or contract. (Armstrong, 2006). According to Armstrong, “it can play a main role in providing for an integrated and coherent range of human resource management processes which are mutually supportive and contribute as a whole to improving organizational effectiveness” (2006, p.493)
Human resource management (HRM) has become a persistent and dominant approach to the management of the employment relationship (Beardwell and Holden, 1997; Beer and Spector, 1985; Hendry and Pettigrew, 1990 as cited in Garavan, Morley, & Heraty 1998). The elaboration of academic theories of HRM in the 1980s led to an argument about the nature of HRM. A main question raised in the early debate was Is HRM different from personnel management PM? (Boselie, Brewster & Paauwe, 2009). (Garavan, Morley, & Heraty 1998). Several critics believe it as a restatement of basic personnel functions (Armstrong as cited in Garavan, Morley, & Heraty 1998). Others believe it is a mixture of personnel management and industrial relations (Guest as cited in Garavan, Morley, & Heraty 1998). Two additional perspectives were emphasized by critics such as Beardwell and Holden (1997) and Brewster (1993, 1995): an approach to HRM that emphasises the role of the individual within organisations and HRM as a strategic and international function. The two latter perspectives have guided several critics to describe differences between “traditional personnel” and human resource management (Garavan, Morley, & Heraty 1998). Also, there is evidence that every now and then experts view personnel and HRM as dichotomous models for managing human resources (Fowler & Legge as cited in Garavan, Morley, & Heraty 1998).
The difference between personnel and Human resource management are perceived as a matter of emphasis and approach rather than one of substance, according to Hendry and Pettigrew “HRM can be perceived as a perspective on personnel management and not personnel management itself” (Armstrong, 2006, p.20). Basically, Personnel management is an operational function that deals with the execution of daily people management activities. In contrast, the nature of HRM is strategic, that is, being concerned with helping an organisation precisely to achieve sustained competitive advantage (IQPC, 2006). Moreover, personnel management is more passive than HRM, where the maintenance of personnel and administrative systems is what personnel management is all about. On the contrary, HRM is concerned with forecasting of organisational needs, the continual monitoring and adjustment of personnel systems to meet current and future requirements, and the management of change (IQPC, 2006). According to Edvardsson:
Independent of the similarities or differences between HRM and personnel management, the core business of the HR function is to develop the employees in accordance to the business strategy, select and hire people, train and develop the staff, evaluate their performance, reward them, and create a culture of learning. (2003, p.6).
It is argued over and over that, Human resource management (HRM) has a significant role to play in assuring high levels of service quality, given the value of the customer/employee interaction to the service encounter (Haynes & Fryer, 2000).The act of consuming a product differs from service customer, where the latter engages a pleasantly understated and complex experience which is personal and emotional. (Schneider and Bowen as cited in Haynes & Fryer, 2000). Subsequently it is astonishing to find that our understanding of the correlation between HRM policies and practices and service quality remains incomplete (Haynes & Fryer, 2000). “The advice is largely normative and the links between good HRM practice and the quality of service that the customer receives are typically only inferred” (Redman & Mathews as cited in Haynes & Fryer, 2000, p.240)
Such misunderstanding is partially a result of the traditional focus of HRM on quantifiable outcomes not directly related to service such as labour turnover, absenteeism, and productivity. (Haynes & Fryer, 2000) The lack of focus on service outcomes is attributed as a measure of HRM performance to the manufacturing paradigm within which HRM is believed to be developed. Conversely, in most cases the HRM literature has inclined the assumption that the relationship between HRM and organisational performance are positive. Until recently, there was no interest in measuring the effects of HRM on organisational performance. (Haynes & Fryer, 2000)
A positive relationship between high performance HRM policies and practices, and organisational performance is reported by several studies over the past decades. (Arther 1994; Delaney & Huselid, 1996; Huselid, 1995; Huselid et al., 1997; MacDuffie, 1995 as cited in Haynes & Fryer, 2000) (Arthur, 1992; Dyer and Reeves, 1995; Ichniowski, et al., 1997; MacDuffie, 1995 as cited in Haynes & Fryer). Lately, attention has focused on the aptitude of internally reliable and synergistic HRM bundles or systems, especially to create competitive advantage associated with organisational strategies (Arthur, 1992; Dyer and Reeves, 1995; Ichniowski, et al., 1997; MacDuffie, 1995 as cited in Haynes & Fryer).
Human resource management in corporative banks is more sensitive, personalised, context dependent and cannot be handled through a collection of pre-identified procedures than any other management function. Nowadays, HRM is seen as a strategic tool for competitive advantage rather than being a supportive function only. Actually, it is hard to practice customer-centric strategic management without initially achieving customer satisfaction. Consequently, customer satisfaction is achieved after reaching employee satisfaction. Cooperative banks must prioritise their options around workforce engagement, which is derived from a cautious examination of the needs of the business. Successful HRM necessitates banks to perform a sound management philosophy that compliments human dignity and diversity and are devoted to the development of employees, consider in the value of employee’s involvement and engage them in decision making and share the wealth equitably and fairly. (Ramu, 2008)