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Human Resource
Management
in a Business Context
3rd edition
ALAN PRICE
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Human Resource Management in a Business Context: Third Edition
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Chapter 1
Managing people
Learning objectives People management
Background and origins of people management
The purpose of this chapter is to:
Professional managers
(cid:2) Provide an overview of the history of people
The human factor
management.
Human relations
(cid:2) Outline significant developments that led to
Management theory
modern human resource management (HRM).
Development of the personnel specialism
(cid:2) Discuss the main differences between ‘traditional’
Management thinking
personnel management and HRM.
From personnel to human resource management
(cid:2) Introduce the key roles played by human resource
The new managerialism
specialists.
Summary
Further reading
Review questions
Case study for discussion and analysis –
George Cadbury
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Chapter 1 Managing people 3
People management
In this chapter we set out to understand the purpose of human resource management, how it
developed and the range of tasks covered by human resource specialists. Arguably, HRM has
become the dominant approach to people management throughout much of the world. But it
is important to stress that HRM has not ‘come out of nowhere’. There is a long history of
attempts to achieve an understanding of human behaviour in the workplace. For a century
and more, practitioners and academics have developed theories and practices to explain and
influence human behaviour at work. HRM has absorbed ideas and techniques from a wide
range of these theories and practical tools. In effect, HRM is a synthesis of themes and con-
cepts drawn from a long history of work, more recent management theories and social science
research.
Over and over again, managers must deal with events that are clearly similar but also
different enough to require fresh thinking. For example:
(cid:2) businesses expand or fail
(cid:2) they innovate or stagnate
(cid:2) they may be exciting or unhappy organizations in which to work
(cid:2) finance has to be obtained
(cid:2) workers have to be recruited
(cid:2) new equipment is purchased, eliminating old procedures and introducing new
methods
(cid:2) staff must be reorganized, retrained or dismissed.
Some items we have listed are clearly to do with people management (for example, recruit-
ing or reorganizing staff). Others – such as innovation or stagnation – are less obviously so.
However, they are likely to be affected by having trained, motivated people with suitable
skills in place. Some seem irrelevant to HRM, and you might have identified ‘raising finance’
in this category. But compare two businesses: one has an excellent industrial relations record
with no strikes or disputes, while another has many such problems that have been reported
in the media. For which company would you find it easier to raise extra finance? Businesses
are made up of people and there is no business activity that might not be touched on by
HRM.
Human resource management draws on many sources for its theories and practices.
Sociologists, psychologists and management theorists, especially, have contributed a constant
stream of new and reworked ideas. They offer theoretical insights and practical assistance in
areas of people management such as recruitment and selection, performance measurement,
team composition and organizational design. Many of their concepts have been integrated
into broader approaches that have contributed to management thinking in various periods
and ultimately the development of HRM (see Figure 1.1).
Background and origins of people management
The roots of people management and, therefore, of HRM lie deep in the past. Just as the tasks
that have to be done in modern organizations are allocated to different jobs and the people
who perform those jobs, humans in ancient societies divided work between themselves. The
division of labour (see Key concept 1.1) has been practised since prehistoric times: family
groups shared the work of hunting and gathering; tasks were allocated according to skills such
as ability to find food plants, track animals or cook; age, strength and health were taken into
account and the oldest and youngest members were not expected to travel far from home or
to be involved in the dangers of hunting.
Social customs determined separate roles and tasks for males and females. Traditional
self-sufficient communities, dependent on agriculture or fishing, rarely had more than
20–30 categories of labour, in contrast to modern industrial states that have thousands of
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4 Part one Introduction to HRM
different job types. Some functions, such as religious and political leadership or medicine,
were restricted to individuals with inherited or specialist knowledge. As civilization and tech-
nology evolved, however, specialization led to a proliferation of different forms of work, and
farmers and fishermen were joined by skilled craftworkers using metal, pottery, and wood.
Key concept 1.1 Division of labour
The subdivision of work so that specific tasks or jobs are allocated to individuals deemed
most suitable on the basis of skill, experience or cultural tradition. All societies practise divi-
sion of labour. Some cultures traditionally allocated tasks to particular social groups, such
as the caste system in India. In others, higher status jobs have been reserved for the
members of a power elite such as the products of the British ‘public school and Oxbridge’
system or the French ‘grandes écoles’. Modern HRM aims to identify and develop the best
people for specific jobs, regardless of background, class or gender.
Every generation believes that its problems and achievements are greater than those of the
past. Modern business is seen as being uniquely complex and on a larger scale than the enter-
prises of earlier times but, in the ancient world, large numbers of people were organized to
build great pyramids, fortresses and irrigation systems; military leaders marshalled huge
armies; slave owners operated massive plantations and mines. Leadership, power and organ-
ization, therefore, have been matters of study and debate for thousands of years. The Farmer’s
Almanac, a 5000-year-old Sumerian text, includes useful tips on the supervision of farm
labourers – making it the oldest known HRM textbook (Kramer, 1963: p.105). The text
advised the farmer to prepare a selection of whips and goads to keep men and beasts work-
ing hard. No idleness or interruptions were to be tolerated. Even planting barley seed had to
be closely supervised as the unfortunate labourers were not trusted to do it properly.
This authoritarian approach has predominated throughout most of recorded history, but
there has been a continuing and increasing search for less coercive ways of managing people.
Figure 1.1
Scientific management Human relations
Selection of ‘best people’ for the job People matter
Influences on the Time and motion Consultative management
Direction of effort Working conditions
development of HRM
Minimum staffing Motivation other than pay
Performance management Team working
Performance-related pay Informal organization
Anti-union climate Group phenomena
Peer pressure
Hard HRM Soft
Strategic management Japanese management
Long-term thinking Commitment
Missions and objectives Development
Values Organizational culture
Planned activities Quality
Resource management Just-in-time resourcing
Proactive, focused direction Core-periphery (flexibility)
Continuous improvement
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Chapter 1 Managing people 5
In 16th century Italy, for example, Niccolo Machiavelli (1469–1527) wrote The Prince
(by which he meant a leader), detailing a wide range of strategies and tactics that continue to
offer insights into the exercise of power. Although famous for advocating ruthlessness in
the conduct of public (i.e. political) activities, Swain (2002) considers Machiavelli to be the
originator of three themes more relevant to private management: modernity, publicness and
the executive. According to Swain (2002, p.281) Machiavelli’s modernity distinguished his
world from that of antiquity:
When Machiavelli jettisons the Christian religion and ancient philosophy as sources of guidance in
the human condition, he may do so for the sake of politics, but the ramifications spill over into all
other aspects of human life. The modern enterprise, simply put, is humankind taking care of itself
as best it can in an otherwise pretty lonely universe. Science and technology are harnessed to make
life more pleasant. Politics and political orders are mostly guided by the ends of political stability
and serving humankind’s needs.
According to Machiavelli, the ideal leader should have a degree of virtue and be regarded
with both fear and love – although, if only one was possible, it was better to be feared than
loved. Amongst his other prescriptions, the leader should be both a Fox and a Lion, able to
exercise cunning and be a champion.
The division of labour required the most suitable people to perform skilled tasks, produc-
ing an early interest in the differences between individuals. According to Smith (1948, p.10):
In the 16th century John Huarte wrote a book in Spanish concerning what we should now refer to
as vocational guidance and selection. It was translated into Italian, and from this version an
English translation was made under the title of ‘The Tryal of Wits’, which, translated into modern
speech, means the testing of intelligence. He maintained that it is nature which enables a man of
ability to learn, and that it is quite superfluous for good teachers to try to teach any particular
subject to a child who has not the disposition or the ability required for it. Each person, unless he
is a dolt, has some predominant quality which will enable him to excel in some way.
Huarte produced the following classification (Smith, 1948, p.11):
1 Some have a disposition for the clear and easy parts, but cannot understand the
obscure and difficult.
2 Some are pliant and easy, able to learn all the rules, but no good at argument.
3 Some need no teachers, they take no pleasure in the plains but seek dangerous and
high places and walk alone, follow no beaten track; these must fare forthwith,
unquiet, seeking to know and understand new matters.
Individuals perform their jobs within a wide environmental context. In 1776, Adam Smith
(1723–1790) published An Inquiry into the Nature and Causes of the Wealth of Nations. This
foundation text for the science of economics began by emphasizing the importance of the
division of labour in achieving increased productivity, thereby anticipating the Industrial
Revolution. The UK is conventionally regarded as the first country to experience this process
which then spread throughout Europe and North America and continues to transform devel-
oping countries. However, Cannadine (1992, p.18) observes that:
The view that Britain was the first industrial nation, whose achievements all others consciously
emulated, has also been severely undermined, especially in the case of France where, it is now
argued, industrialization was taking place in a different way and where, in any case for much of
the eighteenth century, its productivity was higher than Britain’s.
‘Revolution’ implies a rapid transition from craft to industrial methods but British indus-
trialization was a relatively slow process in comparison with the recent development of the
‘tiger’ economies of east Asia. At the end of the 18th, and the beginning of the 19th centuries,
workers were gradually concentrated in factories and work centres, more or less under their
own free will. This concentration was linked to increasing mechanization and the consequent
need for machine-operating skills. Developing from older craft-based industries, work was
divided between employees according to the nature of their skills. One worker would no
longer be totally responsible for all stages of production, such as making a piece of furniture.
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6 Part one Introduction to HRM
In the industrial system the task was subdivided into simpler, less skilful jobs. Different people
would deal with parts of the process: one would turn chair legs, another would prepare seats,
yet another would stain and polish, and so on.
By the late 19th century, the size and complexity of the new industries demanded more
sophisticated methods of control and organization, eventually evolving into modern manage-
ment. Until this time, workers were not directly employed by large capitalists: their employers
were gang bosses, subcontracted to provide and organize labour. In the developed world, sub-
contractors of this kind continue to exist in the building sector and in fruit and vegetable-
picking. In developing countries their power is even greater. Under autocratic but loose
control, skilled or unskilled workers largely organized their own efforts, forming autonomous
teams. However, as factories grew larger and people were concentrated in greater numbers
in specific locations, this indirect approach became increasingly unworkable. People were
needed to control permanent workforces, which were directly employed by factory owners.
Initially they took the form of overseers, foremen or supervisors; exercising ‘coercion by
means of observation’ (Foucault, 1977, p.175). At first they were people promoted from the
workforce: the concept of a distinct managerial class with separate recruitment paths evolved
slowly. Jacques (1997) points out that ‘the foreman was not in any sense a middle manager,
but a key player in a form of control in the works radically different from and preceding
management.’
In the 19th century industry was dominated by individual owners, family businesses and
partnerships. The principals of these companies managed their businesses in a direct, personal
way, partly because the numbers of people involved were small enough to be within the span
of control of a few individuals. Family-controlled businesses became a major economic force
and many achieved considerable importance. Some of the most successful were happy to
publicize their methods and were featured in the media of the time. Biographies were written
glorifying their achievements and presenting their ideas in largely uncritical terms. George
Cadbury is one such example and he is featured in the case study at the end of this chapter.
Along with explorers, scientists and colonial adventurers, business heroes were presented as
role models for the masses. Such books met the demands of a reading population who pre-
ferred to perceive the world in terms of good and bad, heroes and villains, and required a
presentation of success in simplistic terms. Examination of modern ‘pop management’ books
suggest that little has changed.
Key concept 1.2 Alienation
A state of estrangement, or a feeling of being an outsider from society. Karl Marx observed
that although work in a traditional, agricultural or craft-based society had been exhausting,
workers had control over their own jobs. Their work required considerable knowledge and
skill that had been removed from many factory jobs. Dull, boring and repetitive work induces
a feeling of alienation. Assembly line workers are involved with a small part of the final pro-
duct, have little control over the rhythm of their work and may have no idea of the significance
of their contribution. Their work can appear to be alien with no relationship or meaning to
their lives other than to produce income. As a consequence they may feel little enthusiasm
and, often, active hostility towards what seems like forced labour.
Professional managers
The literature on organization is both extensive and old, but organization is not the same as
management. Much of the literature on management history is American in origin and,
not surprisingly, attributes most of the credit for the development of management to US
originators. Jacques (1997) comments:
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Chapter 1 Managing people 7
Moderns appear to be superior to other people because we see clearly what has hitherto been seen
through the eyes of bias and superstition; English are superior among Moderns because they are
the ones who produced the entire body of early work; Americans are superior to British because
they have superior character. That this hierarchy of ethnocentrism is commonplace in American
writing makes it no less worthy of comment.
One of the principal originators of modern management highlighted in the US literature
was, in fact, neither English nor (born) an American. The Scot, Daniel McCallum, was gen-
eral superintendent of the Eric Railroad in the USA. This railroad, in common with other
large rail companies, was finding it difficult to operate profitably, unlike smaller local rail-
roads. He wrote (see Chandler, 1962) that:
A superintendent of a road fifty miles in length can give its business his professional attention and
may be constantly on the line engaged in the direction of its details; each person is personally
known to him, and all questions in relation to its business are at once presented and acted upon;
and any system however imperfect may under such circumstances prove comparatively successful.
However, McCallum contended, when the railroad is ‘five hundred miles in length a very
different state exists. Any system which might be applicable to the business and extent of a
short road would be found entirely inadequate to the wants of a long one.’
He set about creating a management system in which responsibility for the railroad was
split into geographical divisions, each of manageable size. Superintendents were given respon-
sibility for operations within their respective divisions but had to provide detailed reports to
the central headquarters. There McCallum and his assistants were able to coordinate the
whole operation. McCallum advocated a number of management principles:
(cid:2) good discipline
(cid:2) specific and detailed job descriptions
(cid:2) frequent and accurate reporting of performance
(cid:2) pay and promotion based on merit
(cid:2) clearly defined hierarchy of superiors and subordinates
(cid:2) enforcement of personal responsibility and accountability
(cid:2) the search for and correction of errors.
The lines of authority from headquarters to superintendents and then to their subordinates
were laid out clearly on paper – effectively on an organizational chart. Other railroads copied
this system and were able to become effective and profitable. In turn, these ideas spread to
other US businesses.
By 1900 the USA had undergone several decades of rapid, large-scale industrialization.
Large American companies such as Heinz and Singer Sewing Machines had the characteris-
tics of modern, highly-structured organizations. They produced standardized consumer
durables for the mass market. These organizations required a supply of trained managers.
Notionally selected on the basis of ability and expertise – rather than family connections –
they needed to know how to organize, reward and motivate their staff. In the USA, state and
private universities were opened to cater for this new professional need.
The first companies of equivalent size and organization did not arise in Britain and the
Commonwealth until the 1920s and management education was similarly late in developing.
Like most European or Asian companies they still tended to employ relatives or to promote
long-standing workers to management roles. Reliability and ability to impose discipline were
held to be more important than technical knowledge. Increasingly, however, managers (espe-
cially those at a senior level) developed vested interests incompatible with those of the
working-classes (labour) and shareholders (capital).
A distinctive form of scientific management was taken up in the new high-volume produc-
tion industries. This came to be known as Fordism after the mass production methods used
by Henry Ford for automobile manufacturing. Jelinek (quoted in Mintzberg, 1994, p.21) con-
siders that Taylor ‘for the first time made possible the large-scale coordination of details –
planning and policy-level thinking, above and beyond the details of the task itself’. This
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8 Part one Introduction to HRM
Scientific management
In 1903, F.W.Taylor – an American engineer – published Shop Management, outlining a
system for extracting maximum output from workers. Later, his methods were pre-
sented as The Principles of Scientific Management (1911). Controversial at the time, and
still the subject of debate, Taylor is quoted frequently as the inspiration for many modern
industrial practices – including Japanese production methods. He outlined a systematic
but controversial programme based on:
(cid:2) rudimentary time and motion studies
(cid:2) selection of ‘first-class men’ for the job
(cid:2) premium pay for a ‘fair day’s work’.
Taylor’s ideas were not original. They embodied attitudes of the time, including strict
discipline to control soldiering (‘slacking’ or ‘skiving’). Taylor saw two forms: (a) ‘individ-
ual’ soldiering where workers’ were naturally lazy; and (b) ‘systematic’ soldiering where
workers conspired to maintain a comfortable work rate. Activities were timed to prevent
employees from taking it easy. As chief engineer at the Midvale Steel Company, Taylor
sacked slow workers, cut piece-rates, and brought in non-union workers. Productivity
was raised by standardizing and simplifying procedures into specified and unvarying
jobs. Employees were not allowed to think about their jobs, bring in new ideas, or vary
tasks to alleviate boredom. Broad craft knowledge was no longer required – knowledge
was transferred to the manager.
Taylor’s basic concept was the ‘task idea’: planning out every job in minute detail;
giving precise instructions on what to do, in what order, at what speed; and eliminating
wasteful or unnecessary actions. This produced ‘one best way’ for any task. At the
Bethlehem Steel Company he applied his principles to shovelling and handling pig iron
(Taylor, 1947, p.43) :
Now, gentlemen, shovelling is a great science compared with pig-iron handling. I dare say
that most of you gentlemen know that a good many pig-iron handlers can never learn to
shovel right; the ordinary pig-iron handler is not the type of man well suited to shovelling. He
is too stupid; there is too much mental strain, too much knack required of a shoveler for the
pig-iron handler to take kindly to shovelling.
The plant employed 400–600 men to move several million tons of material each year.
Taylor found the optimum load for shovelling, designed better shovels and scheduled
carefully timed rest-pauses. He was able to achieve the same output from 140 men with
an average 60 per cent bonus, virtually halving costs. He argued that the men were not
being overworked but simply doing their jobs more sensibly.
Taylor used Henry Knolle –a ‘first-class’ labourer immortalized in management lit-
erature as ‘Schmidt’ –to demonstrate the motivating effect of premium pay. Knolle’s pig-
iron handling increased four-fold to 50 tons a day, for a bonus equivalent to half his
normal pay. Only one in eight workers could match this performance, the remainder
being given lower-paid work. Many employers used Taylor’s system to increase produc-
tivity, but without extra pay. In fact, wages were often reduced on the grounds that the
rationalized jobs could be classified as unskilled. The work was given to people, such as
new immigrants, who would accept lower pay.
In his writings, Taylor presented his work at Bethlehem Steel as a success. In fact,
there were angry reactions from workers, managers and others. Press publicity on likely
redundancies, threats of industrial action, and management resentment led to Taylor’s
dismissal. He spent the rest of his life publicizing his theories. He believed that he had
developed a science that would legitimize the professional status of managers. Rose
(1975, p.32) describes Taylorism as ‘an instructive reminder of how “scientific” theories
of workers’ behaviour which fail when actually applied in industry can none the less
acquire a substitute vitality as managerial ideologies’. In other words, ideas which do not
work in practice can still be sold to other managers!
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Chapter 1 Managing people 9
As an early management guru, Taylor used recognizable tactics:
(cid:2) he developed a relatively simple set of principles
(cid:2) took personal credit for devising them
(cid:2) gave them a pretentious name – scientific management
(cid:2) and publicized them extensively.
What relevance do Taylor’s methods have for modern human resource management?
produced a new division of labour, splitting tasks and their coordination into different roles.
So management had become ‘abstracted’ from day-to-day activities, allowing it to ‘concen-
trate on exceptions’.
Taylor’s ideas were developed further by Frank and Lilian Gilbreth who made valiant
efforts to turn human beings into automatons. Their bizarre concepts included the ‘therblig’
(Gilbreth backwards) as a measure of work (Rose, 1975, p.84). Frank Gilbreth became
famous for his study of bricklaying in which he reduced the movements involved from 15 to
eight, and increased the number of bricks laid from 120 an hour to 350. Smith (1948, p.144)
gave an example of a simple motion study using the Gilbreths’ terminology, a bottle of gum
and a brush:
Actual movements Generalized description
1 Reach for the gum bottle Transport empty
2 Grasp the brush Grasp
3 Carry the brush to the paper Transport loaded
4 Position for gumming Position
5 Gum the paper Use
6 Return the brush to bottle Transport loaded
7 Insert the brush Pre-position
8 Release the brush Release
9 Move the hand back Transport empty
What was the point of such a motion study? Smith quoted a paper by H.G. Maule from
the Journal of the Institution of British Launderers, May 1935, which reported on use of the
methodology to investigate the process of folding sheets:
The sequence of movements was: collect a sheet as it came from the calendar, fold it, place the
folded article on a table. In the course of timing he noticed that a disproportionate amount of time
was taken in the last movement owing to the position of a table on which the folded articles were
placed. By calculating the time taken and multiplying it by the number of sheets folded in a week
he found that 20 miles a week were walked unnecessarily. … By a slight rearrangement of the table
this was altered, and yet no one had noticed it before this.
Huczynski and Buchanan (2000) argue that Taylorism and related techniques are more
prevalent today than ever. Japanese just-in-time techniques bear a number of similarities to
some aspects of scientific management. Scientific managementwas one of the first of the ‘one
best way’ methodologies of dealing with people management.
The human factor
The ‘science’ in scientific management was doubtful. At the same point in time, however,
academic researchers had begun to take an interest in the practical aspects of work. Work
psychology was pioneered by the German psychologist Hugo Munsterberg (1863–1916) who
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