The Evolution of Human Resources

1. The Evolution of Human Resources

As we move into a new industrial age, businesses will need their HR departments to adapt and change to survive in this new environment. Before the 19th century, most work was done by skilled artisans and craftworkers. These workers usually owned their tools and sold their products directly in local markets. There weren’t formal employee-employer relationships or structured HR practices back then.

During the Industrial Revolution in the 19th century, factories and mass production changed how work was done. Factories needed more workers, which led to the need for better labor management. Labor unions also started during this time to fight for workers’ rights and collective bargaining.

key concept

Workers formed labor unions to negotiate for better wages, benefits, and working conditions with their employers. By joining together, they had a better chance of getting their requests recognized than if they asked individually.

In the early 20th century, businesses started to see the need for specialized roles to handle employee-related tasks. Personnel managers took care of things like payroll, compliance, and keeping employee records. During this time, researchers like Elton Mayo showed how social factors affect productivity. Mayo’s Hawthorne Studies highlighted the importance of employee morale and motivation. Companies began to think more about employee well-being and satisfaction.

IN CONTEXT

The Hawthorne Studies, done at Western Electric’s Hawthorne Plant in the 1920s and 1930s, had a big impact on management theories. Researchers, including psychologist Elton Mayo, looked at how people behave at work. They found that changes in lighting seemed to affect productivity because the workers felt observed and cared for by the researchers, not the implemented lighting changes alone. These studies showed that social factors, such as feeling valued and being part of a group, had a significant impact on productivity. The Hawthorne Studies highlighted the importance of considering workers’ social and emotional needs in addition to their physical work environment.

The term ‘Human Resource Management’ became well-known in the 1980s when HR roles expanded beyond just administrative tasks to include strategic functions. Concepts like talent management, performance appraisal, and succession planning became essential. Companies started to see human capital (workers’ knowledge, skills, creativity) as a crucial asset, making strategic HRM the norm.

terms to know

Industrial Age

A period of rapid industrialization, technological innovation, and economic growth, transforming societies from agrarian to industrial.

Industrial Revolution

A period of rapid industrial growth in the 18th and 19th centuries transforming manufacturing and society.

Labor Union

An organized association of workers, often in a trade or profession, formed to protect and further their rights and interests.

Personnel Managers

A role that started in the early 20th century and proceeding HRM, focusing on the administrative side of hiring, employee relations, and managing staff.

Hawthorne Studies

Experiments that showed workers’ productivity increased when they felt observed and valued.

Performance Appraisal

A regular review of an employee’s job performance and contributions to the company.

Succession Planning

Planning future leadership by identifying and developing employees to fill key roles in the company.

Human Capital

The skills, knowledge, and experience that employees bring to a company, making them valuable resources.

2. HR as a Strategic Partner

In the 21st century, HR has evolved into a strategic partner, crucial for implementing business strategies through effective management of human capital. This means going beyond traditional HR tasks, like payroll and compliance, and focusing on aligning HR strategies with the company’s long-term goals, significantly impacting overall business performance and success.

Over the past 15 to 20 years, the focus has been on integrating HR strategy into the overall business strategy. HR now considers the overall business strategy when prioritizing and allocating resources. HR has become a true partner to the business, with its credibility depending on its involvement in strategic management discussions.

key concept

As a strategic partner, HR not only supports internal needs but also considers external factors like customers, investors, and communities to define success in terms such as customer satisfaction, investor confidence, or reputation within the community itself. HR is now measured on its ability to drive both internal initiatives and external success.

In this new role of strategic partner, HR focuses on several key activities to support and drive business success.

• Talent management is a major area, involving the recruitment, development, and retention of skilled employees.
• Workforce planning is another critical activity, where HR analyzes and forecasts the organization’s future staffing needs to ensure the right people are in the right roles at the right time.
• Organizational development is also a priority, with HR working to improve the overall effectiveness of the company through initiatives like leadership development, change management, and fostering a positive workplace culture.

HR must also look to the future to identify trends that could impact the organization. This involves staying informed about changes in technology, workforce demographics, and industry developments. By understanding these trends, HR can develop proactive plans to address potential challenges and opportunities.

EXAMPLE

This might include implementing new training programs to upskill employees, adjusting recruitment strategies to attract emerging talent, or creating flexible work policies to adapt to changing employee expectations.

By anticipating future needs and preparing accordingly, HR ensures that the organization remains competitive and well-positioned for long-term success.

key concept

Over the last 200 years, HR has transformed from an administrative function focused on paperwork and record-keeping to a key role within organizations, partnering with executives to drive business forward. This evolution shows how HR has grown to be an integral part of business strategy, ensuring that the management of human capital aligns with the overall goals and success of the organization.

The following diagram depicts the evolution of human resource management from skilled workers to strategic partners:

big idea

By aligning HR goals with the overall organizational strategy, HR professionals contribute to talent management, workforce planning, and organizational development. They play a pivotal role in areas such as recruitment, learning and development, compensation, employee relations, and change management. Through this strategic partnership, HR enhances employee engagement, productivity, and the organization’s overall success.

IN CONTEXT

Case Study: Google and Project Oxygen

A real-world example of HR as a strategic partner is Google’s approach to talent management and company culture. Google’s HR, called People Operations, plays a key role in shaping the company’s strategies and keeping it a top innovator in the tech industry.

One important project led by Google’s HR was called ‘Project Oxygen’ (Garvin, 2013). This project aimed to find out what makes a manager effective at Google. Using data, they analyzed performance reviews, feedback surveys, and nominations for top-manager awards. They found eight key behaviors of successful managers, like being a good coach and empowering the team without micromanaging.

With this information, Google’s HR team redesigned their management training programs to focus on these behaviors. They also used these criteria in their hiring and evaluation processes for managers. This strategic move not only improved managerial effectiveness but also boosted employee engagement and productivity.

This example shows how HR can go beyond traditional roles and contribute strategically to a company’s success by using data to improve leadership and overall business performance.

try it

Directions: Imagine you are HR with Google. How would you have figured out how to make managers more effective? Consider how the transition of human resources from simple administration to strategic partners impacted the outcomes of Project Oxygen and the impact on Google.

What was the primary goal of Project Oxygen?

To identify the behaviors of the most effective manager and to improve the quality of management within Google.

How did HR use the findings to improve HR practices?

HR used the information to improve management training programs, hiring processes, and performance evaluations.

terms to know

Strategic Partner

HR’s role working closely with top management to create and put into action business plans by managing the company’s people.

Talent Management

Finding, developing, and keeping skilled employees to meet a company’s needs and help it grow.

Workforce Planning

The analyzing and forecasting of staffing needs to ensure an organization has the right people in the right roles.

Organizational Development

The improvement of a company’s effectiveness by enhancing its processes, structures, and culture.

REFERENCES

Garvin, David A. (2013, December). How Google Sold Its Engineers on Management. Harvard Business Review. hbr.org/2013/12/how-google-sold-its-engineers-on-management