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Human resource management
Human resource management (HRM, or simply HR) is a function in organizations designed to maximize employee performance in service of their employer’s strategic objectives. HR is primarily concerned with how people are managed within organizations, focusing on policies and systems. HR departments and units in organizations are typically responsible for a number of activities, including employee recruitment, training and development, performance appraisal, and rewarding (e.g., managing pay and benefit systems). HR is also concerned with industrial relations, that is, the balancing of organizational practices with regulations arising from collective bargaining and governmental laws.
HR is a product of the human relations movement of the early 20th century, when researchers began documenting ways of creating business value through the strategic management of the workforce. The function was initially dominated by transactional work, such as payroll and benefits administration, but due to globalization, company consolidation, technological advancement, and further research, HR now focuses on strategic initiatives like mergers and acquisitions, talent management, succession planning, industrial and labor relations, and diversity and inclusion.
In startup companies, HR's duties may be performed by trained professionals. In larger companies, an entire functional group is typically dedicated to the discipline, with staff specializing in various HR tasks and functional leadership engaging in strategic decision making across the business. To train practitioners for the profession, institutions of higher education, professional associations, and companies themselves have created programs of study dedicated explicitly to the duties of the function. Academic and practitioner organizations likewise seek to engage and further the field of HR, as evidenced by several field-specific publications. HR is also a field of research study that is popular within the fields of management and industrial/organizational psychology, with research articles appearing in a number of academic journals, including those mentioned later in this article.
In the current global work environment, most companies focus on lowering employee turnover and retaining the talent and knowledge held by their workforce. New hiring not only entails a high cost but also increases the risk of the newcomer not being able to replace the person who was working in that position before. HR departments also strive to offer benefits that will appeal to workers, thus reducing the risk of losing knowledge.
HR spawned in the early 20th century and was influenced by Frederick Taylor (1856-1915). Taylor explored what he termed "scientific management" (later referred to by others as "Taylorism"), striving to improve economic efficiency in manufacturing jobs. He eventually keyed in on one of the principal inputs into the manufacturing process—labor—sparking inquiry into workforce productivity.
The human relations movement grew from the research of Elton Mayo and others, whose Hawthorne studies (1924-1932) serendipitously documented how stimuli, unrelated to financial compensation and working conditions, yielded more productive workers. Contemporaneous work by Abraham Maslow, Kurt Lewin, Max Weber (1864-1920), Frederick Herzberg, and David McClelland (1917-1998) formed the basis for studies in industrial and organizational psychology, organizational behavior and organizational theory, giving room for an applied discipline.
By the time enough theoretical evidence existed to make a business case for strategic workforce management, changes in the business landscape (à la Andrew Carnegie, John Rockefeller) and in public policy (a là Sidney and Beatrice Webb, Franklin D. Roosevelt and the New Deal) had transformed the employer-employee relationship, and the discipline was formalized as "industrial and labor relations". In 1913, one of the oldest known professional HR associations—the Chartered Institute of Personnel and Development—was founded in England as the Welfare Workers' Association, then changed its name a decade later to the Institute of Industrial Welfare Workers, and again the next decade to Institute of Labour Management before settling upon its current name. Likewise in the United States, the world's first institution of higher education dedicated to workplace studies—the School of Industrial and Labor Relations—was formed at Cornell University in 1945.
During the latter half of the 20th century, union membership declined significantly, while workforce management continued to expand its influence within organizations. "Industrial and labor relations" began being used to refer specifically to issues concerning collective representation, and many companies began referring to the profession as "personnel administration". In 1948, what would later become the largest professional HR association—the Society for Human Resource Management (SHRM)—was founded as the American Society for Personnel Administration (ASPA).
Nearing the 21st century, advances in transportation and communications greatly facilitated workforce mobility and collaboration. Corporations began viewing employees as assets rather than as cogs in a machine. "Human resources management", consequently, became the dominant term for the function—the ASPA even changing its name to SHRM in 1998. "Human capital management" is sometimes used synonymously with HR, although human capital typically refers to a more narrow view of human resources; i.e., the knowledge the individuals embody and can contribute to an organization. Likewise, other terms sometimes used to describe the field include "organizational management", "manpower management", "talent management", "personnel management", and simply "people management".
HR has been depicted in several popular media. On the U.S. television series of The Office, HR representative Toby Flenderson is sometimes seen as a nag because he constantly reminds coworkers of company policies and government regulations. Long-running American comic strip Dilbert also frequently portrays sadistic HR policies through character Catbert, the "evil director of human resources". Additionally, an HR manager is the title character in the 2010 Israeli film The Human Resources Manager, while an HR intern is the protagonist in 1999 French film Ressources humaines. Additionally, the BBC sitcom dinnerladies main character Philippa is an HR manager.
At the macro-level, HR is in charge of overseeing organizational leadership and culture. HR also ensures compliance with employment and labor laws, which differ by geography, and often oversees health, safety, and security. In circumstances where employees desire and are legally authorized to hold a collective bargaining agreement, HR will typically also serve as the company's primary liaison with the employee's representatives (usually a labor union). Consequently, HR, usually through representatives, engages in lobbying efforts with governmental agencies (e.g., in the United States, the United States Department of Labor and the National Labor Relations Board) to further its priorities.
To look at Human Resource Management more specifically, it has four basic functions: staffing, training and development, motivation and maintenance. Staffing is the recruitment and selection of potential employees, done through interviewing, applications, networking, etc. Training and development is the next step in a continuous process of training and developing competent and adapted employees. Motivation is key to keeping employees highly productive. This function can include employee benefits, performance appraisals and rewards. The last function of maintenance involves keeping the employees' commitment and loyalty to the organization.
The discipline may also engage in mobility management, especially pertaining to expatriates; and it is frequently involved in the merger and acquisition process. HR is generally viewed as a support function to the business, helping to minimize costs and reduce risk.
There are half a million HR practitioners in the United States and thousands more worldwide. The Chief HR Officer or HR Director is the highest ranking HR executive in most companies and typically reports directly to the Chief Executive Officer and works with the Board of Directors on CEO succession.
Within companies, HR positions generally fall into one of two categories: generalist and specialist. Generalists support employees directly with their questions, grievances, and work on a range of projects within the organization. They "may handle all aspects of human resources work, and thus require an extensive range of knowledge. The responsibilities of human resources generalists can vary widely, depending on their employer's needs." Specialists, conversely, work in a specific HR function. Some practitioners will spend an entire career as either a generalist or a specialist while others will obtain experiences from each and choose a path later. Being an HR manager consistently ranks as one of the best jobs, with a #4 ranking by CNN Money in 2006 and a #20 ranking by the same organization in 2009, due to its pay, personal satisfaction, job security, future growth, and benefit to society.
Human resource consulting is a related career path where individuals may work as advisers to companies and complete tasks outsourced from companies. In 2007, there were 950 HR consultancies globally, constituting a USD $18.4 billion market. The top five revenue generating firms were Mercer, Ernst & Young, Deloitte, Watson Wyatt (now part of Towers Watson), Aon (now merged with Hewitt), and PwC consulting. For 2010, HR consulting was ranked the #43 best job in America by CNN Money.
Some individuals with PhDs in HR and related fields, such as industrial and organizational psychology and management, are professors who teach HR principles at colleges and universities. They are most often found in Colleges of Business in departments of HR or Management. Many professors conduct research on topics that fall within the HR domain, such as financial compensation, recruitment, and training.
Several universities offer programs of study pertaining to HR and related fields. The School of Industrial and Labor Relations at Cornell University was the world's first school for college-level study in HR. It continues to offer education at the undergraduate, graduate, and professional levels; and it operates a joint degree program with the Samuel Curtis Johnson Graduate School of Management. Other universities with entire colleges dedicated to the study of HR include Michigan State University, University of Minnesota, University of Illinois at Urbana-Champaign, and Renmin University of China. Many colleges and universities house departments and institutes related to the field, either within a business school or in another college. Most business schools offer courses in HR, often in their departments of management.
There are a number of professional associations, some of which offer training and certification. The Society for Human Resource Management, which is based in the United States, is the largest professional association dedicated to HR, with over 250,000 members in 140 countries. It offers a suite of Professional in Human Resources (PHR) certifications through its HR Certification Institute. The Chartered Institute of Personnel and Development, based in England, is the oldest professional HR association,with its predecessor institution being founded in 1918.
Several associations also serve niches within HR. The Institute of Recruiters (IOR) is a recruitment professional association, offering members education, support and training. WorldatWork focuses on "total rewards" (i.e., compensation, benefits, work life, performance, recognition, and career development), offering several certifications and training programs dealing with remuneration and work-life balance. Other niche associations include the American Society for Training & Development and Recognition Professionals International.
A largely academic organization that is relevant to HR is the Academy of Management that has an HR division. This division is concerned with finding ways to improve the effectiveness of HR. The Academy publishes several journals devoted in part to research on HR, including Academy of Management Journal and Academy of Management Review, and it hosts an annual meeting.
Academic and practitioner publications dealing exclusively with HR:
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Human resource management