People Innovation Excellence

The Development of Personnel Administration (PA)

Nurianna Thoha, MBA, DBA

International Business, Faculty of Business, Bina Nusantara University

This article describes the history of personnel administration as part of human resource development from various sources of literature from the year 1940s up to the year of 1970s. Some writers use the term personnel management and personnel administration interchangeably for the same meaning and others use personnel administration as a part of personnel management. This article will follow the later ones, where personnel management includes personnel administration.

In the 1940s, as it started, the literature on personnel administration mostly described a need to improve personnel administration functions due to wartime conditions. Johnson (1947) describes the implementation of personnel administration prior to World War I, where few companies had functionalised hiring and firing activities. Johnson (1947) proposes that the application of the principle of decentralising line personnel functions and centralising staff functions led to greater cooperation between the operating organisation and the personnel department. He suggests that staff employment functions such as the preliminary interview, testing, placement, promotion, transfer, adjustment of wage rates, development of service records, control of absenteeism and tardiness, and the maintenance of other personnel records be centralised in the personnel department. Meanwhile, the right to discharge an employee was decentralised among the foremen but workers were protected against unwarranted discharge from the company by termination interviews centralised in the personnel department. Under this arrangement, the personnel department was able to record the causes of quits, layoff, and discharges, and use techniques to minimise labour turnover, reduce discriminations and favouritism and then to protect workers against incompetent and arbitrary supervisors.

In search of a personnel administration definition, Byrt (1968) defines a “personnel system” put forward by the American writer, Mosher, as a system under which employees are recruited, hired, developed, fired and retired. Byrt (1968) further proposes that personnel administration be looked at under three major headings: personnel policy, personnel practices, and organisation for personnel administration. Personnel policy is a broad, general guide to action. Personnel practices are activities, procedures, or techniques used in operating the personnel system. It consists of three main phases: employment, development, and termination. The organisation of personnel administration varies from one organisation to another. In Australia, administering employment conditions has tended to be the principal “bread and butter” activity of most personnel departments.
In examining personnel roles, Lupton, a Professor of Organisational Behaviour in England, proposes a new role for the personnel manager.

“The new role for the personnel manager which is emerging is to provide this specialised knowledge and skill, and to help manage the social assimilation of technical innovation” (Lupton 1969, p.167).

Therefore, the administrative procedures that received a great emphasis in the job of the personnel manager, and which follow decisions made by others can now be seen as secondary to policy making functions where the personnel manager sets out to play a major role. Consequently, to have the professional level ability, the personnel manager is required to have a good working knowledge of the behavioural sciences theories, and an ability to apply this knowledge to the analysis of the organisation’s problems (Lupton 1969).

The 1970s articles mostly acknowledged a rapidly changing society and proposed a way for personnel administration to react to it.

The rapidly changing society which is characterised by changing technology and increasing rates of obsolescence or changing state welfare and barbiturate culture had been observed by many writers (Barnes & Ridding 1972). These external changes influenced the organisation at that time in many ways, such as: increasing competitiveness, leading to a demand for greater management effectiveness; rising standards of education and expectation, leading to a demand for more appropriate methods of employee motivation; rapidity of social and technological change, leading to a demand for corporate flexibility and innovation; and economic ignorance and indifference, leading to a pressing need for explanation of the economic facts of corporate life (Martin 1972). All of these cause Barnes and Ridding (1972) to ask a question: Is personnel management keeping pace with social and technological change?
To answer that question they examine some personnel functions:

  • Industrial Aspects
    These include the changing concept of remuneration (from a reasonable living allowance to the concept of the capacity of an industry to pay. In this case the basis for wage negotiation is becoming more reliant on the understanding and application of economics); shorter hours of work; improved working conditions for greater efficiency of equipment rather than of employees.
  • Employment and counselling
    These include: Recruitment as changing technology directs career choices towards glamour industry; educational standards which increase pre-requisite requirements; the application of aptitude tests; and the need for counselling.
  • Man power planning
    These include: the balancing of recruitment to organisational needs in numbers and skills, and a planned programme of retraining and development of existing manpower.

They cited a paper presented by Davidson (1968) which describes his concepts of the personnel manager that were needed to undertake the personnel functions above:

  • As a business manager, he needs the same perspective of management as any other manager; he must be up-to-date with the development of management techniques including using computers to access information.
  • As an expert in his own field, he carries a particular responsibility to ensure that the company’s human resources are effectively and profitably used.
  • As an agent for change, he must be able to recognise change in the external environment; to increase his knowledge, develop new skills and adjust his outlook and attitudes.

In 1967 Wood conducted a survey about specific functions performed by the personnel department. Of fifty-four questionnaires that were sent, forty-eight were returned. The questionnaire was divided into six functional areas: employment, training and education, personnel records, compensation administration, medical-health-safety, and personnel management. The research summary showed that member companies of the Washington Technical Personnel Forum, regardless of the size, mostly applied the administration function to their personnel departments (Wood 1967). Therefore, the survey shows that personnel management in the past focused mostly on administrative function, and did not have any involvement in strategic function.
Searching for an appreciation of the role of personnel management from the top management and others in developing organisations, Sheehan (1976) presents the development of the definitions of personnel management in Australia, the United Kingdom (UK), and the United States of America (USA).

Table 1. The Development of Personnel Administration and Personnel Management Definitions in Australia, UK, and USA

Australia UK USA
“the organisation, direction and control of people in formal organisations” (Byrt 1967 in Sheehan (1976, p.10)). “…..the personnel department is a division within the management structure wherein men and women are employed to help to evolve and to help in carrying out the various policies of a company in matters affecting its employees. ….the work of a  personnel department is described under six headings – Employment, Wages, Joint Consultation, Health and Safety, Employee Services and Welfare, Education and Training” (Moxon 1943 in Sheehan (1976, p.11)). “Since management aims at getting effective results with people, personnel administration is a basic management function or activity permeating all levels of management in any organisation. Personnel administration is …. Organising and treating individuals at work so that they will get the greatest possible realization of their intrinsic abilities, thus attaining maximum efficiency for themselves and their group, and thereby giving the enterprise of which they are a part its determining competitive advantage and its optimum results” (Pigors and Myers 1969 in Legge (1994, p.13)).
“the personnel department is one of the staff departments that renders all four of the staff functions, namely, advice, service, coordination, and control. The department is in an excellent position to do a constructive job in several phases of coordination. In fact the personnel department may well provide leadership in the entire area of organisation building and structure” (Scott, Clothier, and Spiegel in Sheehan (1976, p.11)). “the reasonable satisfaction of human needs is an inescapable function of management and a necessary prelude to production efficiency” (Moxon 1945 in Sheehan (1976, p.11)). “Personnel management is the recruitment, selection, utilisation and development of human resources by and within the enterprise” (French in Sheehan (1976, p.14)).

“The personnel function in management is especially concerned with the development of a highly motivated smoothly functioning work force” (Strauss and Sayles in Sheehan (1976, p.14)).

“the acquisition, development and maintenance of human resources in such a manner to accomplish, with maximum efficiency and economy, the functions and objectives of an enterprise” (Pickett 1967 in Sheehan (1976, p.11)). “that part of the management function which is primarily concerned with the human relationships within an organisation. Its objective is the maintenance of those relationships on a basis which, by consideration of the wellbeing of individual, enables all those engaged in the undertaking to make their best personal contribution to the effective working of that undertaking” (Forman 1956 in Sheehan (1976, p.11-12)). “Personnel administration is that activity in an enterprise which strives to mould human resources into an effective organisation, provides opportunity for maximum individual contributions under desirable working conditions, promotes individual development, and encourages mutual confidence and understanding between employees and the employer as well as between employees themselves” (Scott, Clothier, and Spiegel in Sheehan (1976, p.14)).
“the aim of personnel management is to develop a satisfied labour force that will be efficient” (Kangan in Sheehan (1976, p.11)). “Personnel Management aims to achieve both efficiency and justice, neither of which can be pursued successfully without the other” (Institute of Personnel Management Statement  1963 in Sheehan (1976, p.12))

Lupton (1963) and this following sentences in that statement:

“and these aims and functions are best carried out by a department of the enterprise employing people who are specially trained for the job!” (Lupton 1963 in Sheehan (1976, p.12)).

“the purpose of personnel function is to provide advice and service to all units of the company in making most effective use of human resources in attaining the objectives of the enterprise. Personnel is primary concerned with doing those things that motivate the people of the company to highest productivity and helps to provide the company with the kind of people it needs for continuity and success. To a very high degree, its purpose is to see that the highest form of executive leadership is secured, obtained, developed, and perpetuated through out the organisation” (National Industrial Conference Board, Inc. in Sheehan (1976, p.14)).
  “Personnel management is a responsibility of all those who manage people, as well as being a description of the work of those who are employed as specialists. It is that part of management which is concerned with people at work and with their relationships within an enterprise. Personnel Management aims to achieve both efficiency and justice, neither of which can be pursued successfully without the other. It seeks to bring together and develop into an effective organisation men and women who make up an enterprise, enabling each to make his own best contribution to its success, both as an individual and as a member of the working group. It seeks to provide fair terms and conditions of employment and satisfying work for those employed” (Institute of Personnel Management Statement  1976 in Sheehan (1976) and in Legge (1994, p.14)).

 

“…..personnel has developed into a major function and a constellation of special skills and talents covering a broad spectrum of activities concerned with the recruitment, training, assessment, selection, placement, development, appraisal, compensation, organisation and conservation of business and industry’s most critical resource: the people who make the enterprise productive. Indeed, the personnel function may be said to be principally responsible for the human values of the organisation…..” (Handbook of Modern Personnel Management in Sheehan (1976, p.14)).

 

Basically personnel is concerned with the matching of people to the jobs that must be done to achieve the organisation’s goals (Glueck 1974 in Legge (1994, p.13)).

  “Personnel management is concerned with obtaining the best possible staff for an organisation and, having got them, looking after them so that they will want to stay and give their best to their jobs” (Cuming 1975 in Legge (1994, p.14)).

 

 

“Personnel management is a series of activities which: first enable working people and their employing organisations to agree about the objectives and nature of their working relationship and, secondly, ensures that the agreement is fulfilled” (Torrington and Hall 1987 in Legge (1994, p.14)).

“Since all organisations, regardless of their size, functions, or objectives, must operate with and through people, the management of such organisations basically is the process of managing people. Any manager or supervisor who is responsible for the work of others in an organisation therefore must engage in personnel management and perform the various processes, such as training, motivating, and counselling, that this responsibility entails. The primary function of the personnel department staff, on the other hand, is to provide managers with service and assistance that they may require in managing subordinates more effectively and in accordance with established personnel policies and procedures” (Chruden and Sherman in Sheehan (1976, p.14)).

Source: Developed from Sheehan (1976) and Legge (1994)

Based on the definitions of personnel management and personnel administration above, some common topics can be identified. These include recruiting, selecting, rewarding, developing, and directing employees in such a way as to achieve their work satisfaction by giving their best at work so that the organisation can achieve its goals. Personnel administration and management is the task of all managers, not just personnel specialists.

Source of article:
Thoha, N., 2006, The transition from personnel administration to strategic human resource management practices in large Indonesian companies: Barriers and Enablers. Doctoral Disertation, Curtin University, Perth, Western Australia.


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