Nurianna Thoha, MBA, DBA

International Business Program, BINUS Business School

  As a review of the literature indicates, concerns about people in the workforce started a long time ago back in 1870 when the revolution of industry enabled mass manufacturing. Managers began to think about how to manage shop floor practices to gain work efficiency and provide for employees’ welfare.  Nankervis et al (2005) later called this people management.  A series of influences began to elevate the importance of people management.  A great contribution of America’s earliest industrial leaders was the efficient system of mass production they created.  Employee muscle made those systems work and employees were expected to adapt to the way in which those systems were designed. Therefore, employees usually were seen and treated as extensions of the assembly lines on which they worked (Ehrlich 1997).

To indicate the development of people management, Nankervis et al (2005) present the following statement:

“People management has existed in one form or another since the beginning of time. Certain HR processes, even though informal in nature, were performed whenever people came together for a common purpose” (Nankervis, Compton & Baird 2005, p. 4).

Following Nankervis’s statement above, Table 1 presents the summary of the development of people management starting from the year 1870 to 1955.

Table 1. The Development of People Management

Note: The texts printed in italics show the people management practices.

  Characteristic Rhetoric

1870 – 1900

Ideology: Industrial Betterment

Tenor: Normative

·  Managerial discourse sought to legitimate coercive shopfloor practices.

·  Harsh discipline.

·  American employers paid little attention to working conditions or to the welfare of employees.

·  Industrial betterment began in the railroad industry by founding YMCA, the activities were: building libraries and recreational facilities, offering classes for employees and their families, establishing social clubs, instituting profit sharing and benefit plans, improving the aesthetics and sanitation of factories (Social Programs).

·  Revolution of industry enables mass manufacturing and ultimately corporate growth and consolidation.

·  As firms grew, owners found face-to-face management more difficult.

·  Demand for labour was fulfilled by immigrants who brought foreign customs and behaviour.

·  Labour relations became increasingly confrontational.

·  Strikes, lockouts, radical labour unions emerged.

·  Wage system prevailed.

·  Employer educated the workforce, if necessary ‘Americanize’ the worker’s habits and character.


1900 – 1923

Ideology: Scientific Management

Tenor: Rational

·  Managers with engineering background attempted to apply the principles of their discipline to the organisation of production.

·  Firms were losing control because administration had become ‘increasingly chaotic, confused and wasteful’. This could be solved by developing more rational methods for managing the shopfloor.

·  Scientific management was founded by Frederick Taylor. He had devised various schemes for improving shopfloor production.

·  Efficiency craze.


·  Rationalization would make work less arduous and more productive. It would result in greater earnings for workers and industrialists alike.

·  Workers were organized by applying the criterion of efficiency and by offering a fair day’s pay for a fair day’s work.

·  Effective management required the exercise of valid expertise, so it require a ‘mental revolution’

·  For Taylor, scientific management was more a way of thinking than a set of techniques.


Challenge to Rhetoric:

·  Scientific management was no panacea for industry’s ills.

·  Lilian Gilberth and Henry Gantt payed more attention to ‘human factors’.

·  Morris L. Cooks supported collective bargaining and union participation in corporate governance towards organized labour.

·  Industrialist evinced a new willingness to cooperate with labour.


1925 – 1955

Ideology: Human Relations/ Welfare Capitalism

Tenor: Normative

·  Welfare practiced:

– Vacations and sick leave

   – Health care

   – Sanitation

   – Pension funds (Employee Benefit)

·  Efficiency

·  National Personnel Association was founded; National Civic Federation had begun to speak of “personnel directors” instead of “welfare secretaries”.

·  Ability assessment was used for selecting and placing employees.

·  New ideology of normative control was emerged: The group oriented rhetoric of human relations movement.

During the late 1940s a number of industrial relations centres were established. The systems were charged with institutionalising a system of collective bargaining which emphasised a shift from solely structuring conflict through due process to include the potential for collaboration.

·  Welfare capitalism in the 1920s was best viewed as an attempt to modify and extend rationalism’s promise to the realm of employment relations. The upshot was the birth of Personnel Administration.

·  Between 1929 and World War II managerial theorists fashioned a rhetoric of control that turns on the imagery of depth psychology and group behaviour.

·  The principles of human relations were initially formulated during the 1930s but not until the 1940s did it garner substantial institutional support.

·  After World War II corporate experimentation with strategies for enhancing loyalty, motivation and satisfaction blossomed almost overnight. Shopfloor interventions rapidly expanded beyond counselling, supervisory training, innovative compensation system, schemes for participatory decision making and job enrichment, attitude surveys, and even esoteric techniques such as psychodrama and sociometry.

Source: Developed from Barley and Kunda in Thoha (2006).

Table 1 shows people management practices, characteristics and rhetoric which had been performed since the 1870 – 1900 era. In this era people management practices were very limited. They include: disciplinary procedures, employees’ education, and labour relations issues. Then, in the 1900 – 1923 era more practices were applied by offering a fair day’s pay for a fair day’s work, paying more attention to the human factor, and co-operation between the industrialist and the labour. In 1925 – 1955 people management practices went through further expansion, covering welfare practices, development of National Personnel Association, formulation of the principles of human relations and the system of collective bargaining, implementation of supervisory training, innovative compensation system, and job enrichment.

In this era the focus on people management was on work efficiency and work standards:

“We Are Used to Thinking of Reconversion as a Machine Problem But There is Also a Problem of Human Reconversion Because There must be a Vast Number of Job Changes, Migrations and Improved Standards of Performance Required of Workers” (Fredenburgh 1945, p.242).

The birth of the Personnel Administration concept occurred after the people management. Then followed by the development of Human Resources Management, Strategic Human Resources Management, and Human Capital concepts.



  • Barley and Kunda (1992) in Thoha, N (2006), “The Transition from Personnel Administration to Strategic Human Resource Management Practices in Large Indonesian Companies: Barriers and Enablers”, Curtin University, Perth, Western Australia.
  • Ehrlich, C. J. 1997, ‘Human resource management: A changing script for a changing world’, Human Resource Management, vol. 36, no. 1, pp. 85-89. Retrieved: 22 September 2004, from Proquest database.
  • Fredenburgh, F. A. 1945, ‘Reconversion of personnel’, Personnel Journal, vol. 23, no. 7, pp. 242-253.
  • Nankervis, A. R., Compton, R. L. & Baird, M. 2005, Human resource management: strategies and processes, 5th edn, Thomson Learning, Southbank, Vic.