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Difference Between Human Resource Management and Personnel Management

Difference Between Human Resource Management and Personnel Management

Many of us assume that Human Resource Management (HRM) and personnel management are similar terms and can be interchanged. But, the fact is, even though both these terms share some common grounds, they have some diverse aspects.
Suganya Sukumar
The term personnel management originated before the term Human Resource Management (HRM). Human Resource Development (HRD) is another term used in management studies and it covers a wider view of HRM. They have more similarities than differences. One of the obvious similarities between them is that, they both share the same field of activity and have the same objective of 'managing the employees'.
What is Human Resource Management?
The all-importance and requisiteness of HRM is stated by Henry Ford (a pioneer in the field of management) as ~ "take out my building, take out my machines, and all capital but leave my men with me, I will become Henry Ford again." These lines say a lot about the importance of human resources for any organization. The human resources refer to the qualities possessed by the workforce or employees in an organization. These qualities include knowledge, values, skills, abilities, cognition, beliefs, commitment, etc., possessed by the employees, without which any organization cannot grow or achieve their objectives. In short, the efficiency and success of any administrative system depends upon the cooperation of the human resources. HRM directly deals with the human resources in a system. Human Resource Management is defined by Gray Dessler as ~ "The policies and practices involved in carrying out the 'people' or human resources aspects of a management position, including recruiting, screening, training and appraising".
Functions of HRM
  • Managing the workforce as assets, that are required to develop the organization.
  • Aligning and developing the HR policies, according to the corporate strategies and other business management policies.
  • Developing the skills of the employees through adequate training and by providing the necessary resources required to develop their knowledge pertaining to their job.
  • Creating an efficient Organization Development (OD) system.
What is Personnel Management?
"Personnel Management is that phase of management which deals with the effective control and use of manpower as distinguished from other sources of power. The methods, tools, and techniques designed and utilized to secure the enthusiastic participation of labor represent the subject matter for study in personnel administration." ~ Dale Yoder.
It is the sub-system of the whole management system in an organization. The production and distribution of goods and services is managed by the Personnel department. This department evaluates the efficiency of the workers and also provides them incentives which can be either monetary or non-monetary. They also assign the departments such as sales and marketing, production, maintenance, etc., where the employee has to work, depending on the skills and knowledge possessed by the employee.
Functions of Personnel Management
  • Developing the organizational structure and planning.
  • Managing the wage and salary of the employees and provide appraisals.
  • Providing employee benefits and services such as insurance plans, pension plans, fringe benefits, Provident Funds (PF), etc.
  • Negotiating on labor union activities like collective bargaining, trade union issues, contract agreements, grievance handling, etc.,
  • Auditing the employee policies and practices, to ensure the efficiency of those policies.
Comparison Between HRM and Personnel Management
Point of Difference Human Resource Management Personnel Management
Key Function To improve organization's efficiency Employment laws and payroll management
Key Focus Build dynamic culture Administer the workforce
Job design Team work Division of Labor
Standardization Low High
Pay appraisals Performance related Job evaluation
Intervention Wide range of strategies Procedural methods
Management role Transformational Transactional
Communication Method Direct Indirect
Key Management Skill Facilitation Negotiation
Contract management Individual contracts Trade union or collective bargaining contracts
Managerial Task Nurturing Monitoring
Key Managers Business/line/general managers Personnel managers or IR manager
Nature of Relation Unitarist Pluralist
Management Action Informal urge for Business-need Procedures
Decision-making Fast Slow
Conflict De-emphasized Institutionalized
Key Relation Customer Labor

Both of them are important management sectors that work together for the growth of the organization, by managing and serving their employees. It was found that, nowadays, HRM has a broader scope than personnel management.