The term human resource management (HRM) had its origins in the United States and was first used in Europe as a job title by US multinationals in the 1960s. The concept of people being a strategic input into the production process alongside capital and material resources quickly became regarded as a powerful one and its popularity soared as personnel sought to establish itself as a function in its own right, gain a central place in commercial organisations, and Personnel Directors strived to secure more power and status within company boards.
The human resource function embraces recruitment, employee discipline and dismissal, training and development, performance appraisal, labour relations, compliance with employment laws and health and safety legislation, productivity improvement, the administration of contractors, equality and diversity, remuneration policy, benefits administration, payroll, employee welfare (wellness), motivation programmes, corporate governance, manpower planning and employee communications. In some organisations it also includes the administration of company security, data protection and outsourcing activities.
There is a strong contrast between European countries in the way that HRM is viewed and in the ratio of HR practitioners to other employees in an organisation. Typically HR is regarded as a more self-contained and strategic function in the UK, whereas it is often regarded as primarily administrative and routine in continental companies. There is also typically around one HR practitioner for every 110 employees in the UK (depending on company type and size), whereas this ratio rises to 1:250 – 350 in many continental companies.
The focus for HR strategy over the last decade has been to find an ever-widening range of methods to cut costs and improve operational performance. This trend has been irrespective of stages reached in the economic cycle or a company’s relative competitive position. Options which were once regarded as either in or out of fashion are now being assessed purely on their merits, and are being swiftly adopted if they seem likely to succeed.