Human resource management 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. 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.
Antecedent theoretical development
HR spawned in the early 20th century and was influenced by Frederick Taylor (1856-1915). Taylor explored what he termed “scientific management”, 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.
Birth and evolution of the 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 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 Labor 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”.