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  1. 1. Human Resources Management in New ZealandRichard RudmanFifth edition, 2010History and development of human resourcesmanagement Adapted from Chapter 2, Human Resources Management in New Zealand, fourth edition, 2002.The origins of human resources managementHuman resources management is not a new term. It was being used – mainly in the United States as a synonym forpersonnel management – as far back as the 1950s. Personnel management has a much longer history, going back to theIndustrial Revolution and beyond. Just how much further back is mainly of interest to historians. But people have beenmaking personnel decisions since the earliest times, when tribal leaders had to be selected, and young people had to betrained to hunt prey, cook food, tend crops, farm animals, and so on. Ancient history has many examples of personnel management in action. As far back as 1750BC, the code of lawsproclaimed by Hammurabi, King of Babylon, set wages for people hired as agricultural labourers, ox-drivers andshepherds. Craftsmen could be prosecuted if they failed to pass their skills on to apprentices, builders were held liablefor the standard of their work, and owners were required to pay for the health care of their slaves. Many of the early examples are concerned with workers’ health. In the 1st century AD, a Roman scholar, Pliny theElder, warned about the hazards of handling zinc and sulphur and described a protective mask, made from an animal’sbladder, which protected labourers from dust and lead fumes. In 1473, Ulrich Ellenbog wrote a pamphlet onoccupational diseases and injuries to gold miners. The field of occupational health was further advanced in 1556,when the German scholar, Agricola, described diseases which affected miners and prescribed preventative measures.The first comprehensive book on occupational medicine – Diseases of Workmen – was published in Italy in 1760 byBernadino Ramazzini, who became known as the ‘father of industrial medicine’.Modern personnel managementPeople have been managed as long as they have worked for others, yet the origins of modern personnel managementlie mainly in the Industrial Revolution. Two principal themes began to emerge in those early days: a concern for the welfare of workers the employer’s need to guide and control workers and their efforts.These themes feature throughout the development of personnel management and contain many of the conflicts andambiguities which have shaped its history. To a considerable extent, the key influences on the development ofpersonnel management – the scientific management, industrial welfareand human relations movements, the development of trade unions and Sources of personnel managementcollective bargaining, and the growth of employment-related Industrial Revolutionlegislation – were responses to the interplay of these twin themes. Scientific Management Industrial Welfare movementIndustrial Revolution Human Relations movementBefore the Industrial Revolution, most manufacturing was carried on Development of trade unionsby individual craft workers in their own homes. With the development Collective bargainingof coal-fired steam power, and the invention of new manufacturing Employment law History and development of human resources management 1 © Pearson 2010 Supplement to Human Resources Management in New Zealand, 5e
  2. 2. machinery, the Industrial Revolution began around the middle of the 18th century. Power, plant and people –harnessed in new factory-based production units – began to replace cottage-based industry and agricultural work asthe major sources of employment. These new employment patterns led to population shifts – chiefly, the process ofurbanisation – which would alter the nature of society dramatically. Workers could get higher wages in the factoriesthan they earned under the cottage system, so there was a ready supply of labour. But along with increased wealth and better job opportunities, the factory system had its less attractiveconsequences. Workers who had carried out a wide range of tasks in the cottage now found themselves doing the sameoperation time and time again. And the factory brought regimentation to working life which had not been part ofcottage industry or agricultural work. The employment of large numbers of people, and the interdependence of theirtasks and positions in the production process, seemed to require detailed – and often harsh – rules to govern manyaspects of working life. Working life became more organised in other ways also. A hierarchy of managers developed, and the socialdistance between workers and owners increased as a consequence. Most factory employees worked long hours for lowpay, in working conditions which offered little protection against extreme temperatures, noise or dust, and largelyignored safety considerations. Child labour was common. In 1833,Britain adopted its first effective factories legislation, which Thousands of little children, from sevenrestricted the hours that children could work in factories. It was a to fourteen years of age, are dailyforerunner to modern health and safety legislation. compelled to labour from six oclock in There were more subtle evils as well. In both Britain and the the morning to seven in the evening, withUnited States, for example, employees were frequently given only — Britons, blush while you read itvouchers on the ‘company store’ instead of wages. It was not until — with only thirty minutes allowed forthe Truck Act of 1891 that employers in Britain were required to eating and recreation. Poor infants —pay wages in cash. Such factors profoundly influenced the feel and mourn that ye are slaves.development of personnel management. Oastler (1830)Effect in New ZealandThe impact of the Industrial Revolution was felt early in the European period of New Zealand’s history, because manyimmigrants came to this country to escape the working and living conditions of Victorian Britain. The stand for theeight-hour day made by Samuel Parnell, a carpenter, in 1840 at Petone, has become a key event in New Zealand’sindustrial history and is still celebrated in the annual Labour Day holiday. The churches and other sponsors ofsettlement in New Zealand held views similar to those of the great English social reformers, and were determined notto replicate the miseries of the Industrial Revolution in the new country. In this they were not successful. By the1880s, New Zealand had an increasing number of manufacturers who were able to compete internationally, partlybecause raw materials were cheap and readily available, partly because labour was also cheap, and partly becausethere was no restrictive labour legislation. In 1890, a Royal Commission into industrial conditions found manyinstances of ‘sweated’ labour and recommended the introduction of employment legislation and a system ofconciliation and arbitration.Scientific ManagementThe Industrial Revolution introduced The first case inquired into by the pressman (Mr Silasspecialisation, division of labour, and the Spragg, a reporter for the Otago Daily Times) was that ofconcentration of employment in factories. In this Mrs M, who was busily employed finishing boysway, it anticipated the scientific management knickerbockers. The home was scrupulously clean. Howmovement which came at the end of the 19th long will you work tonight? asked the pressman. Mrs Mcentury. Its most prominent name is that of an replied: Till just about 11 oclock, but then I shall have madeAmerican engineer, Frederick Winslow Taylor. 3s 6d today — that is, by working from half-past 8 thisHe believed that managers could use scientific morning till 11 oclock tonight. But this is a special day — ittechniques to improve productivity and efficiency is all the better class of work. It is only when one gets theand achieve greater co-operation. Taylor (1911) first-class work that you can make anything like that. Paul (1939) History and development of human resources management 2 © Pearson 2010 Supplement to Human Resources Management in New Zealand, 5e
  3. 3. laid an early foundation for personnel management: First. Develop a science for each element of a man’s work, which replaces the old rule-of-thumb method. Second. Scientifically select and then train, teach, and develop the workman, whereas in the past he chose his own work and trained himself as best he could. Third. Heartily co-operate with the men so as to insure all of the work being done in accordance with principles which have been developed. Fourth. There is an almost equal division of the work and the responsibility between the management and the workmen. The management take over all work for which they are better fitted than workmen, while in the past all of the work and the greater part of the responsibility was thrown upon the men.Taylor and his colleagues were pioneers in work study, ergonomics and production-related payment systems.Although they are often scorned today for their apparently impersonal techniques, the advocates of scientificmanagement loudly proclaimed that they were concerned about the welfare of workers. Psychologist Lillian Gilbreth(1914) wrote that scientific management provided for: the physical improvement of workers (increased health, better colour and general appearance); mental development (wider interest, deeper interest, increased mental capabilities); moral development (personal responsibility, responsibility for others, appreciation of standing, self-control, ‘squareness’); contentment, brotherhood, and the ‘will to do’ (developments which are natural consequences of moral development).The scientific management school dominated management thinking until the 1920s. It provided a foundation for themodern professionalisation of management, including the development of personnel management as a discipline in itsown right.Industrial Welfare movementReaction against the Industrial Revolution’s impact on people was another contributor to the development of modernpersonnel management. For example: Cuming (1975) argues that ‘the origins of personnel management can be found wherever enlightened employers have tried to improve the lot of their workers’; and Niven (1967) asserts it was ‘the plight of the workers which was to mould the form welfare work was to take’.Charity was a driving force for many of the early personnel practitioners, many of whom were women. But they weregenuinely concerned for the welfare of workers, even if somewhat paternalistic in their approach. The great English social reformers of the nineteenth century – like Robert Owen, who is sometimes called thefather of personnel management, and Lord Shaftesbury – roundly criticised the working conditions and treatment ofworkers provided by other employers, and set out to improve the lot of the workers in their own factories. Owen, forexample, introduced shorter working hours, meals for employees, and staff purchasing privileges to his textile mills inScotland. Other examples come from the Rowntree, Cadbury and Lever families – names which live on in modernenterprises – who set up unemployment benefit, sick pay and employee housing schemes for their workers, partlybecause it made good business sense, but mainly out of charity. Their criticisms of the terrible impact of the IndustrialRevolution are echoed in the writings of Charles Dickens and reflected in the pictures of William Hogarth. Industrial welfare work involved ‘voluntary efforts on the part of employers to improve, within the existingindustrial system, the conditions of employment in their own factories’ (Pround, 1916). In addition, some employerstook their welfare concerns outside the workplace and provided libraries, recreational facilities and medical care, aswell as financial assistance for education and home purchase. The first personnel officers were employed to administer these welfare programmes, and usually had titles likesocial secretary or welfare secretary. The Institute of Welfare Officers, founded in Britain in 1913, is now the History and development of human resources management 3 © Pearson 2010 Supplement to Human Resources Management in New Zealand, 5e
  4. 4. Chartered Institute of Personnel and Development. The influence of the welfare tradition remains strong even todaywhen, for example, employee assistance programmes are a common feature of HR management.Human Relations movementThe origins of the human relations movement lie in the Hawthorne Experiments – a research programme whose designcriteria would have satisfied any advocate of scientific management. In 1924, efficiency experts at the Hawthorneplant of the Western Electric Company in Illinois set out to study the effects of lighting on workers’ productivity.They assumed that increases in lighting would lead to higher output. Two groups of employees were selected: a testgroup to work in conditions of changing light, and a control group whose lighting would be kept at normal levels. Aslighting increased, the test group’s output went up as expected, but so did the output of the control group – andwithout any change in their lighting. Over a period of 18 months, the researchers – led by Australian-born Elton Mayo (1949) of Harvard University –improved the working conditions of the women who assembled telephone relays by introducing rest periods, providingmeals and shortening the working week. All the time, production increased. Next, anticipating that a return to theoriginal working conditions would affect production negatively, they took all the improvements away. Output reachednew peaks. The explanation lay in the human dimensions of these experiments, not in the technical changes. The workers weremade to feel important by the attention they received from the researchers; they saw themselves as members of a teamrather than as individuals; and they developed relationships which met their needs for affiliation, competence andachievement. Subsequent interviews with more than 20,000 Western Electric employees confirmed that they wanted tobe seen as important, both as individuals and as a group, and wanted opportunities to participate in the operations andfuture of the company. The methodology of the Hawthorne studies has been criticised, but their findings are the basic theme of the humanrelations school: managers need to study and understand relationships among people. In summary: Productivity is influenced more by interpersonal relationships on the job than by pay and working conditions. Workers should be seen both as individuals and as members of groups which have norms and values that influence the behaviour of their individual members. Productivity rises when groups identify with management, but fall when their goals are different or opposed. This happened at the Hawthorne plant when workers felt their sense of mastery and achievement was replaced by close supervision and a loss of control over their jobs and environment.The human relations movement is important for its recognition that an organisation is a social system, not just a formalarrangement of functions. Thus it gave managers a new set of assumptions and decision criteria based on thebehavioural sciences. Traditionally, their assumptions had been based largely on economics.Trade unions and collective bargainingThe question whether or not workers are to be permitted to act ‘in combination’ to advance and protect their interestsand welfare leads to a second theme in the historical development of personnel management – the need to seekconsensus or compromise between employers and their employees yet, at the same time, to maintain the organisation’sneed for control. Associations of workers existed before the Industrial Revolution – most often in the form of guilds of craftworkers – but the changes that factory-based employment brought to working life encouraged the growth of unions.At the end of the 18th century, when violent strikes made many fear there could be a repeat of the French Revolutionin Britain, the House of Commons enacted the Combination Laws. They made it a criminal offence for workers toorganise to increase their wages or reduce their working hours. In the United States, in 1842, workers gained the rightto organise and bargain collectively, but unions were not legal in Britain until the Trade Union Act 1871. By then, socialism was growing in Europe. Marx and Engels published The Communist Manifesto in therevolutionary year of 1848, the First International was held in London in 1864, social democratic parties wereincreasing their representation in European parliaments, 1906 saw the formation of the British Labour Party, the History and development of human resources management 4 © Pearson 2010 Supplement to Human Resources Management in New Zealand, 5e
  5. 5. Bolshevik Revolution erupted in 1917, and Britain elected its first Labour government in 1924. Revolution, socialism,war and government served to persuade organised labour that it should have both political and industrial agendas.Early unionism in New ZealandNew Zealand had its first recorded strike in 1841. The first unions for skilled trades workers were formed about 20years later, at the initiative of migrants from Britain and with rules copied from their British counterparts. Unions weregiven legal standing by the Trade Union Act 1878 – which simply copied English legislation – but they tended to gainand lose membership and strength rapidly. Unions were hit hard by economic depression at the end of the 1870s, butrevived in the early 1880s with the formation of district trades and labour councils. A national trades and labour congress met in Dunedin in 1885, but the first real upsurge for the unions came in1889–90. This was part of the international rise of political and industrial labour, but resulted also from the risingpublic concern about working conditions – fuelled by newspapers and church leaders – which led in 1890 to theappointment of a Sweating Commission. However, the crushing defeat of the unions in the 1890 Maritime Strike wasa blow from which they took many years to recover, despite the reforming zeal of the 1890 Liberal government. The formation of the Labour Party in 1916 – largely at the initiative of unions – was clear recognition thatorganised labour needed both industrial and political armsto pursue its values and goals. Origins of human resources management Systems theoryEmployment legislation Behavioural sciencesThe 1890 Liberal government in New Zealand was Organisation Developmentsympathetic to labour, and set about a legislative New managementprogramme that would have a significant impact on both of Competitive advantagethe main themes in the development of personnel Strategic managementmanagement. It enacted the Industrial Conciliation and Managerialism and economicArbitration Act 1894 and, at the same time, brought in rationalismlegislation to regulate conditions in factories and otherworkplaces. The Labour Department was set up in 1891,initially to help people find employment, but later as the administrative and enforcement machinery for the Liberalgovernment’s labour legislation. As Noel Woods (1963) writes: By 1891, two distinct movements simultaneously reached a climax. The first, a movement for the state regulation of conditions of work, was supported by a community whose conscience had been pricked by the exposure of working conditions existing in the eighties. The second, a movement for state regulation of industrial relations, was supported by a community determined that it should not again be subjected to the discomforts of widespread industrial warfare.These twin concerns have remained strong influences ever since. Any account of the development of industrialrelations and employment legislation in New Zealand must reflect their importance.Towards Human Resources ManagementAs we have seen, human resources management is frequently used as a synonym for personnel management. HumanResources Management – with those initial capital letters – is something different. Its foundations were laid –probably unintentionally – when: Peter Drucker (1955) advocated visionary goal-directed leadership as the best management approach for modern organisations; and Douglas McGregor (1960) stressed the importance of management by integration as the strategy for managing people across an entire organisation.However, the emergence of Human Resources Management as a specific management approach or philosophy datesmainly from the mid-1980s. History and development of human resources management 5 © Pearson 2010 Supplement to Human Resources Management in New Zealand, 5e
  6. 6. Systems theorySince the 1950s, systems theory has helped all managers – not just those in specialist HR roles – to appreciate how thevarious parts and functions of an organisation relate to each other and, therefore, why a change in one area will havean effect in other places. Rensis Likert (1961) argued that ‘all components of the system of management must beconsistent with each other and reflect the system’s basic philosophy’. The idea that HR policies and plans shouldreflect the organisation’s culture and be integrated with its business plans is fundamental to HR management.Behavioural sciencesThe behavioural sciences can help managers: improve their understanding of individual motivation, group behaviour, leadership and communication take more systematic and better informed approaches to job design, recruitment and selection, training and development, employee appraisal and counselling, and remuneration planning and management.During its prominence in the 1960s, the behavioural science movement, led by Abraham Maslow, ChristopherArgyris, Frederick Herzberg, Rensis Likert and others, focused on issues of integration and involvement. It alsostressed quality of working life as a key factor in employee motivation, job satisfaction and performance.Organisation DevelopmentDuring the 1960s and 1970s, the behavioural sciences led to the development of Organisation Development. OD is aseries of interventions designed to help people to analyse and understand their organisations holistically, and to planand implement change strategies from this perspective. The development of teams and the management of changewere central aspects of the OD approach, which featured process consulting techniques as a means for people toanalyse their own situations and problems and generate solutions.‘New’ managementIn Search of Excellence was the first management blockbuster book, and the beginning of the modern boom inmanagement theory. In some ways, In Search of Excellence is most important for encouraging a whole generation ofmanagers to think more carefully about what they do. Its authors, Tom Peters and Robert Waterman (1982), clearlydescribed the significance of the so-called ‘soft’ skills of management in the success of American enterprises to whatbecame a huge international audience. And they stressed the need for all aspects of an organisation’s management tobe integrated, and in harmony with its overall values and objectives. Corporate values, culture and mission wereamong the key focal points of ‘new’ management. In a subsequent book, Peters and Austin (1985) summarised the ‘excellent’ characteristics of successfulorganisations as a triangle of virtues: care for customers, innovation, and people. Leadership was at the centre of thetriangle – to be exercised largely through ‘management by walking around’ (MBWA). In addition, decentralisationwould reduce the number of management layers, and put decision making nearer to both customers and employees. In Search of Excellence was, perhaps, most influential inits attack on the ‘rationalist’ model which had dominatedAmerican business and government during the Second World Behavioural sciencesWar and beyond. Peters and Waterman advanced three psychology – study of human behaviourarguments against the rationalist model (Mickelthwait & social psychology – human behaviour inWooldridge, 1996): social settings It puts too much emphasis on financial analysis and organisation theory – organisational too little on motivating workers or satisfying design and functions customers. organisational behaviour – human behaviour in organisational settings It encourages bureaucratic conformity and the expense of entrepreneurial innovation. History and development of human resources management 6 © Pearson 2010 Supplement to Human Resources Management in New Zealand, 5e
  7. 7. It rests on a misunderstanding of human nature. The central problem with the rationalist view of organising people is that people are not very rational. To fit Taylor’s old model, or today’s organisational charts, man is simply designed wrong (or, of course, vice versa). . . . (Peters & Waterman, 1982, p. 55).Around this time too, many organisations adopted ‘Japanese’ management techniques like Total Quality Management(TQM) and continuous improvement (Kaizen). Employee empowerment, development and commitment are central tothese practices, which thus influenced the path which HR management took in those organisations.People as competitive advantageDuring the 1980s, the idea that ‘people are our most important asset’ began to give way to the proposition that ‘peopleare a source of competitive advantage’. In other words, the ‘asset’ had to be turned to the organisation’s ‘advantage’by the application of appropriate management techniques. As Charles Greer (1995) says: In a growing number of organisations, human resources are now viewed as a source of competitive advantage. There is greater recognition that distinctive competencies are obtained through highly developed employee skills, distinctive organisational cultures, management processes, and systems. This is in contrast to the traditional emphasis on transferable resources such as equipment. Increasingly, it is being recognised that competitive advantage can be obtained with a high quality work force that enables organisations to compete on the basis of market responsiveness, product and service quality, differentiated products, and technological innovation.This applies especially to organisations in the service sector where product and service differences have narrowed.Most airlines, for example, operate similar aircraft on similar routes at similar prices: according to the ‘people ascompetitive advantage’ argument, passengers choose their airline mainly for the service they receive from check-instaff and cabin crews. Thus, how people are managed, and respond to that management, will be reflected in theorganisation’s performance. The argument here is that organisations can achieve sustainable competitive advantage through their humanresources, if they meet these criteria: The people improve the efficiency or effectiveness of the organisation. Their skills, knowledge and abilities are not equally or easily available to competitor organisations. The employees’ capabilities and contributions cannot be duplicated quickly or readily by other organisations. The organisation’s human resources are appropriately organised for the present task, and easily adaptable to move to future tasks when needed.Rise of strategic managementThe development of HRM as a distinct philosophy of management was encouraged by the rise of strategicmanagement thinking. Shareholders and managers have been forced to rethink the structure and operations of theirorganisations – and how they should respond to increasing international competition, globalisation, the growingcomplexity and size of organisations, technology changes, flatter organisational hierarchies, a better educatedworkforce, changing workforce values, and changes in workforce demographics. Organisations have had to learn howto manage strategically rather than operationally, and many have sought – but fewer have succeeded – to recognise thecentral role of human resources in this new, integrated approach.Managerialism and economic rationalism History and development of human resources management 7 © Pearson 2010 Supplement to Human Resources Management in New Zealand, 5e
  8. 8. The new philosophy of HRM has been attractive to managers who face the need to change rapidly and radically. Guest(1989) describes HRM as ‘an attractive option to managements driven by market pressures to seek improved quality,greater flexibility and constant innovation’. At the same time, the move towards HRM reflects the ascendancy of ‘new right’ or ‘neo-classical’ philosophies,and managerialism. Purcell (1989) comments that ‘in the entrepreneurial 1980s, the HRM philosophy was alignedclosely with prevailing ideas of enterprise and the freeing up of management initiatives’. That alignment continued into the 1990s. As a result, HR management – as strategies and practices, as well as aspecialist function – was to become closely identified with the interests of the organisation. The new legitimacy formanagerialism is often most obvious in the public sector where successive governments have insisted that ‘marketconditions’ apply and new management structures be used to emphasise accountability. Paradoxically, this means thatthe new ideology of HRM has been widely introduced to organisations which are not actually ‘businesses’ in the usualsense of that word. Predictably perhaps, in an increasingly individualistic world, the ideas of common interest and mutuality are notnecessarily shared by workers. Following the shift to HRM, employees in some organisations have become suspiciousof their HR managers, and some HR professionals have become rather cynical about their own roles and theexpectations that others have of them. In fairness, it should be noted that many changes were forced on organisationsby their general or line managers – often against the advice or over the opposition of their personnel specialists.Personnelmanagement and War and the labour forceHRM in New Zealand Under manpower regulations, women and men were conscriptedThe development of personnel and directed to essential work. In 1944, all men aged 18–59 and allmanagement in New Zealand followed women (without dependent children) aged 18–40 could be directeda similar pattern to Britain, but to a job.emphasised administration more than Acts of Parliament and Arbitration Court awards could be setwelfare (Ransom, 1966). Before the aside under wartime emergency regulations. Restrictions onSecond World War, the typical New overtime working and the requirement to pay penalty rates forZealand enterprise was small and overtime work were lifted. The minimum working age was loweredlacked tradition: its owner-manager was and children were employed on shift work.likely to be an individualist, oftenwithout much sense of a socialresponsibility to employees. Very few organisations had developed staff policies. Instead, they relied on the fact that itwas relatively easy for them to hire and fire individual employees, and left the details of their employment terms andconditions to be dealt with in industrial awards and agreements negotiated by unions and employers’ associations.After the warDuring the Second World War, labour shortages forced both politicians and employers to rethink manpower policies.Government regulations made it hard for employers to dismiss workers, and for workers who had been dismissed toget new jobs. Employers realised that they would have to find tools other than dismissal to help them deal withdiscipline, labour turnover, absenteeism, and industrial unrest. New Zealand’s first welfare officers and industrial nurses were appointed during the war to deal with the problemsof those in directed labour, especially women who had not worked before, and now found themselves in jobspreviously done by men. History and development of human resources management 8 © Pearson 2010 Supplement to Human Resources Management in New Zealand, 5e
  9. 9. Twenty firms were known to employ welfare officers in the early 1940s, although these were low-level positionswith duties restricted to canteen services, first aid, handling personal difficulties and welfare, and controllingabsenteeism. Most of these welfare officers were untrained and not well suited to their positions. And, because theywere women, society allowed them to have no real authority over men: thus they were found mainly in female-intensive organisations. But the general success of these appointments led to changes in management views. After the war, the Department of Health encouraged the employment of industrial nurses. By 1946, some 38industrial nurses had jobs, again in firms which employed predominantly women. Their duties were mainly limited tohealth and first aid, but some were used to control discipline and absenteeism, although their training in autocraticinstitutions did not prepare them for that very well. Only two organisations, both of them large, were known to employpersonnel officers, although they had no formal personnel management training. At the same time, studies and reports from the industrial psychology division of the Department of Scientific andIndustrial Research, which had been set up in 1942 to investigate problems arising from wartime industry, wereencouraging interest in the business community in industrial psychology and systematic management. In Stewart Ransom’s view, the greatest impetus for the introduction of personnel management to New Zealand wasthe arrival of large organisations whose headquarters were overseas. The New Zealand operations had to conform tothe overseas model – both in working conditions and staff policies and in having a personnel department – and thesecompanies appointed experienced personnel managers and provided excellent training. The development of major public works (like hydro-electric dams) and industrial projects (in the pulp and paperindustry, for example) led to the appointment of personnel officers to handle the challenges of employing largenumbers of people, often in isolated areas. Initially, the responsibilities of these personnel officers were usuallyrestricted to accommodation, canteens, social and recreational facilities, transport and welfare problems – but weresoon extended to employment activities like recruitment and selection, and later to staff development and personnelpolicy issues.The IPM surveysIn 1958, the Institute of Personnel Management – now the Human Resources Institute – surveyed 39 private sectorfirms which employed 35,000 staff and a number of government departments which employed another 105,000people. The survey found that 25% of organisations with 150 or more staff had a personnel department. This was apost-war development, because only four personnel managers had been appointed before 1945, 10 between 1945 and1949, another 10 between 1950 and 1954 and 13 between 1955 and 1958. On average, largerorganisations in the Ratio of HR specialists to total staff1958 IPM survey 1958 1968 1978 1987employed one personnelstaff member for every Less than 600 employees 1:145 1:125 1:82 1:149185 employees. The 1:185 1:173 1:195 1:172 More than 600 employeesratio for organisationswith fewer than 600 staff was 1:145. By1968, these ratios were 1:173 and 1:125 Women and the warrespectively; in 1978 they were 1:195 The national emergency of war had a liberating effect on women;and 1:82. A 1987 survey showed a ratio they became more recognised as people who could and shouldof 1:172 for organisations with more contribute to economic life. Hitherto, because of tradition, prejudice,than 600 employees and 1:149 for and women’s lack of social equality in the community, they hadsmaller organisations. been prevented from doing so. Now they drove tractors and buses, In its 1978 survey, IPM said there did all types of farm work, mended the tram tracks, cleaned out thehad been significant economic and railway carriages, entered the public services as clerical workers. Insocial change between 1969 to 1978, 1947 the percentage of women clerical workers in the publicthe effects of which had made new service was 25; in 1939 it had been 5 per cent.demands on all those concerned with Sutch (1969) History and development of human resources management 9 © Pearson 2010 Supplement to Human Resources Management in New Zealand, 5e
  10. 10. the management of people as employees. It had been a period of high immigration and emigration, with manyimmigrants in the early 1970s unused to industrial employment and many of those who left being skilled tradesmen. Legislation had created an almost new environment for the employer and employee: equal pay, human rights,accident compensation, wage control, industrial training and industrial relations were some examples. It had been aperiod of unprecedented economic change: expansion and great development in some industries; contraction, mergersand close-downs for others; companies had had to become more efficient in order to survive. It had also been a periodof change for the trade union movement, with young professionals appearing in the movement, new strengthsdiscovered, and real challenges to the place of trade unions in society.Power and positionA mid-1980s study of personnel and industrial relations staff (Gilbertson et al., 1987) showed that just over half of allrespondents (54%) were responsible for recommending or making personnel or industrial relations policy for theirorganisations. However, one-third of them were neither personnel nor industrial relations executives: it appeared thatmany organisations included personnel and industrial relations policy making as part of a wider management portfoliosuch as corporate services or administration. This suggested that there may be evolutionary stages in the specialisationof the personnel and industrial relations function: It emerges as a series of duties incorporated with other managerial tasks, for example administration manager. Next, the need emerges for a manager devoted full time to personnel and industrial relations matters, leading to a combined personnel and industrial relations manager role. The size or complexity of the combined task then demands further specialisation into personnel and industrial relations matters, hence the emergence of a group of managers specialising in either personnel or industrial relations work. Eventually, sub-specialisation can occur within the function itself with the appointment of staff specialists at both manager and officer level – for example, training managers.The 1987 survey found that few New Zealand organisations had sufficiently large numbers of employees to justify thefinal evolutionary stage of specialisation. It also found that: almost half the people in personnel and industrial relations work had no tertiary or professional qualifications: they relied on work experience as the basis for their knowledge; fewer than one in five had a tertiary qualification, and only 28% of these qualifications were in personnel and industrial relations; 82% of the respondents were male, and women held only 9.5% of all policy-making positions; at the policy- implementing level, 37% of personnel officers were women while only 8% of personnel managers were women; 87% of the respondents had worked outside the personnel and industrial relations fields, in other business functions, the armed services, general administration and a range of occupations. Nearly one-third of personnel and industrial relations managers had come from non-business careers, while 51% of all the respondents reported line working experience.Into the 1990sA 1990 survey (Geare & Stablein, 1993) found that the ‘typical’ New Zealand HR manager was a married man in hisforties, a New Zealander of British descent. He was a non-graduate with a fair amount of HR management training,more than 10 years’ experience in management, but only about five years’ experience in the HR department. Themajority of HR managers were not graduates, but a significant proportion were (37%), and a significant proportionwere women (31%). Later in the decade, a survey of IPM members (Pajo & Cleland, 1997) updated the profile of the New Zealand HRspecialist. It found that: more than two-thirds of HR practitioners were aged between 30 and 49 years; History and development of human resources management 10 © Pearson 2010 Supplement to Human Resources Management in New Zealand, 5e
  11. 11. 60% of HR practitioners were women, compared with only 20% in 1978; there were more males in the older age groups, but women made up the majority of younger practitioners – suggesting that HR management would increasingly become a female-dominated field; ethnic groups other than Caucasian (96% of all respondents) were severely under-represented in HR positions; 85% of respondents had a tertiary qualification, compared with only 13% in 1968; and the most common background for HR people was clerical and administration work (where nearly one-quarter began their working careers), but almost the same proportion had started in HR-related work.This profile had scarcely changed four years later when the Human Resources Institute (IPM changed its name in1999) analysed its membership and found: 46% were aged 30-49 years; 56% were female; 74% of respondents identified themselves as New Zealanders and another 16% as Europeans; 87% held a tertiary qualification. The ratio of HR specialists to total staff has often been used as an indicator of the development of the personnel andHR functions. With the recent enthusiasm for outsourcing non-core functions and ‘devolving’ operationalresponsibilities to line managers, this ratio may no longer have the same relevance. Of the respondents to a 1997survey of New Zealand organisations with more than 50 employees (Johnson, 2000), 61% had an HR department ormanager. The median number of HR staff was three. The median ratio of HR staff to all employees was 1:73, similarto organisations in Europe.ReferencesCuming, M. W. 1975, The Theory and Practice of Personnel Management, Heinemann, London.Drucker, P. F. 1955, The Practice of Management, Heinemann, London.Geare, A. J. & Stablein, R. 1993, ‘Human resource management in New Zealand: profession and practice’, Asia Pacific Journal of Human Resources, vol. 31, no. 2, pp. 26–38.Gilbertson, D., Fogelberg, G. & Boswell, C. 1987, Personnel and Industrial Relations Staff in New Zealand: A Research Report, Victoria University of Wellington and Institute of Personnel Management New Zealand, Wellington.Gilbreth, L. M. 1914, The Psychology of Management, Sturgis & Walton, New York, chap. 10.Greer, Charles 1995, Strategy and Human Resources, Prentice-Hall, NJ, p. 105.Guest, D. 1989. ‘Human resource management and industrial relations’. Journal of Management Studies, vol. 24, no 5.Johnson, E. K. 2000, ‘The Practice of Human Resource Management in New Zealand: Strategic and Best Practice?’, Asia Pacific Journal of Human Resources, vol. 38, no. 2.Likert, R. 1961, New Patterns of Management, McGraw-Hill, New York, p. 222.Mayo, E. 1949, ‘Hawthorne and the Western Electric Company’, in The Social Problems of an Industrial Civilisation, Routledge.McGregor, D. 1960, The Human Side of Enterprise, McGraw-Hill, New York.Mickelthwait, J. & Wooldridge, A. 1996, The Witch Doctors: Making Sense of the Management Gurus, Times Books, New York, pp. 89–90.Niven, M. M. 1967, Personnel Management 1913–1963, Institute of Personnel Management, London.Oastler, R. 1830. ‘Slavery in Yorkshire’, Leeds Mercury, 29 September. History and development of human resources management 11 © Pearson 2010 Supplement to Human Resources Management in New Zealand, 5e
  12. 12. Pajo, K. & Cleland, J. 1997, Professionalism in Personnel, Massey University/IPM New Zealand.Paul, J. T. 1939, Our Majority: And the After Years, Dunedin, p. 11.Peters, T. J. & Waterman, R. H. 1982, In Search of Excellence, Harper & Row, New York.Peters, T. J. & Austin, N., 1985, A Passion for Excellence, Collins, London.Pround, E. D. 1916, Welfare Work, G. Bell & Sons, London, p. 5.Purcell, J. 1989, ‘The impact of corporate strategy on human resource management’, in Storey, J. (ed), New Perspectives in Human Resource Management, Routledge, London.Ransom, S. W. N. 1966, ‘Background of Personnel Management’, in Hanley, G. (ed), Personnel Management in New Zealand, Sweet and Maxwell, Wellington, pp. 9–21.Sutch, W. B. 1969, Poverty and Progress in New Zealand, Reed, p. 252.Taylor, F. W. 1911, Scientific Management, Harper & Row, New York, pp. 36–7.Woods, N. S. 1963, Industrial Conciliation and Arbitration in New Zealand, Government Printer, Wellington, pp. 39– 40. History and development of human resources management 12 © Pearson 2010 Supplement to Human Resources Management in New Zealand, 5e