The early days: welfare officers

The history of personnel management begins around the end of the 19th century, when welfare officers (sometimes called 'welfare secretaries') came into being. Their creation was a reaction to the harshness of industrial conditions, coupled with pressures arising from the extension of the franchise, the influence of trade unions and the labour movement, and the campaigning of enlightened employers, often Quakers, for what was called 'industrial betterment'.

The first welfare workers were women, and were only concerned with the protection of women and girls, which was seen as a worthy aim. They would visit sick employees and help to arrange accommodation for women, often including the supervision of moral welfare. They were usually employed in the newer industries where women were engaged in light machine work, packing, assembly or other routine jobs. In some companies, their duties grew to become concerned with the recruitment and training of women as well.

There was some ambiguity about their role as it grew; an ambiguity which this factsheet will show, is often present in the personnel role and which has not diminished over the years. On the one hand, there was the assertion of a paternalistic relationship between employers and (female) employees and the aim of moral protection of women and children. On the other, there were the economic aims of achieving higher output by control of sickness and absence and, by resolving grievances, of making the organisation of women in trade unions unnecessary. Thus their motives were mixed (and of course their costs were met by companies), but at a time when there was virtually no state welfare provision most welfare workers wanted to help improve conditions for working women.
The growth in personnel management: 1914-39

The First World War accelerated change in the development of personnel management, as it did in many other areas of working life. The number of welfare officers grew to about 1,300, largely because of the Munitions of War Act, 1915, which sought to control the supply of labour to munitions factories and made welfare services obligatory in them. Men were recruited to oversee boys' welfare, and the government encouraged welfare development through the Health of Munitions Workers' Committee.

During the war, industrial relations entered the equation. Women were recruited in large numbers to fill the gaps left by men going to fight, which in turn meant reaching agreement with trade unions (often after bitter disputes) about 'dilution'- accepting unskilled women into craftsmen's jobs and changing manning levels. For the first time the state had to open up a dialogue with the unions and develop forms of joint consultation.

During the 1920s, jobs with the titles of 'labour manager' or 'employment manager' came into being in the engineering industry and other industries where there were large factories, to handle absence, recruitment, dismissal and queries over bonuses and so on. Employers' federations, particularly in engineering and shipbuilding, negotiated national pay rates with the unions, but there were local and district variations and there was plenty of scope for disputes. Officials were employed by the federations to help settle them.

Also between the wars, large companies like ICI, Pilkingtons, and Marks and Spencer developed through growth and mergers and began to form their own specialist personnel departments to unify divergent policies from the centre and manage absence and recruitment with the aim of improving output. But such departments were mainly concerned with hourly-paid workers, while industrial relations was frequently the responsibility of senior line managers. Moreover, employment management, or personnel management as it was beginning to be called in these firms, was mainly confined to the newer, emergent industries such as plastics, chemicals, and multiple retail. During the 1930s, with the economy beginning to pick up, big corporations in these newer sectors saw value in improving employee benefits - for example, holidays with pay and pensions - as a way of recruiting, retaining and motivating employees. But older industries such as textiles, mining and shipbuilding which were hit by the worldwide recession (unemployment nationally through this period was hardly ever less than 10 per cent, and much higher in the traditional manufacturing and mining areas) did not adopt new techniques, seeing no need to do so because they had no difficulty in recruiting labour.

The Second World War: personnel grows further in importance

The Second World War brought about welfare and personnel work on a full-time basis at all establishments producing war materials because an expanded Ministry of Labour and National Service insisted on it, just as the Government had insisted on welfare workers in munitions factories in the previous conflict. With more women again being introduced into the workforce, 'dilution' once more on the agenda, substantial re-training necessary and shift working extended, the government saw specialist personnel management as part of the drive for greater efficiency and the number of people in the personnel function grew substantially; there were around 5,300 in 1943.

Industrial relations grew in importance too. Strikes were made illegal. The Minister of Labour, Ernest Bevin, had been general secretary of the Transport and General Workers' Union before the war and was able to convince the unions through dialogue with them that the suspension of restrictive practices to enable production targets to be met did not represent surrender. Thus productivity improvements came to be linked with joint consultation or negotiation, which was to become a dominant feature of the post-war years.

1945 - 1979: collective bargaining and industrial relations have primacy

By 1945, employment management and welfare work had become integrated under the broad term, 'personnel management', while experience of the war had shown that output and productivity could be influenced by employment policies. The role of negotiation with unions had grown in importance. But the role of the personnel function in wartime had been largely that of implementing the rules demanded by large-scale, state-governed production, and thus the image of an emerging profession was very much a bureaucratic one.

Pre-war, most bargaining between employers and unions had been at national level, conducted on the employers' sides by employers' associations or federations. The war had seen the rise of local negotiations in the engineering industry in particular and the 1950s and '60s witnessed an acceleration of this trend, not only in engineering. There was an enormous growth in the number and power of shop stewards, and local-level bargaining gave greater scope for the company-level personnel function. At the same time, larger companies wanted to develop their own employment policies which fitted their own plans and corporate strategies, leading to further decentralisation of bargaining. During the 1960s there was a series of well-publicised productivity bargains with trade unions to enable both sides of industry to benefit from improvements brought about by new technology. Personnel managers were involved in such bargains although so too were line managers, because they were the people who had to make them work.

The growth of shop stewards and local bargaining (not always well-managed by unions nationally) resulted in a large number of official and unofficial strikes which were damaging to the economy, particularly in the manufacturing industry (and manufacturing, it should be remembered, played a much larger part in the economy than it does now, and was extensively unionised). The UK was becoming notorious for its poor industrial relations, and the number of working days lost through strikes in the UK compared unfavourably with better-performing European competitors, notably West Germany. Strikes were even known as 'the British disease'. Ad hoc responses by personnel managers without too much reference to longer term industrial relations or business strategies often only served to set precedents which were later used against them.

Thus a Royal Commission under Lord Donovan was set up. Reporting in 1968, it was critical of both employers and unions; personnel managers were criticised for lacking negotiation skills and failing to plan industrial relations strategies. At least in part, Donovan suggested, these deficiencies were a consequence of management's failure to give personnel management sufficiently high priority, and it is tempting to see the somewhat higher profile that personnel management achieved later in the century as something of a response to Donovan's criticisms. (A common saying amongst trade union officials in the 60s and 70s was, 'Companies get the industrial relations they deserve', and there was some truth in that observation.)

Meanwhile, by the mid-1960s, organisations outside manufacturing - in the public sector and services - were beginning to employ personnel specialists. The numbers covered by collective bargaining widened as white-collar staff associations - particularly in the public sector - evolved into trade unions. Meanwhile the scope of bargaining widened to include not just pay but, for example, pensions, training and safety. The world was opening up too; the growth of multi-national companies and entry into the EEC meant that some personnel managers had an international role in, for example, reconciling varying national compensation systems, and taking account of different systems of employment law. Even in purely UK-based organisations, by the seventies personnel managers had to begin to understand the impact of European law on the UK, something which was to grow in importance as the century advanced.

Domestic legislation was increasing too. In the mid-1960s new legislation was introduced on contracts of employment, training, and redundancy payments, followed in the seventies by laws on equal pay and opportunities, employment protection and attempts to regulate trade union activity. This was also a period of high inflation, and voluntary and statutory attempts - mostly unsuccessful - were made to regulate prices and incomes. Personnel departments were required to understand these new measures, and to develop policies to implement them; statutory regulation of pay, for example, helped to lead to greater use of job evaluation.

Finally, in this period, personnel techniques developed using theories from the social sciences about motivation and organisational behaviour; selection testing became more widely used, and management training expanded. New management techniques for improving performance arrived from American academics such as McGregor and Herzberg to be applied by personnel departments.

Thus, by the end of the seventies, the main features of personnel management as it appears today were in place, and can be distinguished as:

the collective bargaining role - centred around dealing with trade unions, to which might be added the development of strategies for handling industrial relations
the implementer of legislation role - implying understanding and implementing a growing amount of legislation
the bureaucratic role - implementing a series of rules about behaviour at work, dealing with recruitment, managing absence and so on
the social conscience of the business role, or 'value champion' - a residue from the welfare worker function
a growing performance improvement role (in some organisations and sectors) - about integrating the personnel function with business needs and taking a more strategic view.
There is no significance in the order of the above list; the relative importance of the respective features will vary from organisation to organisation, and from time to time.

1979 - present: the rise of HRM

The 1980s in particular saw substantial changes as a result of legislation, a shift in the intellectual climate away from post-war collectivism and towards individualism, and changes in the structure of the economy. In 1979 a Conservative government under Margaret Thatcher was elected with a radical agenda and, with wide public concern about perceived abuses of union power, a mandate to reduce it. Legislation was introduced to outlaw sympathetic and political strikes, remove the closed shop (under which union membership was compulsory), and generally increase the power of individual union members. High unemployment (reaching three million in the early eighties) and structural change in the economy with a move to services from manufacturing (where union membership was strongest, other than in the public sector), would in any case have meant a decline in union membership. But the legislation assisted employers who wanted to reduce the influence of trade unions; personnel departments played their part in this process, most notably and symbolically in national newspapers where, after bitter disputes, closed shops were ended and trade unions removed.

Around the mid-80s, the term 'human resource management' (HRM) arrived from the USA. To some, HRM was mainly connected with minimising trade union influence and the titles of some personnel departments were changed to symbolise this. To others, though, it implied a more strategic role, with the HR department helping to achieve business objectives and planning (with line managers) how to achieve those objectives, and ideally with an HR director on the board of the company. With this, in some cases, came a kind of consultancy role, with the HR department acting as adviser to line managers. The term 'human resources' was (and is) an interesting one: it seemed to suggest that employees were an asset or resource-like machines (and capable of being replaced or up-graded like machines?), but at the same time HR also appeared to emphasise employee commitment and motivation. Certainly it fitted the ideological climate of the times, and in some organisations there was a hard edge to HRM, in part a consequence of its perceived role in reducing union influence.

At one point in the early 1990s, the debate on HRM took on almost theological dimensions, with academics discussing what it represented, and usually reaching no definitive conclusions. In recent years this debate has declined and it is probably best to regard HRM (and its offshoot HRD, discussed in more detail in the companion factsheet Training: a short history) as merely a part of the development of personnel management, a kind of labelling of the last point in the list above, and not as something separate. However, this is not to underrate its importance. In some organisations HRM has encouraged the devolution of certain operational personnel tasks from personnel specialists to line managers; more generally, it has helped to promote the view that personnel has an important role in the development of the business and of business strategy.

Source: http://www.cipd.co.uk/subjects/hrpract/hrtrends/pmhist.htm