Human Resources -A Value Driven Perspective

Abstract

The information age has changed many of the "classical" business activities by altering the core values and management principles. Human resources management has also changed and has adapted to the new challenges of the 21 st-century information age. The hunt for knowledge and for the determined business value is driven by more complex and far-reaching human resources activities. Companies must change their "classic" view on human resources to prevail and to be successful in the new complex and speed century. Human resources have changed its old working principles to fit the requirements of constant data, information, and knowledge "hunting" and morphed to a proactive and dynamic business value driver. The main objective of the paper is to show and document that human resources management is 21 st-century business value and knowledge driver that business organizations must use in their quest for the ultimate competitive advantage.

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Human Resources – A Value Driven Perspective
Marius Daraban
“Lucian Blaga” University of Sibiu, Romania
marius.daraban@dmc.ro
Abstract
The information age has changed many of the “classical” business activities by altering the
core values and management principles. Human resources management has also changed and has
adapted to the new challenges of the 21st-century information age. The hunt for knowledge and for
the determined business value is driven by more complex and far-reaching human resources
activities. Companies must change their “classic” view on human resources to prevail and to be
successful in the new complex and speed century. Human resources have changed its old working
principles to fit the requirements of constant data, information, and knowledge “hunting” and
morphed to a proactive and dynamic business value driver. The main objective of the paper is to
show and document that human resources management is 21st-century business value and
knowledge driver that business organizations must use in their quest for the ultimate competitive
advantage.
Key words: human resources, value driver, information age, economic value
J.E.L. Classification: M00, D46, O15
1. Introduction
When talking about a business or a business organization the concept of human resources
cannot be ignored. Right next to the viability of the business idea and the needed business capital
the human resources are an essential element that supports a business idea to become reality by
transcending from just a well-thought business plan to an operational, activating organization.
A business organization can be defined as being an entity formed for the deployment of
commercial activities by making use of resources to create value for its shareholders. One of the
critical resources that a business organization needs to control and can use is human resources.
Like any other business resource, also human resources, represented by the employed or needed
staff/employees need to be properly managed and handled to reach the defined business
organization goal.
Since the very early stages of development of human society, there was a clear need for
attracting, retaining, training and developing the best available people for the achievement of an
organizational goal.
“During pre-historic times, there existed consistent methods for selection of tribal leaders. From
2000BC to 1500BC, the Chinese used employee screening techniques and while Greeks used an
apprentice system.” (Tubey, et al., 2015, p. 1)
As of today, there is hardly a universally accepted definition of Human Resource Management.
Human Resources Management (also known as HRM or HR) is the activity of managing the
organization's human resources by maximization of staff performance to assure the organizational
strategic goal.
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2. Theoretical background
The 21st century has come with a lot of changes and challenges to the daily life of humans. One
major change in the daily life of humans is determined by the information age that has started in the
1990s with the breakthrough of electronic data processing.
The massive adoption and rapid development of information technology have led to a paradigm
shift in business management and business philosophy. Data, information, and knowledge have
become the “prime commodity” of the information age of the 21st century. Business organizations,
like any organization, are generating data, information, and knowledge from within their own
organizations.
The current paper proposes a detailed look at business human resources management from the
perspective of the information age where data, information, and knowledge are prime products for
the business organization. Modern human resources management is more than a clerical activity, it
has become a main business value contributor by meeting all the key requirements of the
information age, it is creating economic or business value, through the proper and efficient
management of organizations knowledge.
3. Research methodology
Qualitative research was the main research methodology used for the present paper. Interviews
and free discussions with human resources professionals and executives have been highlighted the
main research objectives. Document analysis in form of publications and articles and social and
professional media analysis confirmed and documented the main findings of the present paper.
4. Origins of human resources management
Human resources management has evolved alongside the development of human society to fit
the new challenges and requirements of the social and business realities. Early human resources
employees were called personnel administrators, due to their mainly reactive and administrative
role in managing worker’s relations. Even more, the performed activities have been mostly
secretarial and did not have any link to the strategy of the business organization.
HRM has evolved and developed at different rates all over the globe, it was mainly driven by
the adoption of power-driven machines and industrialization. This process created a lot of jobs that
have had simplistic, monotonous operations that have been performed also in unhealthy or even
dangerous working environments and that has led to the separation in white and blue-collar.
The concentration of workers in industrial factories has led public attention to focus on labor
environments and employment conditions. The economic theories of the time, early 1900, have
highlighted the potential conflicts between employers and employees.
“Governments became involved in these issues and passed a series of laws to regulate the hours
of work for women and children, to establish minimum wages for male labor and to protect
workers from unhealthy or hazardous working conditions.” (Tubey, et al., 2015, p. 2). In the given
new frameworks, companies have begun to focus and to analyze the nature of work and work
systems still focusing on the main goal of getting maximum efficiency of the available human
resources for the achievement of the strategic business goals.
HRM has evolved and developed as a reflection of human society and the industrialization of
businesses. Starting 1900 until 1940 the personnel management function was mainly assimilated to
the supervisor, line managers that have faced the early stages of the modern HRM, like recruiting,
training, etc. Until the 2nd World War human has faced some major events, the great depression
from the 1930s and the first World War, have scared human society, trade unions have been active
but mainly focusing in basic working conditions and pay. Personnel functions have been mainly
limited to personnel administration like wages, disciplinary actions, and welfare. Starting 1940
until the mid-1970 the marks of World War II are visible in all areas of the business, because of the
lack of resources a more professional approach to personnel management was needed and has
appeared. The scarcity of labor resources in critical post-war industries have determined and
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increase in requirements and a change in approach, topics like labor performance and recruitment,
retention and training of personnel became the main preoccupation of personnel management.
Personnel administration has morphed towards human resources management at the time when
it became obvious that staff, personnel, employees are more than a workforce. This transformation
has represented the incorporation and development of the secretarial activities of personnel
administration into the management of human resources, a strategic business activity, that was
oriented towards organizational efficiency. Human resource management sees staff as human
resources that are recognized as assets, owning knowledge, skills, aptitudes, and potential. The
business assets called human resources demand a different management strategy as opposed to
seeing human resources as costs. Human resources, properly managed, are the key factor for a
business organization that pursues its business goals.
What is today known as Human Resources Management has evolved and has morphed from the
more “simplistic”, administrative orientation of personnel administration? The main differences of
the old view, personnel administration and the new view, human resources management, are shown
in table no. 1 further below.
The old concepts of personnel administration have evolved and have transformed to meet the
requirements of the new social, business and economic environment. The changes in the old
concepts have accompanied and supported the new socio-economic environment.
Table no. 1 - Personnel Management vs HRM
Factor
Personnel Management
Human Resource
Management
Time and planning
perspective
Short term, reactive, ad hoc,
marginal
Long term, proactive,
strategic, Integrated
Psychological
contract
Compliance
Commitment
Employee relations
perspective
Pluralist, collective, low trust
Unitarist, individual, high
trust
Preferred
structure/system
Bureaucratic/mechanistic,
centralized, formal/defined roles
Organic, devolved, flexible
roles
Roles
Specialized/professional
Largely integrated into line
Management
Evaluation
Cost minimization
Maximum utilization (human
asset accounting)
Source: Adapted from ‘Human Resource and Industrial Relations’, Journal of Management Studies, 24
May, p. 507
5. HR as a corporate knowledge-based organization
The concepts of human resource management (HRM) and human resources (HR) are replacing
the obsolete and aged concepts of personnel administration or personnel management. Today’s
meaning and role of HRM is people management within a business organization. “Human
Resource (HR) management deals with the design of formal systems in an organization to ensure
the effective and efficient use of human talent to accomplish organizational goals. In an
organization, the management of human resources means that they must be recruited, compensated,
trained, and developed.” (Birkend , et al., 2013, p. 1)
Human resource management has an important role and contribution to the business knowledge
management function due to the fact that it manages people that are the source of tacit knowledge
for business organizations. Considering the knowledge management view, the role of human
resources management is to attract, retain and develop intellectual capital that covers the business
organization’s needs.
“Organizational learning is an integrative characteristic of most companies although not all of
them can utilize it for the creation of an improved performance. Organizational knowledge and
knowledge management and interconnected and both are widely dependent on human resources.”
(Birkend , et al., 2013, p. 5)
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In the classical view, HRM has its focus on securing, training, motivating and retaining the
business organization's workforce while concentrating efforts to maintain and control labor costs.
Due to changes in paradigm, influenced by the information revolution, HRM must contribute to the
accomplishment of the sustainable competitive advantage of the business organization by
capitalizing on the core asset of the employees, their knowledge. HRM enables, facilitates and
assures the proper organizational environment for employees to use their knowledge to achieve the
corporate strategic goals by securing, training, motivating and retaining the best workforce.
“The approach of KM and HR is much complex due to the fact that HR internal consultants
should be leading factors in defining the learning organization through shared knowledge or
through specific policies that have as aim to increase the orientation to discover and share the
knowledge.” (Chasovschi, et al., 2010, p. 3)
“Nowadays, the knowledge workers are found at almost all levels of the workforce, from low
wages to high wages.” (Dobre, 2012, p. 1)
Modern HRM must set up procedures and systems so that employees can deliver maximal
efficiency by securing, training, motivating and retaining needed staff by encouraging and creating
a work environment that fosters and promotes learning, communication, and knowledge sharing.
“In the knowledge-based economy, the human resources management activities will be not
resumed by the conventional functions of staffing, training, and development, performance
management, etc.” (Antohi, 2013, p. 2)
In the context of the knowledge-based society, Human Resources Management includes the
same traditional functions but with a changed approach. Recruitment, retention, and development
of staff are viewed as procurement of knowledge rather than procurement of labor force.
Human resources management creates, distributes and uses knowledge through the creation of
systems and processes that leverage the new point of view on employees and the labor force. The
modern HRM, to fit the requirements of the knowledge-based society and to assure the needed
competitive advantage, can be summarized as a business organization that fosters, promotes and
assures knowledge creation by itself and by the managed employees.
The processes and systems created by HRM are custom designed and proprietary to the business
organization and use the specific knowledge, background, and experience of the HR staff to gain a
specific competitive advantage.
6. HR as a corporate business value driver
Modern Human Resources Management defines and profiles competitive and innovative
business organizations of the 21st century, a century of the information and knowledge revolution.
Even though the main processes of Human Resources are the same, sourcing, retention and
development of needed labor force, the influence of the information and knowledge revolution has
left its mark.
The classical processes have been adjusted and updated to match the requirements and the
newly transformed demands of market competition that is now focused on the “prime commodity”
of the knowledge economy.
The transformation of the role and focus of HRM has led to new challenges of business
organization management. HRM is one of the main drivers of the value chain and its contribution
to the business organization margin has been demonstrated and is accepted.
HRM creates value through the generated specific knowledge of the sourced, retained and
developed employees. The available pool of potential employees, valuable and accessible
knowledge resources, is not unlimited, this puts business organizations in increased and more
complex competition. The creativity and innovation of the business organization HRM create value
the more the needed knowledge is in short supply.
One other solution to access the needed knowledge at the level of the business organization is
the investment and fostering of the knowledge organization. This process is a time-consuming
process that can not react quickly to the changes in the markets and competitors. The organizational
HRM can mediate and manage these aspects by retention and motivation systems and policies for
the existing staff.
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7. Conclusions
HRM has progressively increased in complexity because of the changing market requirements
and competition. The created value and the resulting competitive advantage has put business
organizations into the position to assure and to sustain the growing reach of HRM in the business
value chain. Human resources are one of the most important and relevant business functions and
activities that need to be treated with the utmost attention by business managers, stakeholders, and
shareholders. Based on the existing business goals the activity of the human resource must find,
acquire, retain and develop the needed business human resources by aligning and understanding the
business strategic goals.
By assuring the needed employees, human resources (HR) defines, develops and distributes
specific activity and business knowledge. The knowledge creation and management process are
influenced by HR in two ways, by creation, implementation, and management of rules and
regulations for internal business use and by sourcing of employees that contribute to the overall
business knowledge creation and management.
The creation and management of internal rules and regulations for employed staff are based on
existing legal frameworks, the tacit knowledge of HR staff and business organization goals and
organizational culture. Knowledge is created by adjusting the HR rules for the achievement of
business goals. In the case of HR, knowledge creation is the basis of the organizational culture that
transforms and adjusts the “level” of the business organization so that tacit knowledge is
transformed in explicit knowledge by its employees and fosters the learning organization.
Business value is created by the sourced, retained and developed staff that assures and enables
further development of business organization and operations. In the information age, the
information worker, the knowledge worker, is enabling, transforming and distributing knowledge
and created business value true the shaped improved and streamlined operational and
organizational business processes, tools and systems.
The main challenge for the HR of the 21st information is the sourcing, retention, and
development of needed skilled and trained human resources that can contribute to the knowledge
and value creation process of the business organization. The HR function has transcended the
clerical, administrative role and has morphed into a creative, proactive knowledge-based
organization that is contributing to the business organization value creation process by tapping into
the core of the knowledge creation and development, the tacit knowledge transformation from tacit
into explicit knowledge by creating an adequate framework for the employed staff.
Disruptions in the knowledge and value creation process can be determined by socio-political
instability, increased labor union power, missing or low management performance and lack of clear
business goals and perspectives that determine a decrease in employee and employer branding.
Human resources in the information age imply a delicate balance between demand and supply
of needed skilled resources that can be acquired by business organizations that are proactively and
flexibly acting on the labor market.
In Romania, in the last years, one of the major battles that are fought by companies is the battle
for knowledge, through the intense and wide-reaching recruiting campaigns. Local companies like
UiPath, Bitdefender, TotalSoft, Zitec, Kaufland, Lidl, etc. have developed strong high-performance
HR departments and have integrated HRM in their business strategic activities.
8. References
• Antohi, I., 2013. The Challenges of Human Resources Management Practice in a Knowledge-Based
Organization. Ovidius University Annals, Economic Sciences Series, pp. 1060-1063.
• Birkend, A., Nexhbi, V. & Sadudin, I., 2013. Human Resources and Knowledge Management.
Zadar, Croatia, ToKnowPress, pp. 1037-1043.
• Chasovschi, C., Bejinaru, R. & Bordeianu, O., 2010. Optimization of human resources function
through knowledge management. The Annals of the "Stefan cel Mare" University of Suceava.
Fascicle of The Faculty of Economics and Public Administration, 10(2), pp. 208-215.
• Dobre, O.-I., 2012. Managing human resources in the knowledge-based economy. Review of
Applied Socio-Economic Research, 3(1), pp. 68-76.
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• Tubey, R., Rotich, K. J. & Kurgat, A., 2015. History, Evolution, and Development of Human
Resource Management: A Contemporary Perspective. European Journal of Business and
Management, 7(9), pp. 139-149.
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