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The Human Resource Management Concept in its present state is a purely new
concept, which can be said to have emerged in the early 1980s. Many
management writers and thinkers saw the adoption of the HRM concept as a
major stride towards achieving organizational effectiveness. This in other words
is a clear indication that the traditional ways of managing employment had some
weaknesses in them. With the failure of the traditional systems, management
thinking thus became preoccupied by the need to proffer solutions that would in
turn trigger organizational effectiveness.
Organizational effectiveness was thus identified with one of the follow 4 factors: 1.
Strong goal-directed leadership
High levels of employee motivation and skill
A holistic approach to people management and organizational change
Treating employees as human capital i.e. assets rather than costs to a
What is important to note is that these principal characteristics that formed the
hallmark of organizational effectiveness were highly incompatible with the traditional
ways of managing employment hence there was need for a new distinctive approach to
employment management.
Infact there are two important factors that led to an increased emphasis on
organizational effectiveness and the characteristics named above.
The Influence Increased Japanese Competition
The success of the Japanese economy as the leading economy from the 1970s onwards
challenged the predominance of the US and Western European businesses.
Garraghan and Stewart (1992) noted that the success of the Japanese economy was
premised on a distinctive business culture, which was different from the free market
capitalist culture of the US and the European economies.
NB: Free market capitalism was a direct contradiction of the principles of organizational
effectiveness hence there was need for US and European economies to adopt a much
more flexible and distinctive approach to employment management that would bring
organizational effectiveness.
This is simply because of the fact that the South Eastern Asian Model with its emphasis
on growing talent as opposed to poaching talent, strategic investment in people, team
working and a strong sense of belonging to teams became an epitome of best practice and
In a nutshell the US and the European economies because of this increased competition
and the ultimate success of the Japanese were forced to adopt these practices, which
underline the present concept of HRM.
Thus authors like Ouchi 1981, Peters and Waterman (1982) asset that HRM emerged
from the threats posed by the South East Asian Tigers and the ultimate adoption of
people-centered approaches, which are basically embraced by the HRM Concept.
Government Policy In Western Business Culture
The adoption of HRM occurred at a time when Japanese competition was heavily
impacting on Western business economies. In short free market capitalism is shorttermist in nature that is it emphasizes more on things like: -
fast return on capital
Hard-headed managerial attitudes i.e. readily acceptance of
Increased profits through mergers, deals and aggressive
Minimal acceptance of social responsibilities like
maintaining low levels of unemployment.
On the other side the Japanese business culture emphasized more on long-term thinking
and a more humane aspects of employment management. It was based on a culture of:
Teamwork rather than individualism
Thriving for high levels of quality and motivation
Mutual commitment between the organization and its staff
Thus according to Eccles (1989) Free market capitalism of the US and Europe was at a
disadvantage than the South East Asian model led by Japan. This huge gulf or distinction
that existed between the free market capitalism and the South East Asian Model led by
Japan was a major determinant factor in the emergence of the HRM concept.
What is important to note during this period was that political events in the Western
business economics in the early 1980s were conducive for the adoption of people
management approaches, which focused on relationships between organizations and
individual employees rather than between employers and Trade Unions.
However, it is paradoxical to note why Western economies like US and UK led by
Thatcher and Reagan respectively encouraged the adoption of HRM during the period of
increased Japanese competition yet people management practices of the Japanese were
incompatible with their free market ideals.
Guest (1991) asserts that although Thatcher and Reagan were strong advocates of free
market ideals, the adoption of HRM within their economies would be compatible with
Their intention to create economies based on Unitarism and convergence of interests
characterized by :
Low labour protection
Emergence of managers as strong leaders
Absolute managerial rights to manage
Restricted rights to strike.
The adoption of HRM was also possible as Reagan and Thatcher advocated for an
environment where workers were to be loyal to their employers and not to other bodies
like Trade Unions.
Because free market ideals also encouraged individual success, this also made it possible
for the emergence of the HRM concept with its differential forms of remuneration such as
Performance Related Pay and incentive bonuses, which are also individualistic in nature.
Conclusively HRM was adopted within this period because the individualistic and
unitaristic nature of free market ideals were consistent with the ideals of the HRM models
of performance.
Tutorial Question
Critically compare and contrast the HRM model and the IR Model.
Does the recent adoption of the HRM model represent a positive approach in the
management of people?