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Over the past decade a shift has occurred away from ideas of personnel management
towards HRM and concepts of people management (Pass, S. & Hyde, P., 2005) This shift
has been essential, as with the globalization of the market and more competitors, firms
have found it more and more difficult to gain competitive advantage. In order to adapt to
this changing environment, the firms traditional management system evolved to a more
strategic approach towards human resource management. Strategy is about building
sustainable competitive advantage that in turns creates above average financial
performance. (Becker, B & Huselid, M., 2006) (Wielemaker, M. et al, 2005) states that
before the shift, firms were seeking competitive advantage from outside, such as in costs
of goods and trade prices. But a new belief argues that the principal source of competitive
advantage actually lies within the firm itself. It is now thought that the main sources of
competitive advantage are dependent on people. This new ideology has caused the role of
human resources from being supportive, to being strategic.
As (Wielemaker, M. et al, 2005) stated the role of traditional personnel management was
mainly supportive and repetitive. Tasks such as training, recruiting and compensation were
the usual roles of the human resources department. (Pass, S. & Hyde, P., 2005), argues that
now, with strategic human resources management, the role of the human resources
department has become more one of to ensure strategic integration, long term planning and
a transfer from human resources responsibility to line management. From this, it can be
concluded that strategic human resource management now focuses more on its internal
people. It can also be argued that it is now regarded as a significantly more important role
than previous, where the role of personnel management was seen as an option, it is now
seen as a crucial part of a firms success.
The purpose of this essay is to critically evaluate the initial, traditional style of personnel
management to the more recent, strategic approach to human resource management. In
order to achieve this, each approach will be closely analysed. First, the history and
attributes of traditional personnel management will be overviewed. To help understand
why there was a need for a shift towards strategic human resource management, the
weaknesses of the traditional personnel management will also need to be investigated.
Finally, the factors that make the strategic personnel management a more successful way
of obtaining competitive advantage will be analysed, along with any problems the new
