Over the past century, there has been an evolution in the concept of “human resources” – a term that was not actually used in its current form until the mid-1950s when economist and Yale professor E. Wight Bakke published a report entitled “The Human Resources Function.” Changes in the culture, politics, and economics of society have influenced these shifts over time.
The early 20th century was a time of labor unrest during which employees were hired and fired at will, unions began to form (although participation in them was restricted), and strikes took place. As a result, the personnel department, essentially an “industrial relations” function, primarily focused on the issues of wages and labor disputes. In 1938, the Fair Labor Standards Act was created, setting the minimum wage and other laws to protect workers. As a result, the focus of the personnel department transitioned to compliance with these laws and to ensuring that employees were happy, healthy, and safe.
In the 1950s, when unions had become powerful, the human resource department was responsible for managing these unions; in addition, positions within companies were generally filled through internal promotion, rather than recruiting, with the HR department deciding who got which positions. As a result, according to social commentator William H. Whyte, who authored the book “Organization Man,” human resources was considered a “glamorous” role to be in, as it was one that wielded significant power and prestige. The scope of the department began to grow, and by the 1960s, it covered legal compliance, recruiting, hiring, training, and assessing workers.
When the economic recession hit in the 1980s, job seekers outnumbered available jobs, companies were forced to cut costs, and unions lost their grip on management. This led to cuts in labor relations, recruiting, and training, which, in turn, led to the development of shared-service models with call centers and outsourcing of administrative functions. A change from decades past, labor relations had lost its place as the main function of HR. Outsourcing led to the growth of staffing agencies and search firms, as well as IT-driven vendors providing administrative operation functions that were previously performed by employers. Computers were used more widely in HR, with the beginnings of automating procedures and the creation of web-based HR systems.
Heading into the 1990s, human resources began to be seen as a profession in its own right, evidenced by the growth of the Society for Human Resource Management’s membership from 4,000 in the mid-1970s to over 250,000 today. The shift from promoting from within to hiring from without impacted this, as HR staff were no longer focused only on their own businesses. In the late 1990s, a strong economy meant a surge in recruiting. In addition, during this time, spurred in part by the 1997 work of Dave Ulrich, a business professor at the University of Michigan who authored “Human Resource Champions: The Next Agenda for Adding Value and Delivering Results,” the concept of the human resources department began to transform. Ulrich proposed an HR function that would be responsible for a number of distinct categories: administrative efficiency through shared service centers that provided basic, traditional HR services and improvements to organizational processes (which could be outsourced); “centers of expertise” focused on compensation and benefits to attract employees and respond to employee needs as employee champions; strategic partners who focused on aligning HR with business strategy; and change agents who managed the processes that would increase the organization’s effectiveness.
In the 21st century – and trending into the future – major areas of change have included: