Topic 1: What is 'people management' and why does it matter?
What is 'people management'?
People management in a climate of change
The importance of people management
The first line states; "People management is about managing people" (and project management is about managing projects, operations management is about managing operations and tautology management is about managing tautologies.) Thanks for that!
People management is a subset of human resource management, which deals with strategic, financial and policy issues, as well as people management.
Let us define these terms that are used so frequently when discussing organisational change.
Downsizing refers to the elimination of jobs or positions in organisations, aimed at reducing labour costs by trimming unnecessary functions (Cascio, 1993).
Delayering, which commonly takes place as part of downsizing, involves the removal of layers of management, thus resulting in 'flatter' organisational structures with fewer levels of management, to reduce bureaucracy and to improve communication within organisations. In 'flat' organisations, flexibility also requires that employees be able to undertake a wide
range of tasks and to move between them as necessary
Casualisation occurs when a significant proportion of the jobs are done by people paid by the hour.
Outsourcing involves transferring jobs which are not seen as central to the organisation — not its 'core competencies' which contribute to its market advantage — to external contractors.
Privatisation of publicly owned institutions. Railways, hospitals, prisons, electricity and water supplies have all been changed from government-owned operations to private ones. Privatisation can also lead to short-term profit goals at the expense of long-term viability, with infrastructure allowed to decline and research expenditure reduced.
Another change in many economies has been a reduced role for manufacturing and primary industries, unskilled labour, and an increased role for service industries (for example, hospitality, education and financial services). Large and increasing proportions of people work in organisations where they are interacting with customers, rather than making things, leading to high levels of monopolistic competition in the service sector.
An increasing proportion of employees across the advanced economies also now work in so-called 'knowledge work' occupations—highly skilled technical and professional jobs (for example, systems analysis) which are characterised by the use of theoretical, conceptual and creative skills
The flattening of organisational structures and the trimming of functions from organisations has meant increasing devolution of people management from corporate human resource (HR) departments to line managers. Line managers are taking more responsibility for, and spending more of their time on, people management than in the past. The changes associated with the growth of service and knowledge work, and the need for flexibility, mean that many organisations will need to devote increasing effort to developing employees' skills and to managing people for optimal performance. That is, the way that people are managed will increasingly be a determinant of organisational success and is likely to be given greater emphasis.
The main argument for good people management is that it can contribute significantly to organisational performance. If organisations treat their employees in a way which the employees perceive to be fair and ethical, then, other things being equal, they are likely to suffer lower levels of turnover than organisations which treat their staff badly. A recent US study estimates the cost of losing and replacing an average worker to be $50 000, comprising items such as termination payments, advertising, recruitment, selection, training, relocation, disruption to work flow and time taken for the new employee to develop organisation-specific skills.
There is an increasing body of literature and evidence which suggests that the ways in which people are managed can have organisational benefits that go beyond cost reduction and efficiency. People management contributes to 'value creation'. Many of the traditional sources of competitive advantage available to organisations—for example, technology—are easily imitated by competitors.. Organisations must seek competitive advantage by creating value in ways that are rare and difficult for competitors to imitate. Hence, effective management of people may give organisations a competitive edge.
If the management of people is to contribute to organisational performance, then there must be a 'fit' between the people management practices and the organisation's strategy. Employees who have a clear idea of what their organisation wants are in a better position to achieve it; so constant communication and development of the right culture are crucial aspects of people management.
Ethics concern principles by which actions can be judged as good or bad or as right or wrong. Thus, to consider the importance of people management from an ethical perspective is to consider questions about what is the right way to treat employees. Put simply, it revolves around the fact that humans are not simply resources like capital, equipment or raw materials. Rather, given their feelings, needs and aspirations, their work is likely to determine the overall quality of their lives. What this means is that the way line managers deal with their staff may have far-reaching consequences for those staff, which need to be taken into account in making decisions.