Personnel Management explained

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Personnel Management: this article explains the concept of Personnel Management in a practical way. In addition to what it is, this article also highlights its features and benefits. After reading you will understand the basics of this Human Resource Management pillar. Have fun reading!

What is Personnel Management?

Personnel Management (PM) is an element of Human Resource Management and is primarily focused on recruiting and developing employees. The task of personnel management can also be seen as managing the workforce, which includes obtaining, using, and maintaining the workforce.

Employees are one of the most valuable resources in organizations because the employees stimulate the growth of the company. The skills and capabilities of employees help the organization develop and obtain a competitive position in the industry.

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For this reason, attracting, recruiting, and maintaining the best employees is a crucial element of Human Resource Management.

PM is additionally concerned with supporting employees. It is true because the goal of personnel management is to make sure that the employees are satisfied to work for the organization.

More specifically, it is responsible for making sure that employees are driven to achieve the common goal of the organizations. It is for this reason important to stimulate each employee to reach their full potential in order to achieve organizational milestones. Consequently, the goal of personnel management is to make use of the human resources of the company effectively while stimulating relationships among the employees in the firm.

Functions of Personnel Management

In order to recruit and develop employees, a function of PM is identifying the gap between the companies’ internal capabilities and the desired values of employees.

Personnel management is for this reason responsible for the coordination between various human resource management activities which include but are not limited to identifying the need for employee benefits, training, compensation, and other personnel services.

Personnel managers usually act as advisors and policy writers to make sure equally opportunities arise for personnel. Another function of PM is to create and maintain an employee database which includes required employee data. It includes maintaining employee insurances, pension, and remuneration packages.

The next function is to be proactively engaged in monitoring the changing external environment with regards to laws and collective labor agreements. Next to this, it deals with the following operational functions.

  1. Procurement function
  2. Development function
  3. Compensation function
  4. Maintenance function
  5. Integration function
personnel management functions - toolshero

Figure 1 – functions of Personnel Management

1. Procurement function

This function deals with the creation, maintenance, and development of the employee database. As previously described, the first step is to recruit the right people but also in the correct numbers. An essential part of personnel management is for this reason to determine the mix of skills and capabilities required to fulfill a specific position. This includes identifying the tasks and responsibilities for the job but also determining the desired combination of characteristics of the potential employee.

The next step is selecting qualified and competent employees. This process is usually performed by conducting interviews, but in some scenarios, specific tests or a job simulation has to be made. It is important for Personnel management because these tests can confirm if the potential employee possesses the required skills and capabilities to fulfill the open position in the organization.

When the right person is selected, the new employee frequently has to go through an induction phase. In this phase, the employee gets familiar with the working environment, the company’s policies, the people, and the new way of working.

2. Development function

This function is concerned with helping employees enhancing their qualities. The goal is to find the right medium to train employees in order to improve operational efficiency and effectiveness. Personnel Management is for this reason responsible for the creation and coordination of training programs for employees of all levels of the organization. This function additionally includes assessing the potential of employees.

Once the potential has been determined, the development function of Personnel Management has to identify possibilities for personal training needs. It could include attending courses next to the job that will enhance the employee’s development to achieve organizational goals. Moreover, personnel planning additionally evaluates the career planning of individual employees. The goal is to help the employee reach its career ambition by providing education but also writing recommendations it this employee is willing to leave the organization.

3. Compensation function

This part is primarily responsible for providing fair compensation for hired employees. The remuneration package must be in line with the contribution the employee has contributed to the organization. It is for this reason responsible for researching wage classifications, which include analyzing job descriptions, and the relationship with wages and wage policies.

Personnel Management is therefore also concerned with the creation of a proper remuneration package which includes assessing the impact of previously designed remunerations packages with the productivity of employees.

This is important because the remuneration package is in relationship with the motivation of the employee to achieve organizational goals. This is additionally described in the Two Factor Theory by Frederick Herzberg.

4. Maintenance function

The maintenance function continually asses and improve the current terms and conditions of working. It means that its responsibility is to assess the working condition in terms of health and safety. Personnel Management is for this reason responsible for providing a safe workplace. The duty extends but is not limited to providing employees accommodation, transportation service, education, and maternity leave and benefits.

5. Integration function

The primary goal of this function is to make sure that the employee agrees to the terms and conditions made by the organization. It remains a challenge for Human resources to achieve a mutual acceptance of, for instance, the wages or working hours.

As a consequence, trade unions are established by employees to represent employees at organizations. These unions attempt to realize harmonized agreement by the employee and business. Personnel management place great value on reaching common agreements because it leads to faster growth and higher productivity.

Benefits of Personnel Management


Personnel management helps the business stay competitive. Since it is concerned with creating the right mix of education that employees will help advance the required skills in the position or industry, the business stays competitive.

Many organizations today offer access to internal online libraries where employees can read articles or following interactive learning programs that help improve their professional skills. When Personnel Management is performed effectively, the employees of the organization acquire new knowledge about the industry and it simultaneously improves the company’s ability to deal with change.

Employee retention

When Personnel Management Is performed effectively, it improves employee retention, and thus results in lower costs for the firm. Personnel Management is concerned with the career of every employee and a primary goal is to achieve common satisfaction in terms of remuneration package and development plans.

When the organization has sufficient resources to offer competitive wages and other benefits, it will attract workers but it is also important for the firm to continually evaluate the remuneration package with the employee. In this way, employees will remain satisfied and feel valued which will improve employee retention.

Teamwork via Personnel Management

Another function of Personnel Management is to improve the relationships among the employees because it improves teamwork and employee engagement. Employees communicate more easily among each other which increases the drive for achieving organizational goals.

At the same time, people in the organization learn about other job positions and respect those based on their better understanding of other positions and jobs. This is as a result improves employees’ knowledge and understanding of the operational activities which stimulates better teamwork.

The importance of Personnel Management

The amount of money that is being spent on personnel depends in reality on the size of companies. It is shown that companies that effectively integrate the human factor in their business achieve a strong competitive position and higher turnovers due to the increased productivity of their employees.

When a company has the skills and resources to recruit the best potential employees and is capable of enhancing the skills of its employees effectively, it is an intellectual resource. Continually improving this resource will help to achieve organizational goals.

Personnel Management additionally helps with the identification of the company’s core competencies, which possibly could also include providing equal and competitive opportunities in terms of wages and benefits for its employees.

This would improve the company’s position to attract the best employees. It is for this reason important to determine the amount of money that can be spent on Personnel Management. The integration of Personnel Management will eventually save costs and result in a more engaged company.

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Now it’s your turn

What do you think? Do you recognize the explanation of Personnel Management? Are you actively engaged in Personnel Management or do you follow a Personnel Management course? Do you have any tips or additions you would like to share?

Share your experience and knowledge in the comments box below.

More information

  1. Armstrong, M., & Lorentzen, J. F. (1988). A handbook of personnel management practice. London: Kogan Page
  2. Aswathappa, K. E. M. A. L. (2005). Human resource and personnel management. Tata McGraw-Hill Education.
  3. Cole, G. A. (2002). Personnel and human resource management. Cengage Learning EMEA.
  4. Mathis, R. L., & Jackson, J. H. (1991). Personnel/human resource management. St. Paul, MN: West Publishing Company.
  5. Werther Jr, W. B., & Davis, K. (1985). Personnel management and human resources.
  6. Werther, W. B., & Davis, K. (1993). Human resources and personnel management.

How to cite this article:
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Original publication date: 06/09/2019 | Last update: 09/01/2023

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Alexander Zeeman
Article by:

Alexander Zeeman

Alexander Zeeman is Content Manager at ToolsHero where he focuses on Content production, Content management and marketing. He is also an International Business student at Rotterdam Business school. Currently, in his study, working on the development of various management competencies and improving operational business processes.


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