Introduction
Human Resource Management, or HRM for short, is one of the most important elements in running a successful company, though it isn’t always treated with the time and emphasis that it deserves. To completely understand what HRM is and its impact on the success or failure of a business, we first need to know what it means. The following is a good definition:
The function of Human Resource Management is to recruit, develop and utilise the personnel within an organisation in the manner in which is most appropriate to accomplishing the aims and objectives of the enterprise.
This basically translates to “using individuals in the business in the best way possible” though that would be an over-simplified assertion that doesn’t echo the true nature and scope of HRM. HRM describes all of the methods and processes that are involved in ensuring that all members of staff in a business are pulling in the same direction, and much more significantly, in the right direction. Without good human resource management a company will be spending effort on jobs that it may not directly gain from.
At its center, HRM brings together three primary elements that are essential to the productive output of the staff. These elements include motivation, management and leadership, and organisational structures. As a result, HRM can be employed on all levels of management within your company, not just the shop floor staff, and it could even be used to modify the framework of those levels of management at the same time. It is a broad subject that is explained in more detail in this article.
Why is it Necessary?
Put simply, companies don’t run without employees. As a result, some level of human resource management is needed for any business to operate at all, let alone in an efficient and prosperous manner. Even if you don’t realise exactly how HRM affects the every day running of your enterprise you will certainly be employing some sort of HRM in order to keep trading.
Human Resource Management has an effect on every level of your business activities with various degrees of visibility. The most obvious HRM tasks involve the hiring and firing of employees as well as monetary systems such as payroll. It may also impact on motivation and communication inside your business, which are far more intangible factors but are crucial nonetheless. Poor HRM practice in these less visible arenas can have a damaging impact on your organisation but go unnoticed for long intervals.
It also goes without saying that each company is different and will have a unique set of challenges to face and opportunities to take advantage of. HRM can act as a versatile tool that converts workforce power into financial profits and can adapt to fully utilise the talents of your company.
HRM is a general business approach and could be carried out on firms that register a company plus almost any other type of business as well.
Impact on Business
While this all appears very interesting and significant, how does it actually influence the daily operations of your business, and more importantly, how will it help to improve the performance and success of your firm?
Recruitment & Training
This is most likely the area of a business that is most associated with human resources - recruitment. Almost every company in the world, and particularly businesses that are growing, must recruit people to work for them. Either existing employees have left, or new opportunities have arisen which mean there are jobs that need to be filled. HRM can ensure your recruitment process gets the right people into the right roles at an affordable price.
It is also important to keep your staff training procedures up-to-date to make certain that your staff is fully capable of doing the job they are there to do. Regardless of whether it is a new piece of legislation or a new piece of technology that changes the market, there is an on-going need to keep your organisation up-to-date and prepared to make use of any opportunity. There is a phrase that states that “if you are not moving forward you are going backwards” which can be applied to business.
You may also find that the expensive practice of external recruitment can be averted if your company has sufficient training facilities in place. It is much easier to train an existing worker to a higher level and then use external recruitment to fill the gap remaining at the lower level than it is to hire straight to a higher level. This technique can be used at almost every single level of management within your company.
Employee Relations
Once you have the suitable people working for you it is necessary to keep them working for you, and to make certain they are doing a decent job. This can be accomplished by means of good employee relations. The most evident employee relations exercise is the art of motivation - a broad topic itself - but other worker relations issues can include disciplinary and grievance management.
Finances
You cannot keep employees at your company by good motivational methods only. They’ll want to be paid a fair amount and on time. Payroll should be one of the very first systems that is developed when you launch a business, but they still need to be taken care of and updated when personnel join, leave or switch pay grade.
Industrial Relations
Several companies will have to deal with trade union or other workers rights establishments which can be very forceful when protecting the interests of their members. When dealing with such bodies it is beneficial to have individuals within your organisation who can connect effectively with them whilst keeping the interests of your own company in mind as well.
New recruits could study your organisation’s background from the paperwork regarding company incorporation to as well as specific training materials to enforce your corporate philosophy.
Workforce Planning
We have seen the impact that human resource management may have on a company and overall it looks like good HRM will have a beneficial effect on any organisation. As a rule, this is the case, but effective HRM doesn’t just occur overnight.
One way to implement HRM concepts to your business is via workforce planning - a system that has the goal of making sure your staff can complete the upcoming tasks required for your company to be successful. It can be defined as:
Definition
Workforce planning is the method of anticipating ahead of time the human resource needs of any organisation, both in terms of the quantity of employees needed and the appropriate skill mix. Recruitment and training procedures are devised with a long term focus in order to make sure that the organisation is able to operate without being limited by a lack of appropriate labour.
Requirements
Analysing your workforce demands is vital to the proper planning of your workforce in the short-term and long-term future. If your business is subject to seasonal changes in demand, for example in the tourism industry, or suffers from seasonal fluctuations in staff levels then your workforce planning has to take these variables into consideration. Also bear in mind any approaching retirements or times of maternity/paternity leave or you could suffer from a shortage of qualified personnel.
Recruitment
Whether you are recruiting externally or from inside your existing workforce you still need to find the right person to fill the position. As part of your workforce planning you should draw up a job description that details the job that will be undertaken as well as a person specification which will give an indication of the kind of individual that would be a good fit for the job and your company.
Selection
The selection process can be as involved or as simple as you deem necessary. Beyond regular job selection interviews there are numerous ways you can learn about about candidates for your jobs, including aptitude tests, group interviews or even psychometric testing. These sophisticated techniques might not be applicable to all workforce planning assignments but are an option to organisations.
Training & Development
The primary goal of staff training and development is to produce a much better quality of worker within your company. Workforce planning can use training to fill upcoming gaps in the skill set of your workforce and is usually faster and more economical than external recruitment. Training and development can also go some way toward motivating your employees.
HRM can help understanding inside of your business in order to make sure all employees know that offshore incorporations are actually the key phrase that define your on-line marketing push.
Workforce Motivation
It practically goes without saying that well motivated workers are going to produce a better standard of output and have a greater quantity of production than unsatisfied workers. This improved working rate will inevitably lead to an increase in the profitability of a company. Yet motivation remains a bit of taboo topic among some managers.
Essentially, all motivational tactics can be separated into two models that are often referred to as the “carrot and stick” approach to motivation. The analogy refers to the two ways to make a donkey carry your possessions, either by tempting it with a carrot, or threatening it with a hit from a stick!
Whether you use the carrot approach or the stick strategy will generally depend on your own management style, as well as the business you work in and the type of people that you employ. Irrespective of your approach, motivational factors can be separated into a further two groups; financial and non-financial motivators.
Financial
The most common financial motivators are payment plans. You can pay workers in many different ways, either a fixed amount for a set service, by an hourly or daily rate, or a rate linked to production, such as a commission structure. Whatever method is employed, the workforce is motivated to work because they will get money for doing so.
Another financial motivation method involves what are known as incentive schemes, where additional financial rewards are handed out for good performance. This may include commission beyond a fixed salary, performance-related pay levels or even offering a share of company profits.
Non-financial
Several human resource theorists have their own ideas about the different factors that motivate people to do the job, although these are often seen as a bonus to a worker. It is widely acknowledged that income is the key motivational factor for the vast majority of people. If you would like to learn more about these ideas I would recommend looking up the work of Elton Mayo, Abraham Maslow as well as Fredrick Herzberg.
The Changing Face of HRM
As previously stated, HRM is a versatile application that is there to match the features of your staff to the objectives of your organisation. As such, it has had to keep adapting to a business climate that is constantly changing for one reason or another.
Perhaps there is a new piece of government law that will have an effect of how your business can carry out its trading, or maybe a fresh manufacturing technology will come along that can revolutionise your sector. Either way, if you want to make sure that your workforce is performing to its highest level then your HRM system should be adaptive enough to cope with an ever-changing world. After all, what might seem like a risk to most will often appear as an opportunity to a shrewd entrepreneur.
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