Introduction
Human Resource Management, or HRM for short, is one of the most critical elements in running a prosperous company, although it isn’t always treated with the time and focus that it deserves. To completely understand what HRM is and its impact on the success or failing of a company, we first need to know what it means. The following is a good definition:
The purpose of Human Resource Management is to recruit, develop and utilise the workers within an organisation in the manner in which is most suitable to achieving the aims and objectives of the enterprise.
This essentially translates to “using individuals in the company in the best way possible” though that would be an over-simplified assertion that does not reflect the true nature and scope of HRM. HRM describes all of the strategies and procedures that are involved in making certain that all members of staff in a company are pulling in the same direction, and more significantly, in the right direction. Without good human resource management a business will be spending effort on jobs that it may not directly benefit from.
At its center, HRM combines three primary elements that are fundamental to the productive output of the staff. These elements include motivation, management and leadership, and organisational structures. Consequently, HRM can be employed on all levels of management within your company, not just the shop floor personnel, and it may even be used to modify the framework of those levels of management as well.
Why is it Necessary?
Quite simply, businesses don’t run without employees. As a result, some level of human resource management is required for any organisation 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 working of your business you will certainly be employing some kind of HRM in order to keep trading.
Human Resource Management has an impact on every level of your corporate activities with varying degrees of visibility. The most evident 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 within your company, which are far more intangible factors but are important nonetheless. Inadequate HRM practice in these less visible arenas can have a negative impact on your company but go unnoticed for long periods of time.
It also goes without saying that every business is unique and will have a different set of challenges to face and opportunities to take advantage of. HRM can act as a flexible tool that converts workforce power into financial gains and can adjust to fully utilise the strengths of your company.
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Impact on Business
While this all sounds very interesting and important, how does it actually impact on the daily functions of your company, and more importantly, how will it help to boost the performance and success of your company?
Recruitment & Training
This is probably the area of a company that is most affiliated with human resources – recruitment. Almost every business in the world, and especially businesses that are expanding, have to recruit people to work for them. Either existing employees have left, or new opportunities have arisen which mean there are jobs that must be filled.
It is also important to keep your staff training procedures up-to-date to make sure 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 industry, there is an on-going need to keep your company up-to-date and ready to take advantage of any opportunity.
You may also discover that the expensive process of external recruitment can be averted if your company has sufficient training facilities in place. It is far easier to teach an existing employee to a higher level and then use external recruitment to fill the gap remaining at the lower level than it is to hire directly to a higher level.
Employee Relations
When you have the right men and women 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 achieved through good employee relations. The most obvious employee relations practice is the art of motivation – a broad topic itself – but other worker relations issues can include disciplinary and grievance management. All of these factors are an important part of the overall HRM picture.
Finances
You can’t keep employees at your company by good motivational techniques alone. They’ll want to be paid a fair amount and on time. Payroll ought to be one of the initial systems that is created when you start a company, but they still need to be maintained and updated when staff join, leave or change pay grade. Incorrect management of your payroll program can quickly lead to disaster in terms of your workforce.
Industrial Relations
Several firms will have to work with trade union or other workers rights establishments which can be very forceful when protecting the interests of their own members. When interacting with such bodies it is advantageous to have people within your organisation who can connect comfortably with them whilst keeping the interests of your own organisation in mind as well.
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Workforce Planning
We have seen the influence that human resource management can have on a business and on the whole it seems like good HRM will have a beneficial effect on any company. As a rule, this is the case, but good HRM doesn’t just occur overnight.
One way to apply HRM ideas to your business is via workforce planning – a system that has the goal of making sure your workforce can finish the upcoming tasks required for your business to be successful. It can be defined as:
Definition
Workforce planning is the process of anticipating in advance the human resource needs of any organisation, both in terms of the number of employees needed and the proper skill mix. Recruitment and training policies are designed with a long term emphasis in order to make sure that the organisation is able to operate without being limited by a shortage of appropriate labour. Workforce planning can be split into four main parts; requirements, recruitment, selection, and training and development.
Requirements
Evaluating 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 is prone to seasonal fluctuations in workforce then your workforce planning must take these factors into consideration. Also bear in mind any approaching retirements or intervals of maternity/paternity leave or you could experience a shortage of qualified workers.
Recruitment
Whether you are hiring people externally or from within your existing workforce you still need to find the right person to fill the role. As part of your workforce planning you ought to draw up a job description that describes the job that will be carried out as well as a person specification which will give an indication of the sort of person that would be a good fit for the job and your organisation. By combining and prioritising the elements of these two descriptions you will be able to identify the ideal job applicant.
Selection
The selection procedure can be as involved or as simple as you deem necessary. Over and above regular job interviews there are several ways you can learn about about candidates for your jobs, including aptitude tests, group interviews or even psychometric testing.
Training & Development
The main goal of staff training and development is to produce a better quality of worker in your business. Workforce planning can use training to fill upcoming gaps in the skill set of your staff which is usually quicker and more cost effective than external recruitment. Training and development may also go some way towards motivating your staff.
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Workforce Motivation
It almost goes without saying that well motivated workers are going to produce a better standard of work and have a greater quantity of production than unsatisfied workers. This improved work rate will inevitably lead to a rise in the profitability of a company. Yet motivation remains a bit of taboo topic amongst some managers.
Essentially, all motivational tactics can be separated into two models that are often called the “carrot and stick” approach to motivation. The analogy relates to the two approaches to make a donkey carry your possessions, either by tempting it with a carrot, or threatening it with a hit from a stick! It is a relatively old idea but the basic principle remains relevant to businesses today.
Whether you use the carrot strategy or the stick approach will largely depend on your own management approach, as well as the business you work in and the type of people that you employ. Regardless of your method, motivational factors can be broken down into a further two sets; financial and non-financial motivators.
Financial
The most typical financial motivators are payment plans. You can pay staff in a number of different ways, either a fixed amount for a set service, by an hourly or daily rate, or a rate related to production, such as a commission scheme. Whatever method is used, the workforce is motivated to work because they will receive money for doing so.
Another financial motivation method involves what are called incentive schemes, where by additional financial rewards are given out for good performance. This may include commission beyond a fixed salary, performance-related pay levels or even offering a share of company profits. Once again, the motivating aspect here is the money alone.
Non-financial
Several human resource advocates have their own ideas about the different factors that motivate people to work, although these are often seen as an added bonus to an employee. It is widely acknowledged that income is the main motivational factor for the vast majority of people. If you want 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 characteristics of your staff to the objectives of your business. 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 may have an effect of how your business can carry out its operations, or maybe a fresh manufacturing technology will come along that can revolutionise your sector. Either way, if you want to make certain that your staff is performing to its maximum level then your HRM strategy should be flexible enough to cope with an ever-changing economy.