Introduction
Human Resource Management, or HRM for short, is one of the most critical elements in running a successful company, although it isn’t always handled with the time and emphasis that it deserves. To fully understand what HRM is and its influence on the success or failure of a business, we first need to know what it means.
The function of Human Resource Management is to recruit, develop and utilise the personnel within an enterprise in the manner in which is most suitable to accomplishing the aims and objectives of the enterprise.
This essentially 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 range of HRM. HRM describes all of the strategies and processes that are involved in making sure that all members of staff within a business are pulling in the same direction, and much more significantly, in the right direction.
At its core, HRM brings together three major elements that are fundamental to the productive output of the staff. These factors include motivation, management and leadership, and organisational structures. As a result, HRM can be employed on all levels of management in your business, not just the shop floor workers, and it may even be used to alter the structure of those levels of management as well.
Why is it Necessary?
Quite simply, companies don’t work without workers. As a result, some level of human resource management is necessary for any business to operate at all, let alone in an effective and prosperous manner. Even if you don’t appreciate exactly how HRM affects the daily running of your company you will certainly be using some form of HRM in order to keep trading.
Human Resource Management has an effect on every level of your corporate activities with various degrees of visibility. The most apparent HRM tasks involve the hiring and firing of staff as well as monetary systems such as payroll. It can also impact on motivation and communication inside your company, which are much more intangible variables but are crucial nonetheless. Poor HRM practice in these less visible arenas can have a damaging impact on your company but go undetected for long periods of time.
It also goes without saying that each organisation is different and will have a different set of challenges to face and opportunities to take advantage of. HRM can act as a versatile tool that translates workforce potential into financial profits and can adjust to fully utilise the talents of your company. Without it, your competitors could be afforded the chance to succeed where you missed out.
The proper management of human resources is vital for businesses providing products and services with very specific terms such as setting up company since client support is of great importance.
Impact on Business
Whilst 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 improve the performance and profitability of your company? The effect of HRM can be broken down into the following areas.
Recruitment & Training
This is probably the part of a company that is most associated with human resources – recruitment. Almost every business in the world, and especially businesses that are growing, need to recruit people to work for them. Either existing employees have left, or new possibilities have arisen which mean there are jobs that need to 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. Whether it is a fresh piece of legislation or a new piece of technology that alters the market, there is an on-going requirement to keep your business up-to-date and ready to make use of any opportunity. There is an expression that states that “if you are not moving forward you are going backwards” which can be applied to business.
You may also discover that the expensive process of external recruitment can be avoided if your company has adequate training facilities in place. It is much easier to train an existing worker to a higher level and then use outside recruitment to fill the gap left at the lower level than it is to hire straight to a higher level.
Employee Relations
Once you have the suitable people working for you it is necessary to keep them working for you, and to make sure they are doing a decent job. This can be achieved via good employee relations. The most obvious employee relations practice is the art of motivation – a wide topic itself – but other worker relations issues can include disciplinary and grievance management.
Finances
You can’t keep employees at your organisation by good motivational techniques alone. They’ll want to be paid a fair sum and on time. Payroll must be one of the very first systems that is developed when you start a business, but they still need to be maintained and updated when personnel join, leave or switch pay grade. Improper management of your payroll program can rapidly lead to disaster in terms of your staff.
Industrial Relations
Many firms will have to deal with trade union or other workers rights establishments which can be very forceful when protecting the interests of their own members. When dealing with such bodies it is advantageous to have individuals within your organisation who can connect comfortably with them whilst keeping the interests of your own organisation in mind as well.
Regardless of the industry they trade in, whenever any bvi company aims to grow it have to use recruitment to increase its current workforce.
Workforce Planning
We have seen the influence that human resource management can have on a company and on the whole it seems like good HRM will have a good effect on any business. As a rule, this is the case, but good HRM does not 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 finish the upcoming tasks required for your company to be successful.
Definition
Workforce planning is the method of anticipating in advance the human resource requirements of any organisation, both in terms of the quantity of employees necessary and the appropriate skill mix. Recruitment and training policies are designed with a long term focus in order to make sure that the organisation is able to operate without being limited by a shortage of appropriate labour.
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 shifts in demand, such as in the tourism industry, or suffers from seasonal fluctuations in workforce then your workforce planning needs to take these variables into consideration. Also bear in mind any approaching retirements or intervals of maternity/paternity leave or you could suffer from a shortage of qualified employees.
Recruitment
Whether you are hiring people externally or from inside your existing workforce you still need to find the correct person to fill the position. As part of your workforce planning you ought to draw up a job description that describes the role that will be carried out as well as a person specification which will give an indication of the kind of person that would be a good fit for the job and your organisation.
Selection
The selection process can be as involved or as easy as you deem necessary. Outside of regular job interviews there are a number of ways you can learn about about candidates for your jobs, including aptitude tests, group interviews and even psychometric testing.
Training & Development
The main goal of staff training and development is to develop a much better quality of worker in your business. Workforce planning can use training to fill upcoming gaps in the skill set of your workforce and is usually faster and more cost effective than external recruitment.
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Workforce Motivation
It practically goes without saying that properly motivated workers are going to produce a better standard of output and have a higher quantity of output than unsatisfied workers. This improved working rate will inevitably lead to a rise in the profitability of a business. Yet motivation is still a bit of taboo topic among some managers.
Essentially, all motivational practices 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 belongings, either by tempting it with a carrot, or threatening it with a strike from a stick! It is a fairly old idea but the principle remains relevant to businesses today.
Whether you use the carrot approach or the stick strategy will largely depend on your own management approach, as well as the industry you work in and the type of people that you hire.
Financial
The most typical financial motivators are payment schemes. You can pay staff in a number of different ways, either a fixed amount for a fixed service, by an hourly or daily fee, or a rate linked to production, such as a commission scheme.
Another financial motivation method involves what are called incentive schemes, where by additional financial rewards are handed out for good overall performance. This may include commission beyond a fixed salary, performance-related pay levels or even offering a share of company profits.
Non-financial
Many human resource advocates have their own thoughts about the different elements 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 key motivational factor for the vast majority of people. If you would like to learn more about these theories I would recommend looking up the work of Elton Mayo, Abraham Maslow and Fredrick Herzberg.
The Changing Face of HRM
As previously mentioned, HRM is a versatile tool that is there to match the features of your workforce to the objectives of your organisation. As a result, it has had to keep changing 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 company can carry out its trading, or maybe a fresh manufacturing technology will come along that can revolutionise your industry. Either way, if you want to make certain that your workforce is performing to its maximum level then your HRM strategy should be adaptive enough to cope with an ever-changing world.
