Introduction
Human Resource Management, or HRM for short, is one of the most important elements in running a prosperous business, although it is not always treated with the time and emphasis that it deserves. To completely understand what HRM is and its influence on the success or failing of a company, we first must know what it means.
The purpose of Human Resource Management is to recruit, develop and utilise the workers within an enterprise in the manner in which is most appropriate to accomplishing the aims and objectives of the enterprise.
This essentially translates to “using people in the company in the best way possible” though that would be an over-simplified assertion that does not echo the true nature and range of HRM. HRM describes all of the methods and procedures that are involved in making certain that all members of staff in a company are pulling in the same direction, and more importantly, in the right direction. Without having good human resource management a company will be spending effort on tasks 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 in your company, not just the shop floor workers, and it can even be used to modify the structure of those levels of management as well. It is a broad subject that is explored in greater detail in this article.
Why is it Necessary?
Quite simply, businesses don’t work without workers. As such, some level of human resource management is required for any business to operate at all, let alone in an effective and profitable manner. Even if you don’t appreciate exactly how HRM affects the daily running of your business you will certainly be employing some form of HRM in order to keep trading.
Human Resource Management has an impact 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 important nonetheless. Inadequate HRM practice in these less visible domains can have a damaging impact on your organisation but go unnoticed for long periods of time.
It also goes without saying that every business is different and will have a specific set of challenges to face and opportunities to take advantage of. HRM can work as a versatile tool that translates workforce power into financial gains and can adapt to fully utilise the talents of your company. Without it, your rivals might be afforded the chance to prosper where you missed out.
Businesses that have been created to provide for organisation formats such as shelf companies should have a skilled workforce in place.
Impact on Business
While this all sounds very interesting and significant, how does it actually impact on the daily operations of your company, and more importantly, how will it help to boost the performance and success of your company?
Recruitment & Training
This is most likely the area of a company that is most affiliated with human resources – recruitment. Nearly every company in the world, and particularly 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 roles 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. Regardless of 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 organisation up-to-date and prepared to take advantage 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 costly process of external recruitment can be averted if your organisation has adequate training facilities in place. It is far easier to train an existing worker to a higher level and then use external recruitment to fill the gap left at the lower level than it is to hire directly to a higher level.
Employee Relations
When you have the right 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 accomplished through good employee relations. The most obvious employee relations exercise is the art of motivation – a broad topic by itself – but other worker relations issues may include disciplinary and grievance management. All of these factors are an essential part of the overall HRM strategy.
Finances
You can’t keep employees at your organisation by good motivational methods alone. They’ll want to be paid a fair sum and on time. Payroll ought to be one of the primary systems that is created when you launch a business, but they still need to be maintained and updated when personnel join, leave or switch pay grade.
Industrial Relations
Several firms will have to work with trade union or other workers rights establishments which can be very forceful when defending the interests of their own members. When interacting with such bodies it is advantageous to have people within your company who can connect effectively with them whilst keeping the interests of your own organisation in mind at the same time.
Human resource management is actually required by every forming company regardless of how large or small your workforce may be.
Workforce Planning
We have seen the influence that human resource management may have on a business and overall it seems like good HRM will have a beneficial effect on any company. As a rule, this is the case, but effective HRM doesn’t just occur overnight. It should be planned according to the goals of the organisation and then carried out thoroughly.
One way to apply HRM ideas to your company is through workforce planning – a process that has the aim of making sure your staff can complete the upcoming tasks needed for your company to be successful. It can be defined as:
Definition
Workforce planning is the method of anticipating in advance the human resource requirements of any enterprise, both in terms of the number of employees necessary and the proper 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 requirements is vital to the proper planning of your staff 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 staff levels then your workforce planning needs to take these variables into consideration.
Recruitment
Whether you are hiring people externally or from inside your existing workforce you still want to find the right individual to fill the position. As part of your workforce planning you ought to draw up a job description that details the function that will be undertaken as well as a person specification which will give an indication of the sort of individual that would be a good fit for the job and your organisation.
Selection
The selection process can be as involved or as simple as you deem necessary. Beyond standard 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. These sophisticated techniques may not be applicable to all workforce planning projects but are an option to employers.
Training & Development
The primary goal of staff training and development is to develop a much better standard of worker within your company. Workforce planning can use training to plug upcoming gaps in the skill set of your workforce and is generally quicker and more cost effective than external recruitment. Training and development can 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 deliver a better standard of output and have a greater quantity of production than unhappy workers. This improved working rate will inevitably lead to an increase in the profitability of a business. Yet motivation is still a bit of taboo subject amongst some managers.
Essentially, all motivational practices can be separated into two sets 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!
Whether you use the carrot approach or the stick approach will generally depend on your own management style, as well as the industry you work in and the type of people that you hire. Irrespective of your method, motivational factors can be broken down into a further two groupings; financial and non-financial motivators.
Financial
The most common financial motivators are payment schemes. You can pay staff in many 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 technique involves what are called incentive schemes, where by additional financial rewards are given out for good overall performance. This may include commission above a fixed salary, performance-related pay levels or even offering a share of company profits. Again, the motivating aspect here is the money alone.
Non-financial
Several human resource advocates have their own ideas about the different elements that motivate people to do the job, 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 flexible application that is there to match the characteristics of your workforce to the objectives of your organisation. As a result, it has had to keep adapting to a business climate that is constantly changing for one reason or another. Moreover, it is a good idea to continuously review your own HRM policies and not to rest on your laurels.
Maybe there is a new piece of government law that may have an effect of how your company can carry out its trading, or maybe a fresh manufacturing technology will come along that will revolutionise your industry. Either way, if you want to make certain that your workforce is performing to its optimum level then your HRM system should be flexible enough to cope with an ever-changing economy.