Introduction
Human Resource Management, or HRM for short, is one of the most critical elements in running a successful company, though it is not 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 must know what it means. The following is a satisfactory 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 essentially translates to “using individuals in the business in the best way possible” although that would be an over-simplified statement that does not reflect the real nature and range of HRM. HRM describes all of the techniques and procedures that are involved in making sure that all members of staff in a company are pulling in the same direction, and much more significantly, in the right direction. Without good human resource management a business will be spending energy on tasks that it may not directly gain from.
At its center, HRM combines three major elements that are essential to the productive output of the workforce. These elements include motivation, management and leadership, and organisational structures. As a result, HRM can be applied to all levels of management in your business, not just the shop floor workers, and it may even be used to modify the framework of those levels of management as well. It is a broad subject that is explained in greater detail in this article.
Why is it Necessary?
Quite simply, businesses don’t work without employees. As a result, some level of human resource management is required for any organisation to operate at all, let alone in an effective and prosperous manner.
Human Resource Management has an impact on every level of your business activities with varying degrees of visibility. The most apparent HRM tasks include the hiring and firing of staff as well as monetary systems such as payroll. It can also impact on motivation and communication within your business, which are far more intangible factors but are critical nonetheless.
It also goes without saying that each company is unique and will have a unique 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 adapt to fully utilise the strengths of your firm. Without it, your rivals might be afforded the chance to prosper where you missed out.
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Impact on Business
While this all appears very interesting and important, how does it actually influence the daily functions of your business, and more importantly, how will it help to boost the performance and profitability of your company?
Recruitment & Training
This is most likely the area of a business that is most affiliated with human resources - recruitment. Almost every business in the world, and particularly businesses that are expanding, must recruit people to work for them. Either current employees have left, or new possibilities have arisen which mean there are roles that need to be filled.
It’s also important to keep your staff training procedures up to date to make certain that your workforce is fully capable of doing the job they are there to do. Whether it is a new piece of legislation or a new piece of technology that alters the marketplace, there is an on-going need to keep your organisation up-to-date and ready to make use of any opportunity.
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 teach an existing staff member to a higher level and then use outside recruitment to fill the gap left at the lower level than it is to recruit directly to a higher level. This approach can be used at almost every single grade of management within your business.
Employee Relations
When you have the suitable people working for you it is important to keep them working for you, and to make sure they are doing a decent job. This can be accomplished via good employee relations. The most obvious employee relations practice is the art of motivation - a broad topic itself - but other employee relations issues may include disciplinary and grievance management. All of these factors are an essential part of the overall HRM strategy.
Finances
You cannot keep employees at your organisation by good motivational techniques alone. They will 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 taken care of and updated when personnel join, leave or change pay grade. Incorrect management of your payroll program can rapidly lead to disaster in terms of your workforce.
Industrial Relations
Several companies will have to deal with trade union or other workers rights organisations which can be incredibly forceful when protecting the interests of their own members. When interacting with such bodies it is beneficial to have people within your organisation who can communicate effectively with them whilst keeping the interests of your own company in mind as well. The demand for good industrial relations is significantly more prevalent in public sector firms.
New employees could understand your company’s background from the initial company formation right up to as well as particular training materials to enforce your corporate philosophy.
Workforce Planning
We have seen the influence that human resource management can have on a business and overall it seems like good HRM will have a positive effect on any company. As a rule, this is the case, but good HRM does not just happen overnight. It should be planned according to the targets of the organisation and then carried out thoroughly.
One way to implement HRM ideas to your company is through workforce planning - a system that has the goal of making sure your staff can complete the upcoming tasks required for your business to be successful.
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 required and the proper skill mix. Recruitment and training procedures are designed with a long term focus in order to make sure that the organisation is able to function without being limited by a lack of appropriate labour. Workforce planning can be broken down into four main areas; requirements, recruitment, selection, and training and development.
Requirements
Analysing your workforce requirements is vital to the proper planning of your staff in the short-term and long-term future. If your company is subject to seasonal shifts in demand, such as in the tourism industry, or is prone to seasonal fluctuations in workforce then your workforce planning needs to take these factors into consideration.
Recruitment
Whether you are recruiting externally or from within your existing workforce you still want 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 job that will be carried out as well as a person specification which will give an indication of the type of person that would be a good fit for the job and your business.
Selection
The selection procedure can be as involved or as simple as you deem necessary. Over and above regular job selection 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 primary goal of staff training and development is to develop a better standard of worker within your company. Workforce planning can use training to fill upcoming gaps in the skill set of your workforce which is generally faster and more cost effective than external recruitment.
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Workforce Motivation
It almost goes without saying that properly motivated employees are going to produce a better standard of output and have a higher quantity of production than unhappy workers. This improved work rate will undoubtedly 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 belongings, either by tempting it with a carrot, or threatening it with a strike from a stick!
Whether you use the carrot approach or the stick approach will generally depend on your own management approach, as well as the industry you work in and the type of individuals that you hire.
Financial
The most common financial motivators are payment plans. You can pay workers in numerous different ways, either a fixed amount for a fixed service, by an hourly or daily rate, or a rate linked to production, such as a commission structure.
Another financial motivation method involves what are known as incentive schemes, where additional financial rewards are handed out for good overall performance. This may include commission above a fixed salary, performance-related pay grades or even providing a share of company profits.
Non-financial
Several human resource advocates have their own thoughts about the other factors that motivate people to do the job, although these are often seen as a bonus to an employee. It is broadly acknowledged that income is the main motivational factor for the great majority of people.
The Changing Face of HRM
As previously stated, HRM is a flexible tool that is there to match up the characteristics of your staff to the objectives of your business. As such, it has had to keep changing to a corporate climate that is continuously changing for one reason or another.
Perhaps there is a new piece of government law that may have an effect of how your company can carry out its operations, or maybe a new manufacturing technology will come along that can revolutionise your industry. Either way, if you want to ensure that your staff is performing to its maximum level then your HRM strategy should be adaptive enough to cope with an ever-changing economy.