Introduction
Human Resource Management, or HRM for short, is one of the most important factors in running a prosperous company, though it isn’t always handled with the time and emphasis that it deserves. To completely understand what HRM is and its influence on the success or failure of a company, we first need to know what it means. The following is a satisfactory definition:
The function of Human Resource Management is to recruit, develop and use the personnel within an enterprise in the manner in which is most appropriate to achieving the aims and objectives of the organisation.
This effectively translates to “using people in the company in the best way possible” though that would be an over-simplified statement 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 importantly, in the right direction.
At its center, HRM brings together three major elements that are fundamental to the productive output of the workforce. 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 can even be used to alter the framework of those levels of management at the same time.
Why is it Necessary?
Put simply, companies don’t operate without workers. As a result, some level of human resource management is necessary 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 obvious HRM tasks include the hiring and firing of employees as well as financial systems such as payroll. It may also impact on motivation and communication within your company, which are much more intangible variables but are crucial nonetheless. Bad HRM practice in these less visible arenas can have a negative impact on your company but go undetected for long intervals.
It also goes without saying that every organisation 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 could be afforded the chance to succeed where you missed out.
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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 boost the performance and success of your company? The effect of HRM can be broken down into the following areas.
Recruitment & Training
This is most likely the area of a company that is most affiliated with human resources – recruitment. Almost every company in the world, and especially businesses that are growing, have to recruit people to work for them. Either current employees have left, or new opportunities have arisen which mean there are roles that must be filled. HRM can ensure your recruitment system gets the appropriate people into the right jobs at a cost-effective price.
It’s 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 bit of technology that changes the marketplace, there is an on-going need to keep your organisation up-to-date and prepared to take advantage of any opportunity.
You may also find that the expensive practice of external recruitment can be averted if your organisation has sufficient training facilities in place. It is much easier to train 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 recruit straight to a higher level.
Employee Relations
When you have the suitable people working for you it is necessary to keep them doing work for you, and to ensure they are doing a good job. This can be accomplished through good employee relations. The most obvious employee relations practice is the art of motivation – a wide topic by itself – but other employee relations issues can include disciplinary and grievance management.
Finances
You can’t keep employees at your organisation by good motivational techniques alone. They will want to be paid a fair sum and on time. Payroll ought to be one of the first systems that is created when you start a business, but they still need to be taken care of and updated when staff join, leave or change pay grade.
Industrial Relations
Numerous firms will have to deal with trade union or other workers rights organisations which can be incredibly forceful when defending the interests of their members. When interacting 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 business in mind at the same time. The demand for good industrial relations is far more prevalent in public sector companies.
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Workforce Planning
We have seen the effect that human resource management can have on a company 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 effective HRM doesn’t just happen overnight.
One way to implement HRM concepts to your company is via workforce planning – a process that has the aim of making sure your staff can complete 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 quantity of employees necessary and the appropriate skill mix. Recruitment and training procedures are devised with a long term focus in order to ensure that the organisation is able to function 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 shifts in demand, such as 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 describes 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 perfect 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 interviews there are several ways you can learn about about applicants for your jobs, including aptitude tests, group interviews or even psychometric testing. These advanced techniques may not be relevant to all workforce planning projects but are an alternative to companies.
Training & Development
The principal goal of staff training and development is to produce a better standard of worker within your company. Workforce planning can use training to fill upcoming gaps in the skill set of your staff and is usually quicker and more cost effective than external recruitment. Training and development can also go some way toward motivating your staff.
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Workforce Motivation
It practically goes without saying that properly motivated employees are going to deliver a better standard of output and have a higher quantity of production than unhappy workers. This improved working rate will inevitably lead to a rise in the profitability of a company.
Essentially, all motivational tactics can be separated into two sets that are often referred to as 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 strike from a stick!
Whether you use the carrot strategy or the stick strategy will generally depend on your own management style, as well as the business you work in and the type of individuals that you employ. Regardless of your approach, 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 many different ways, either a set amount for a fixed service, by an hourly or daily rate, or a rate related to production, such as a commission structure. 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 known as incentive schemes, where additional financial rewards are given out for good performance. This may include commission above a fixed salary, performance-related pay grades or even offering a share of company profits.
Non-financial
Many human resource advocates have their own thoughts about the different factors that motivate people to do the job, although these are often seen as a bonus to an employee. It is widely acknowledged that money is the critical motivational factor for the great 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 and Fredrick Herzberg.
The Changing Face of HRM
As previously mentioned, HRM is a versatile application that is there to match the characteristics of your workforce to the objectives of your business. As such, it has had to keep changing to a business climate that is continuously changing for one reason or another.
Maybe there is a new piece of government legislation that may have an impact of how your business 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 ensure that your staff 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 danger to most will often appear as an opportunity to a shrewd entrepreneur.
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