Human Resource Management
Introduction
Human Resource Management, or HRM for short, is one of the most critical factors in running a prosperous company, though it is not always handled with the time and focus that it deserves. To completely understand what HRM is and its impact on the success or failing of a business, we first must know what it means. The following is a satisfactory definition:
The purpose of Human Resource Management is to recruit, develop and use the personnel within an organisation in the manner in which is most suitable to achieving the aims and objectives of the enterprise.
This basically translates to “using individuals in the business in the best way possible” though that would be an over-simplified assertion that doesn’t reflect the true nature and scope of HRM. HRM describes all of the techniques and procedures that are involved in making certain that all members of staff in a business 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 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 applied to all levels of management within your company, not just the shop floor workers, and it can even be used to alter the structure of those levels of management at the same time.
Why is it Necessary?
Quite simply, businesses don’t work without workers. As a result, some level of human resource management is required for any business to operate at all, let alone in an efficient and profitable manner. Even if you don’t realise exactly how HRM affects the day-to-day running of your enterprise 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 business activities with various degrees of visibility. The most evident HRM tasks involve the hiring and firing of employees 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 crucial nonetheless. Inadequate HRM practice in these less visible arenas can have a damaging impact on your company but go undetected for long intervals.
It also goes without saying that each business is unique and will have a different set of issues to face and opportunities to take advantage of. HRM can work as a versatile tool that converts workforce potential into financial gains and can adjust to fully utilise the talents of your company. Without it, your competitors may be afforded the chance to succeed where you missed out.
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Impact on Business
Whilst this all sounds very interesting and significant, how does it actually influence the daily operations of your business, and more importantly, how will it help to enhance the performance and profitability of your firm? The impact of HRM can be broken down into the following areas.
Recruitment & Training
This is most likely the part of a business that is most associated with human resources – recruitment. Almost every company in the world, and particularly companies that are growing, have to recruit people to work for them. Either existing employees have left, or new possibilities have arisen which mean there are jobs that must 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 industry, there is an on-going need to keep your company up-to-date and prepared to make use of any opportunity.
You may also discover that the expensive process of external recruitment can be avoided if your organisation has adequate training facilities in place. It is far easier to train an existing employee to a higher level and then use external recruitment to fill the gap left at the lower level than it is to recruit directly to a higher level.
Employee Relations
When you have the suitable people working for you it is important to keep them working for you, and to ensure they are doing a good job. This can be accomplished via good employee relations. The most obvious employee relations practice is the art of motivation – a broad topic by itself – but other worker relations issues may include disciplinary and grievance management. All of these things are an important part of the overall HRM strategy.
Finances
You cannot keep employees at your company by good motivational techniques only. They will want to be paid a fair sum and on time. Payroll should be one of the primary systems that is developed when you launch a business, but they still need to be taken care of and updated when staff join, leave or switch pay grade.
Industrial Relations
Many companies will have to work with trade union or other workers rights organisations which can be very forceful when protecting the interests of their members. When dealing with such bodies it is beneficial to have people within your company who can communicate effectively with them whilst keeping the interests of your own business in mind as well.
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Workforce Planning
We have seen the effect that human resource management may have on a company and overall it looks like good HRM will have a good effect on any business. As a rule, this is the case, but good HRM doesn’t just happen overnight. It should be planned according to the goals of the company and then performed thoroughly.
One way to implement HRM concepts to your business is through workforce planning – a process that has the goal of making sure your workforce can complete the upcoming tasks needed for your company to be successful. It can be defined as:
Definition
Workforce planning is the process of anticipating in advance the human resource requirements of any organisation, both in terms of the quantity of employees needed and the appropriate skill mix. Recruitment and training procedures 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 broken down into four main parts; requirements, recruitment, selection, and training and development.
Requirements
Analysing your workforce requirements is essential 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 staff levels 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 right person to fill the position. As part of your workforce planning you ought to draw up a job description that describes the function that will be carried out as well as a person specification which will give an indication of the kind of individual that would be a good fit for the job and your company. By combining and prioritising the components of these two documents you will be able to recognise the ideal job applicant.
Selection
The selection process can be as involved or as easy as you deem necessary. Over and above regular job selection interviews there are numerous ways you can learn about candidates for your jobs, including aptitude tests, group interviews or even psychometric testing. These advanced techniques might not be applicable to all workforce planning projects but are an alternative to recruiters.
Training & Development
The main goal of staff training and development is to develop a much better quality of worker within your organisation. Workforce planning can use training to plug upcoming gaps in the skill set of your workforce and is generally faster and more economical than external recruitment.
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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 greater quantity of output than unhappy workers. This improved work rate will undoubtedly lead to an increase in the profitability of a business.
Essentially, all motivational practices can be separated into two models that are often called the “carrot and stick” approach to motivation. The analogy refers 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 relatively old idea but the basic principle is still relevant to businesses today.
Whether you use the carrot strategy or the stick approach will largely depend on your own management style, as well as the industry you work in and the type of people that you hire. Regardless of your method, motivational factors can be broken down into a further two groups; financial and non-financial motivators.
Financial
The most typical financial motivators are payment plans. You can pay workers in a number of different ways, either a set amount for a fixed service, by an hourly or daily fee, or a rate related to production, such as a commission structure.
Another financial motivation method involves what are known as incentive schemes, where by additional financial rewards are given out for good performance. This may include commission beyond a fixed salary, performance-related pay grades or even offering a share of company profits. Again, the motivating aspect here is the money alone.
Non-financial
Several human resource theorists have their own thoughts about the other elements that motivate people to work, although these are often seen as an added bonus to a worker. 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 versatile tool that is there to match the features of your staff to the objectives of your organisation. As such, it has had to keep adapting to a corporate climate that is continuously 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.
Perhaps there is a new piece of government law that will have an impact of how your company can carry out its trading, or maybe a fresh manufacturing technology will come along that will revolutionise your sector. Either way, if you want to make sure that your staff is performing to its optimum level then your HRM strategy should be adaptive enough to cope with an ever-changing world. After all, what might seem like a danger to many will often appear as an opportunity to a shrewd entrepreneur.
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