Human Resource Management

Introduction

Human Resource Management, or HRM for short, is one of the most important elements in running a prosperous company, though it is not always treated with the time and focus that it deserves. To completely understand what HRM is and its impact on the success or failure of a company, we first must know what it means. The following is a satisfactory definition:

The function of Human Resource Management is to recruit, develop and use the workers within an organisation in the manner in which is most appropriate to accomplishing 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 assertion that doesn’t echo the true nature and scope of HRM. HRM describes all of the techniques and processes that are involved in making certain that all members of staff within a company are pulling in the same direction, and much more significantly, in the right direction. Without good human resource management a company will be spending energy on tasks that it may not directly benefit from.

At its core, HRM combines three primary elements that are fundamental to the productive output of the workforce. These factors include motivation, management and leadership, and organisational structures. As a result, HRM can be applied to all levels of management in your organisation, not just the shop floor workers, and it can even be used to adjust the structure of those levels of management at the same time.

Why is it Necessary?

Quite simply, businesses don’t work without employees. As such, 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 realise exactly how HRM affects the everyday working of your enterprise you will surely be employing some sort of HRM in order to keep trading.

Human Resource Management has an impact on every level of your corporate activities with various degrees of visibility. The most evident HRM tasks involve the hiring and firing of employees as well as financial systems such as payroll. It can also impact on motivation and communication inside your business, which are far more intangible factors but are important nonetheless.

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 flexible tool that translates workforce power into financial profits and can adjust to fully utilise the strengths of your firm. Without it, your competitors might be afforded the chance to prosper 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 functions of your business, and more importantly, how will it help to boost the performance and success 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 business in the world, and particularly companies that are expanding, must recruit people to work for them. Either existing employees have left, or new opportunities have arisen which mean there are roles that have to be filled.

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 piece of technology that changes the market, there is an on-going requirement to keep your company up-to-date and ready to make use of any opportunity.

You may also find that the costly practice of external recruitment can be averted if your company has sufficient 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. This approach can be applied at almost every grade of management within your company.

Employee Relations

When you have the right men and women working for you it is important to keep them doing work for you, and to make certain they are doing a good job. This can be achieved by means of good employee relations. The most obvious employee relations exercise is the art of motivation – a broad topic itself – but other employee relations issues can 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 company by good motivational methods only. They will want to be paid a fair amount and on time. Payroll must be one of the primary 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 switch pay grade.

Industrial Relations

Numerous 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 beneficial to have people within your company who can communicate comfortably with them whilst keeping the interests of your own organisation in mind at the same time.

New recruits could understand your company’s background from the paperwork regarding company formation all the way to the present day as well as particular training materials to enforce your corporate philosophy.

Workforce Planning

We have seen the influence that human resource management may have on a company 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.

One way to implement HRM ideas to your company is via workforce planning – a system that has the goal of making sure your staff can finish the upcoming tasks required for your business to be successful.

Definition

Workforce planning is the method of anticipating ahead of time the human resource needs of any enterprise, both in terms of the quantity of employees necessary and the appropriate skill mix. Recruitment and training procedures are designed with a long term focus in order to ensure that the organisation is able to operate without being limited by a lack of appropriate labour. Workforce planning can be split into four main areas; 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 company is subject to seasonal shifts in demand, for example in the tourism industry, or suffers from seasonal fluctuations in workforce then your workforce planning needs to take these factors into consideration. Also bear in mind any future retirements or periods of maternity/paternity leave or you could experience a shortage of qualified workers.

Recruitment

Whether you are recruiting 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 function that will be undertaken as well as a person specification which will give an indication of the type of individual that would be a perfect 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 procedure can be as involved or as simple as you deem necessary. Beyond regular job interviews there are numerous ways you can learn about applicants for your jobs, including aptitude tests, group interviews and even psychometric testing.

Training & Development

The principal goal of staff training and development is to produce a better standard of worker within your business. 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 practically goes without saying that well motivated employees are going to deliver a better standard of output and have a higher quantity of output than unhappy workers. This improved working rate will inevitably lead to an increase in the profitability of a company. Yet motivation is still a bit of taboo topic amongst some managers.

Essentially, all motivational practices can be separated into two models that are often referred to as the “carrot and stick” approach to motivation. The analogy relates to the two ways to make a donkey carry your possessions, either by tempting it with a carrot, or threatening it with a hit from a stick! It is a relatively old idea but the basic principle remains relevant to companies today.

Whether you use the carrot strategy or the stick strategy will generally depend on your own management style, as well as the industry you work in and the type of individuals that you employ.

Financial

The most common financial motivators are payment schemes. You can pay staff in a number of different ways, either a fixed amount for a set service, by an hourly or daily fee, or a rate related to production, such as a commission structure.

Another financial motivation technique 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 grades or even offering 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 a worker. It is widely acknowledged that income is the critical 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 as well as Fredrick Herzberg.

The Changing Face of HRM

As previously mentioned, HRM is a versatile application that is there to match up the characteristics of your workforce to the goals of your business. As such, it has had to keep changing to a business climate that is continuously changing for one reason or another.

Perhaps 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 new 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 flexible enough to cope with an ever-changing economy.