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 treated with the time and focus that it deserves. To completely understand what HRM is and its influence on the success or failure of a company, we first must know what it means. The following is a good definition:
The purpose of Human Resource Management is to recruit, develop and use the workers within an organisation in the manner in which is most suitable to achieving the aims and objectives of the enterprise.
This effectively translates to “using people in the business in the best way possible” though that would be an over-simplified assertion that does not echo the real nature and range of HRM. HRM describes all of the strategies and procedures that are involved in making sure that all members of staff in a business are pulling in the same direction, and much more significantly, in the right direction.
At its center, HRM brings together three major elements that are fundamental to the productive output of the staff. These factors include motivation, management and leadership, and organisational structures. As a result, HRM can be applied to all levels of management within your business, not just the shop floor staff, and it could even be used to alter the structure of those levels of management as well. It is a wide-ranging subject that is explored in greater detail in this article.
Why is it Necessary?
Put simply, companies don’t run without workers. As such, some level of human resource management is needed for any organisation to operate at all, let alone in an effective and profitable manner.
Human Resource Management has an impact on every level of your corporate activities with varying degrees of visibility. The most apparent HRM tasks involve the hiring and firing of staff as well as financial systems such as payroll. It can also impact on motivation and communication inside your company, which are much 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 periods of time.
It also goes without saying that every 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 power into financial profits and can adjust to fully utilise the talents of your company.
The proper supervision of human resources is essential for firms delivering products and services with very specific terms just like setting up company as customer service is of great significance.
Impact on Business
While this all sounds very interesting and significant, how does it actually impact on the daily operations of your business, and more importantly, how will it help to enhance the performance and success of your firm?
Recruitment & Training
This is probably the part of a company that is most associated with human resources - recruitment. Almost every business 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. HRM can ensure your recruitment process gets the appropriate people into the right roles at a cost-effective price.
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. Regardless of whether it is a fresh piece of legislation or a new piece of technology that alters the marketplace, there is an on-going need to keep your business up-to-date and prepared to make use 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 practice of external recruitment can be averted if your organisation 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 hire directly to a higher level. This approach can be used at almost every single grade of management inside your company.
Employee Relations
Once you have the suitable people working for you it is important to keep them doing work for you, and to ensure they are doing a decent 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 may include disciplinary and grievance management.
Finances
You cannot keep employees at your organisation by good motivational techniques only. They will want to be paid a fair amount and on time. Payroll should be one of the first 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. Poor management of your payroll program can quickly lead to catastrophe in terms of your staff.
Industrial Relations
Several firms will have to deal with trade union or other workers rights establishments which can be very forceful when defending the interests of their own members. When dealing with such bodies it is advantageous to have individuals within your company who can communicate comfortably with them whilst keeping the interests of your own company in mind as well. The demand for good industrial relations is far more prevalent in public sector firms.
Human resource management is actually required by each shelf company no matter how large or little your staff might be.
Workforce Planning
We have seen the impact that human resource management may have on a business and on the whole it seems like good HRM will have a positive effect on any organisation. As a rule, this is the case, but good HRM doesn’t just happen overnight. It should be designed according to the targets of the company and then performed thoroughly.
One way to implement HRM ideas to your business is via workforce planning - a process that has the aim of making sure your staff can complete the upcoming tasks required 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 organisation, both in terms of the number 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 operate without being limited by a shortage of appropriate labour.
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 changes in demand, such as in the tourism industry, or suffers from seasonal fluctuations in workforce then your workforce planning has to take these variables into consideration. Also bear in mind any upcoming retirements or periods of maternity/paternity leave or you could experience a shortage of qualified personnel.
Recruitment
Whether you are hiring people externally or from within your existing workforce you still need to find the correct person to fill the role. As part of your workforce planning you should 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 type of individual that would be a perfect fit for the job and your business.
Selection
The selection process can be as involved or as simple as you deem necessary. Outside of regular job interviews there are numerous ways you can learn about applicants for your jobs, including aptitude tests, group interviews and even psychometric testing. These advanced techniques might not be applicable to all workforce planning assignments but are an option to recruiters.
Training & Development
The principal goal of staff training and development is to produce a better standard of worker in your company. Workforce planning can use training to fill upcoming gaps in the skill set of your staff and is generally quicker and more economical than external recruitment.
Search engine optimisation firms can use a key term, such as set up company , and then produce a plan that aims to position your web site at the top of the engines like google.
Workforce Motivation
It practically goes without saying that properly motivated workers are going to deliver a better standard of output and have a higher quantity of production than unhappy workers. This improved work rate will inevitably lead to an increase in the profitability of a business. Yet motivation is still a bit of taboo topic among some managers.
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 ways 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 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.
Financial
The most typical financial motivators are payment schemes. You can pay staff in many 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 scheme. Whichever method is used, the workforce is motivated to work because they will receive money for doing so.
Another financial motivation technique involves what are called incentive schemes, where by additional financial rewards are handed out for good performance. This may include commission beyond a fixed salary, performance-related pay levels or even offering a share of company profits. Once again, the motivating aspect here is the money alone.
Non-financial
Many human resource advocates have their own ideas about the different factors that motivate people to work, although these are often seen as an added bonus to a worker. It is broadly acknowledged that money is the main motivational factor for the vast majority of people. If you want to learn more about these ideas I would recommend looking up the work of Elton Mayo, Abraham Maslow as well as Fredrick Herzberg.
The Changing Face of HRM
As previously stated, HRM is a versatile application 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 business climate that is constantly changing for one reason or another.
Maybe there is a new piece of government law that will have an effect of how your business can carry out its operations, or maybe a new manufacturing technology will come along that can revolutionise your sector. Either way, if you want to make certain that your staff is performing to its highest level then your HRM strategy should be adaptive enough to cope with an ever-changing economy. After all, what might seem like a threat to many will often appear as an opportunity to a shrewd entrepreneur.
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