Introduction
Human Resource Management, or HRM for short, is one of the most important factors in running a successful company, though it is not always handled with the time and focus that it deserves. To fully 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 purpose of Human Resource Management is to recruit, develop and utilise the workers within an organisation 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 business in the best way possible” although that would be an over-simplified statement that doesn’t echo the true nature and range of HRM. HRM describes all of the strategies and procedures that are involved in making certain that all members of staff within a company are pulling in the same direction, and more importantly, in the right direction. Without having good human resource management a company will be expending energy on jobs that it may not directly benefit from.
At its center, HRM combines three primary elements that are essential to the productive output of the workforce. These factors include motivation, management and leadership, and organisational structures. As a result, HRM can be employed on all levels of management in your organisation, not just the shop floor staff, and it could even be used to modify the structure of those levels of management as well.
Why is it Necessary?
Quite simply, companies don’t run without employees. As a result, some level of human resource management is needed for any business to operate at all, let alone in an efficient and profitable manner. Even if you don’t appreciate exactly how HRM affects the every day working of your enterprise you will certainly be using some sort of HRM in order to keep trading.
Human Resource Management has an effect on every level of your corporate activities with various degrees of visibility. The most evident 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 far more intangible factors but are crucial 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 act as a versatile tool that converts workforce potential into financial profits and can adjust to fully utilise the strengths of your firm. Without it, your competitors might be afforded the chance to succeed where you missed out.
Organisations that are created to supply for organisation setups such as shelf companies should have a skilled workforce in place.
Impact on Business
Whilst this all appears very interesting and important, how does it actually influence the daily functions of your company, and more importantly, how will it help to boost the performance and profitability of your firm?
Recruitment & Training
This is most likely the part of a business that is most affiliated with human resources – recruitment. Almost every company in the world, and particularly companies that are growing, need to recruit people to work for them. Either existing employees have left, or new possibilities have arisen which mean there are roles 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 fresh piece of legislation or a new piece of technology that changes the industry, there is an on-going requirement to keep your business up-to-date and ready to take advantage of any opportunity.
You may also discover that the expensive process of external recruitment can be averted 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 straight to a higher level.
Employee Relations
Once you have the right people working for you it is necessary to keep them doing work for you, and to make certain they are doing a good job. This can be achieved via good employee relations. The most obvious employee relations exercise is the art of motivation – a wide topic by itself – but other worker relations issues can 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 organisation by good motivational techniques alone. They’ll want to be paid a fair sum and on time. Payroll ought to be one of the primary systems that is developed when you start a business, but they still need to be maintained and updated when personnel join, leave or change pay grade. Improper management of your payroll program can rapidly lead to disaster in terms of your workforce.
Industrial Relations
Several companies will have to work with trade union or other workers rights organisations which can be very forceful when protecting the interests of their own members. When dealing 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 organisation in mind as well. The demand for good industrial relations is far more prevalent in public sector companies.
New employees could understand your organisation’s background from the initial company incorporation right up to as well as specific training materials to promote your business philosophy.
Workforce Planning
We have seen the effect that human resource management may have on a business and overall it seems like good HRM will have a good effect on any company. As a rule, this is the case, but good HRM does not just occur overnight. It should be designed according to the objectives of the organisation and then performed thoroughly.
One way to implement HRM concepts to your company is through workforce planning – a system that has the goal of making sure your workforce can complete the upcoming tasks needed for your business to be successful.
Definition
Workforce planning is the process of anticipating in advance the human resource needs of any enterprise, both in terms of the number of employees required and the appropriate skill mix. Recruitment and training policies are devised with a long term emphasis in order to make sure that the organisation is able to function without being limited by a shortage of appropriate labour. It is a bit of a balancing act, but when done correctly can bring about many benefits.Workforce planning can be broken down into four main parts; requirements, recruitment, selection, and training and development.
Requirements
Evaluating your workforce demands is vital to the proper planning of your staff in the short-term and long-term future. If your business is subject to seasonal changes in demand, for example in the tourism industry, or is prone to seasonal fluctuations in staff levels then your workforce planning has to take these factors into consideration.
Recruitment
Whether you are hiring people externally or from within your existing workforce you still need 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 role that will be undertaken as well as a person specification which will give an indication of the sort of individual that would be a perfect fit for the job and your organisation. By mixing and prioritising the elements of these two documents you will be able to identify the ideal job applicant.
Selection
The selection procedure can be as involved or as simple as you deem necessary. Over and above regular job interviews there are a number of ways you can learn about about applicants for your jobs, including aptitude tests, group interviews or even psychometric testing.
Training & Development
The main goal of staff training and development is to develop a much better standard of worker in your business. Workforce planning can use training to plug upcoming gaps in the skill set of your workforce which is commonly faster and more economical 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 output than unhappy workers. This improved work rate will inevitably lead to an increase in the profitability of a company. Yet motivation remains a bit of taboo subject amongst some managers.
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 fairly old idea but the basic principle is still relevant to companies today.
Whether you use the carrot approach or the stick strategy will generally depend on your own management style, as well as the industry you work in and the type of people that you employ. Irrespective of your method, motivational factors can be broken down into a further two groupings; financial and non-financial motivators.
Financial
The most typical financial motivators are payment plans. You can pay staff in many different ways, either a fixed amount for a set 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 given out for good overall performance. This may include commission beyond a fixed salary, performance-related pay grades or even providing a share of company profits.
Non-financial
Many human resource advocates have their own ideas about the other factors that motivate people to do the job, although these are often seen as an added bonus to an employee. It is broadly acknowledged that money is the key motivational factor for the vast 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 as well as Fredrick Herzberg.
The Changing Face of HRM
As previously stated, HRM is a flexible tool that is there to match the features of your staff to the goals of your business. As a result, it has had to keep adapting to a corporate climate that is constantly changing for one reason or another.
Maybe there is a new piece of government law that may have an effect of how your business can carry out its trading, or maybe a new 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 flexible enough to cope with an ever-changing economy. After all, what might seem like a danger to most will often appear as an opportunity to a good entrepreneur.