Introduction
Human Resource Management, or HRM for short, is one of the most important elements in running a successful company, though it isn’t always handled with the time and focus that it deserves. To fully understand what HRM is and its influence on the success or failing of a business, we first must know what it means. The following is a good definition:
The function of Human Resource Management is to recruit, develop and use the staff within an enterprise in the manner in which is most appropriate to accomplishing the aims and objectives of the organisation.
This essentially translates to “using individuals in the company in the best way possible” although that would be an over-simplified assertion that doesn’t reflect the true nature and range of HRM. HRM describes all of the techniques and processes that are involved in ensuring that all members of staff in a business are pulling in the same direction, and much more importantly, in the right direction. Without having good human resource management a company will be expending energy on tasks that it may not directly benefit from.
At its core, HRM brings together three primary elements that are essential 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 company, not just the shop floor staff, and it may even be used to alter the framework of those levels of management as well. It is a broad subject that is explored in more detail in this article.
Why is it Necessary?
Put simply, companies 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 appreciate exactly how HRM affects the daily running of your enterprise you will surely be using some kind of HRM in order to keep trading.
Human Resource Management has an effect on every level of your corporate activities with varying degrees of visibility. The most obvious HRM tasks involve the hiring and firing of staff as well as monetary systems such as payroll. It may also impact on motivation and communication inside your business, which are much more intangible variables but are critical nonetheless. Bad HRM practice in these less visible arenas can have a negative impact on your organisation but go unnoticed for long intervals.
It also goes without saying that each business is unique and will have a unique set of issues to face and opportunities to take advantage of. HRM can work as a flexible tool that converts workforce power into financial gains and can adjust to fully utilise the talents of your company.
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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 improve the performance and profitability of your company? The effect of HRM can be broken down into the following areas.
Recruitment & Training
This is probably the part of a business that is most associated 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 possibilities 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 an affordable price.
It is 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 bit of technology that alters the marketplace, there is an on-going requirement to keep your organisation up-to-date and ready to make use of any opportunity. There is a phrase that states that “if you are not moving forward you are going backwards” which can be applied to business.
You may also find that the costly process of external recruitment can be averted if your organisation has adequate training facilities in place. It is much easier to teach an existing worker to a higher level and then use outside recruitment to fill the gap remaining at the lower level than it is to recruit straight to a higher level.
Employee Relations
Once you have the suitable men and women working for you it is important to keep them working for you, and to ensure they are doing a decent job. This can be accomplished 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 may include disciplinary and grievance management.
Finances
You cannot keep employees at your company by good motivational methods only. They’ll want to be paid a fair sum and on time. Payroll must be one of the very first systems that is created when you launch a business, but they still need to be taken care of and updated when personnel join, leave or change pay grade. Poor management of your payroll program can rapidly lead to disaster in terms of your staff.
Industrial Relations
Several companies will have to work with trade union or other workers rights organisations which can be incredibly forceful when protecting the interests of their own members. When interacting with such bodies it is beneficial to have individuals within your company who can communicate effectively with them whilst keeping the interests of your own company in mind at the same time.
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Workforce Planning
We have seen the impact that human resource management can have on a business and generally it looks 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 planned according to the goals of the company and then performed thoroughly.
One way to implement HRM ideas to your business is through workforce planning – a process that has the goal of making sure your staff can finish the upcoming tasks required for your business to be successful. It can be defined as:
Definition
Workforce planning is the process of anticipating ahead of time the human resource requirements of any enterprise, both in terms of the quantity of employees needed and the proper skill mix. Recruitment and training policies are devised with a long term focus in order to make sure that the company is able to operate without being limited by a lack 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
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, for example in the tourism industry, or is prone to seasonal fluctuations in staff levels then your workforce planning must 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 individual to fill the position. As part of your workforce planning you should draw up a job description that details the function that will be undertaken as well as a person specification which will give an indication of the kind of person that would be a perfect fit for the job and your company.
Selection
The selection procedure can be as involved or as simple as you deem necessary. Outside of standard job selection interviews there are numerous ways you can learn about candidates for your jobs, including aptitude tests, group interviews and even psychometric testing.
Training & Development
The main goal of staff training and development is to develop a better standard of worker within your business. Workforce planning can use training to fill upcoming gaps in the skill set of your staff and is generally faster 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 produce a better standard of output and have a higher quantity of production than unsatisfied workers. This improved work rate will undoubtedly lead to a rise in the profitability of a business.
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 belongings, either by tempting it with a carrot, or threatening it with a hit from a stick!
Whether you use the carrot approach or the stick strategy will generally depend on your own management approach, as well as the business 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 numerous 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. Whichever method is employed, 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 given out for good performance. This may include commission beyond a fixed salary, performance-related pay grades or even providing a share of company profits. Once again, the motivating aspect here is the money alone.
Non-financial
Many human resource theorists have their own ideas about the different elements that motivate people to work, although these are often seen as an added bonus to a worker. It is widely acknowledged that income is the key motivational factor for the vast majority of people.
The Changing Face of HRM
As previously stated, HRM is a versatile tool that is there to match the characteristics of your workforce to the goals of your business. As such, it has had to keep adapting to a corporate climate that is constantly changing for one reason or another. Furthermore, it is a good idea to continuously evaluate your own HRM procedures and not to rest on your laurels.
Maybe there is a new piece of government law that may have an impact of how your business can carry out its operations, or maybe a fresh manufacturing technology will come along that can revolutionise your industry. Either way, if you want to ensure that your staff is performing to its optimum level then your HRM system should be flexible enough to cope with an ever-changing world.