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 handled with the time and focus that it deserves. To completely understand what HRM is and its influence on the success or failing of a business, we first must know what it means.
The purpose of Human Resource Management is to recruit, develop and use the staff within an enterprise in the manner in which is most suitable to accomplishing 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 does not reflect the real nature and range of HRM. HRM describes all of the strategies and processes that are involved in making certain that all members of staff in a company are pulling in the same direction, and much more significantly, in the right direction. Without good human resource management a business will be expending effort on jobs that it may not directly benefit from.
At its core, HRM combines three primary elements that are fundamental to the productive output of the staff. These factors include motivation, management and leadership, and organisational structures. Consequently, HRM can be applied to all levels of management within your company, not just the shop floor personnel, and it could even be used to adjust the framework of those levels of management as well. It is a broad subject that is explored in greater detail in this article.
Why is it Necessary?
Quite simply, companies don’t operate without workers. As such, some level of human resource management is necessary for any organisation to operate at all, let alone in an effective and prosperous manner. Even if you don’t realise exactly how HRM affects the day-to-day working of your company you will surely be using some sort of HRM in order to keep trading.
Human Resource Management has an effect on every level of your business activities with various degrees of visibility. The most obvious 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 inside your business, which are far more intangible variables but are important nonetheless. Poor HRM practice in these less visible arenas can have a damaging impact on your organisation but go unnoticed for long periods of time.
It also goes without saying that each business is different and will have a unique set of challenges to face and opportunities to take advantage of. HRM can work as a versatile tool that converts workforce power into financial gains and can adapt to fully utilise the strengths of your firm. Without it, your competitors could 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 improve the performance and profitability of your company?
Recruitment & Training
This is probably the area of a company that is most affiliated with human resources – recruitment. Almost every company in the world, and especially businesses that are expanding, 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 staff 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 alters the market, there is an on-going requirement to keep your organisation up-to-date and prepared to take advantage 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 process of external recruitment can be avoided if your organisation has sufficient training facilities in place. It is far easier to teach an existing worker 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.
Employee Relations
When you have the suitable men and women working for you it is necessary to keep them doing work for you, and to ensure they are doing a good job. This can be accomplished through good employee relations. The most evident employee relations practice is the art of motivation – a wide topic by itself – but other employee relations issues may include disciplinary and grievance management.
Finances
You cannot keep employees at your organisation by good motivational methods only. They’ll want to be paid a fair sum and on time. Payroll should be one of the primary systems that is created when you launch a company, but they still need to be taken care of and updated when staff join, leave or switch pay grade.
Industrial Relations
Numerous companies 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 organisation who can communicate comfortably with them whilst keeping the interests of your own organisation in mind at the same time. The demand for good industrial relations is significantly more prevalent in public sector organisations.
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Workforce Planning
We have seen the influence that human resource management may have on a company and generally 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 designed according to the targets of the company and then carried out thoroughly.
One way to implement HRM ideas to your business is via workforce planning – a process that has the goal of making sure your staff can complete the upcoming tasks needed for your business to be successful. It can be defined as:
Definition
Workforce planning is the method of anticipating in advance the human resource needs of any organisation, both in terms of the number of employees necessary and the appropriate skill mix. Recruitment and training procedures are designed with a long term focus in order to make sure that the company 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
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 shifts in demand, for example in the tourism industry, or suffers from seasonal fluctuations in staff levels then your workforce planning needs to take these variables into consideration. Also bear in mind any upcoming retirements or intervals of maternity/paternity leave or you could suffer from a shortage of qualified workers.
Recruitment
Whether you are recruiting externally or from inside your existing workforce you still need to find the right individual to fill the position. As part of your workforce planning you ought to draw up a job description that details the job that will be undertaken as well as a person specification which will give an indication of the type of individual that would be a good fit for the job and your business. By mixing and prioritising the elements of these two documents you will be able to identify the ideal job candidate.
Selection
The selection procedure can be as involved or as simple as you deem necessary. Over and above regular job interviews there are several ways you can learn about candidates for your jobs, including aptitude tests, group interviews and even psychometric testing.
Training & Development
The primary goal of staff training and development is to produce a much better standard of worker within your business. Workforce planning can use training to plug upcoming gaps in the skill set of your staff 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 deliver a better standard of output and have a greater quantity of output than unhappy workers. This improved working rate will inevitably lead to a rise in the profitability of a company. 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 called 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 strike from a stick!
Whether you use the carrot strategy or the stick strategy will largely depend on your own management style, as well as the business you work in and the type of people that you hire. Irrespective of your approach, motivational factors can be separated into a further two sets; financial and non-financial motivators.
Financial
The most typical financial motivators are payment schemes. You can pay workers 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 scheme. Whatever method is used, the workforce is motivated to work because they will receive money for doing so.
Another financial motivation method involves what are known as incentive schemes, where by additional financial rewards are given out for good overall performance. This may include commission above a fixed salary, performance-related pay grades or even offering a share of company profits.
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 a bonus to a worker. It is broadly acknowledged that money is the main 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 and Fredrick Herzberg.
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 business climate that is constantly changing for one reason or another. Furthermore, it is a good idea to constantly review your own HRM procedures and not to rest on your laurels.
Perhaps there is a new piece of government law that may have an effect of how your company can carry out its trading, or maybe a new manufacturing technology will come along that can revolutionise your sector. Either way, if you want to make certain that your workforce is performing to its highest level then your HRM system should be adaptive enough to cope with an ever-changing world.