Introduction
Human Resource Management, or HRM for short, is one of the most important factors in running a prosperous company, though it is not always treated with the time and focus that it deserves. To fully understand what HRM is and its impact on the success or failing of a business, 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 enterprise in the manner in which is most appropriate to accomplishing the aims and objectives of the organisation.
This effectively translates to “using individuals in the company in the best way possible” although that would be an over-simplified statement that does not reflect the true 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 company are pulling in the same direction, and much more significantly, in the right direction. Without having good human resource management a business will be expending energy on tasks that it may not directly gain from.
At its center, HRM combines three major elements that are fundamental to the productive output of the staff. These elements 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 may even be used to alter the framework of those levels of management as well. It is a wide-ranging subject that is explored in more detail in this article.
Why is it Necessary?
Quite simply, businesses don’t work without employees. As such, some level of human resource management is required for any business to operate at all, let alone in an effective and prosperous manner.
Human Resource Management has an impact 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 financial systems such as payroll. It can 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 domains can have a negative impact on your company but go undetected for long intervals.
It also goes without saying that each business is unique and will have a specific set of issues to face and opportunities to take advantage of. HRM can act as a flexible tool that translates workforce power into financial profits and can adjust to fully utilise the talents of your company. Without it, your rivals may be afforded the chance to prosper where you missed out.
HRM is a universal business approach and can be applied to organisations who have experience of setting up a new Ltd Company and almost any other type of enterprise as well.
Impact on Business
Whilst this all sounds very interesting and important, how does it actually influence the daily operations of your business, and more importantly, how will it help to boost the performance and success of your firm?
Recruitment & Training
This is most likely the area of a company that is most associated with human resources – recruitment. Almost every business in the world, and especially companies that are growing, have to recruit people to work for them. Either existing employees have left, or new opportunities have arisen which mean there are roles that must be filled. HRM can make sure your recruitment process gets the appropriate people into the right roles at a cost-effective price.
It is also important to keep your staff training procedures up to date to make sure that your staff 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 bit of technology that changes 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 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 averted if your organisation has adequate training facilities in place. It is much easier to train 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 straight to a higher level.
Employee Relations
When you have the suitable people working for you it is important to keep them working for you, and to make certain they are doing a good 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 employee relations issues can include disciplinary and grievance management. All of these factors are an important part of the overall HRM picture.
Finances
You cannot keep employees at your organisation by good motivational methods alone. They’ll want to be paid a fair sum and on time. Payroll should be one of the first 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 change pay grade. Poor management of your payroll program can rapidly lead to catastrophe in terms of your workforce.
Industrial Relations
Several firms will have to work with trade union or other workers rights organisations which can be incredibly forceful when defending the interests of their members. When interacting with such bodies it is beneficial to have individuals within your organisation who can connect comfortably 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 effect that human resource management can 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.
One way to apply HRM concepts to your business is through workforce planning – a process that has the aim of making sure your workforce can finish the upcoming tasks required for your company to be successful. It can be defined as:
Definition
Workforce planning is the method of anticipating ahead of time the human resource requirements of any enterprise, both in terms of the number of employees necessary and the proper skill mix. Recruitment and training policies are devised with a long term emphasis in order to make sure that the organisation is able to operate without being limited by a shortage of appropriate labour. Workforce planning can be split into four main areas; requirements, recruitment, selection, and training and development.
Requirements
Analysing your workforce demands is vital to the proper planning of your workforce in the short-term and long-term future. If your business is subject to seasonal changes in demand, such as in the tourism industry, or is prone to seasonal fluctuations in staff levels then your workforce planning needs to take these factors into consideration. Also bear in mind any upcoming retirements or periods of maternity/paternity leave or you could suffer from a shortage of qualified personnel.
Recruitment
Whether you are hiring people 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 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 person that would be a good fit for the job and your company. By combining and prioritising the components of these two documents you will be able to identify the ideal job candidate.
Selection
The selection process can be as involved or as easy as you deem necessary. Beyond 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 better quality of worker within your company. Workforce planning can use training to plug upcoming gaps in the skill set of your staff which is usually quicker and more cost effective than external recruitment.
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Workforce Motivation
It almost goes without saying that well motivated employees are going to deliver a better standard of work and have a greater 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 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 strike from a stick!
Whether you use the carrot approach or the stick strategy will largely 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 plans. You can pay staff in a number of different ways, either a set amount for a set service, by an hourly or daily rate, or a rate linked to production, such as a commission scheme.
Another financial motivation method involves what are called incentive schemes, where additional financial rewards are given out for good overall 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 factor here is the money alone.
Non-financial
Many human resource advocates have their own thoughts about the other elements that motivate people to work, although these are often seen as an added bonus to a worker. It is widely acknowledged that money is the critical motivational factor for the vast majority of people. If you want 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 up the features of your staff to the objectives of your business. As such, it has had to keep changing to a business climate that is constantly changing for one reason or another.
Perhaps there is a new piece of government law that will have an effect of how your company 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 strategy should be flexible enough to cope with an ever-changing world.