Introduction
Human Resource Management, or HRM for short, is one of the most critical elements in running a successful company, although 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 need to know what it means. The following is a good definition:
The purpose of Human Resource Management is to recruit, develop and utilise the personnel 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 individuals in the company in the best way possible” although that would be an over-simplified assertion that does not reflect the real nature and scope of HRM. HRM describes all of the methods and procedures that are involved in making sure that all members of staff within a company are pulling in the same direction, and much more importantly, in the right direction.
At its core, HRM combines three major elements that are fundamental to the productive output of the workforce. These elements include motivation, management and leadership, and organisational structures. As a result, HRM can be employed on all levels of management within your organisation, not just the shop floor workers, and it could even be used to modify the structure of those levels of management as well.
Why is it Necessary?
Quite simply, businesses don’t operate without employees. As such, some level of human resource management is necessary for any business to operate at all, let alone in an efficient and profitable manner. Even if you don’t realise exactly how HRM affects the every day running of your enterprise you will certainly be employing some form of HRM in order to keep trading.
Human Resource Management has an impact 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 monetary systems such as payroll. It can also impact on motivation and communication inside your company, which are far more intangible factors but are important nonetheless. Inadequate HRM practice in these less visible arenas can have a damaging impact on your company but go unnoticed for long intervals.
It also goes without saying that each organisation is different and will have a unique set of issues to face and opportunities to take advantage of. HRM can act as a flexible tool that converts workforce power into financial gains and can adjust to fully utilise the strengths of your company. Without it, your rivals may well be afforded the chance to succeed where you missed out.
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Impact on Business
Whilst this all sounds very interesting and important, how does it actually impact on the daily functions of your business, and more importantly, how will it help to enhance the performance and success of your firm? The impact of HRM can be broken down into the following areas.
Recruitment & Training
This is probably the part of a company that is most affiliated with human resources – recruitment. Almost every business in the world, and especially companies that are expanding, must recruit people to work for them. Either current employees have left, or new opportunities have arisen which mean there are jobs that must 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 staff is fully capable of doing the job they are there to do. Regardless of whether it is a new 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 prepared to take advantage 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 practice of external recruitment can be avoided if your company has sufficient 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 left at the lower level than it is to hire straight to a higher level. This technique can be used at almost every grade of management within your business.
Employee Relations
Once you have the right men and women working for you it is important to keep them working for you, and to be sure they are doing a decent job. This can be accomplished by means of good employee relations. The most evident 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 can’t keep employees at your company by good motivational techniques alone. They’ll want to be paid a fair sum and on time. Payroll ought to be one of the initial 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.
Industrial Relations
Numerous firms will have to work with trade union or other workers rights establishments which can be very forceful when defending the interests of their members. When interacting with such bodies it is advantageous to have people within your company who can communicate effectively 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.
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Workforce Planning
We have seen the influence that human resource management can have on a business and on the whole it seems like good HRM will have a good effect on any organisation. As a rule, this is the case, but good HRM does not just occur overnight.
One way to implement HRM concepts to your business is through workforce planning – a process that has the goal of making sure your staff can finish the upcoming tasks needed for your company 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 number of employees needed and the appropriate skill mix. Recruitment and training policies are designed with a long term emphasis in order to ensure 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
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 shifts in demand, such as in the tourism industry, or suffers from seasonal fluctuations in workforce then your workforce planning needs to take these factors into consideration.
Recruitment
Whether you are recruiting externally or from within your existing workforce you still want to find the right person to fill the role. As part of your workforce planning you ought to draw up a job description that details 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 elements of these two descriptions you will be able to recognise the ideal job candidate.
Selection
The selection procedure can be as involved or as simple as you deem necessary. Over and above standard job selection interviews there are numerous ways you can learn about applicants for your jobs, including aptitude tests, group interviews or even psychometric testing. These sophisticated techniques may not be applicable to all workforce planning assignments but are an alternative to companies.
Training & Development
The primary goal of staff training and development is to develop a better quality of worker within your business. 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. Training and development can also go some way toward motivating your employees.
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Workforce Motivation
It practically goes without saying that properly motivated workers are going to produce a better standard of output and have a greater quantity of production than unhappy workers. This improved working rate will inevitably lead to a rise 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 sets that are often referred to as the “carrot and stick” approach to motivation. The analogy refers 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 strategy 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 common financial motivators are payment schemes. You can pay staff in many different ways, either a fixed amount for a fixed service, by an hourly or daily rate, or a rate related to production, such as a commission structure. Whatever method is employed, the workforce is motivated to work because they will get money for doing so.
Another financial motivation method involves what are called incentive schemes, where additional financial rewards are handed 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 thoughts about the different factors that motivate people to do the job, although these are often seen as an added bonus to a worker. It is broadly acknowledged that money is the key motivational factor for the great majority of people.
The Changing Face of HRM
As previously stated, HRM is a versatile application that is there to match up the features of your staff to the objectives of your organisation. As a result, it has had to keep changing to a corporate 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 trading, or maybe a fresh manufacturing technology will come along that will revolutionise your sector. Either way, if you want to make certain that your workforce is performing to its optimum level then your HRM strategy should be adaptive enough to cope with an ever-changing economy.
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