Introduction
Human Resource Management, or HRM for short, is one of the most important elements in running a successful business, although it isn’t always treated with the time and emphasis 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 satisfactory definition:
The function of Human Resource Management is to recruit, develop and utilise the staff within an enterprise in the manner in which is most appropriate to accomplishing the aims and objectives of the enterprise.
This essentially translates to “using individuals in the company in the best way possible” though that would be an over-simplified assertion that does not echo the true nature and scope of HRM. HRM describes all of the strategies and processes that are involved in making sure that all members of staff within a company are pulling in the same direction, and much more significantly, in the right direction.
At its core, HRM brings together three primary elements that are fundamental to the productive output of the workforce. These factors include motivation, management and leadership, and organisational structures. Consequently, HRM can be employed on all levels of management in 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. It is a broad subject that is explored in greater detail in this article.
Why is it Necessary?
Put simply, companies don’t operate without workers. As a result, some level of human resource management is required for any organisation 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 various degrees of visibility. The most evident HRM tasks include the hiring and firing of employees as well as monetary systems such as payroll. It may also impact on motivation and communication within your company, which are far more intangible variables but are critical nonetheless.
It also goes without saying that every organisation is unique and will have a different set of issues to face and opportunities to take advantage of. HRM can work as a flexible tool that converts workforce potential into financial gains and can adjust to fully utilise the strengths of your firm. Without it, your rivals may be afforded the chance to succeed where you missed out.
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Impact on Business
While this all appears very interesting and significant, how does it actually influence the daily functions of your company, and more importantly, how will it help to improve the performance and success of your firm?
Recruitment & Training
This is most likely the area of a business that is most affiliated with human resources – recruitment. Nearly every business in the world, and particularly businesses that are growing, must recruit people to work for them. Either existing employees have left, or new opportunities have arisen which mean there are jobs that must be filled. HRM can make sure your recruitment process gets the right people into the right jobs at an affordable 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. Whether it is a new piece of legislation or a new piece of technology that alters the industry, there is an on-going need to keep your company up-to-date and prepared 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 expensive practice of external recruitment can be avoided if your company has sufficient training facilities in place. It is far easier to train an existing employee to a higher level and then use outside recruitment to fill the gap remaining at the lower level than it is to hire straight to a higher level. This strategy can be applied at almost every single level of management inside your organisation.
Employee Relations
Once you have the suitable men and women working for you it is necessary to keep them working 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 itself – but other worker relations issues can include disciplinary and grievance management. All of these factors are an essential part of the overall HRM picture.
Finances
You can’t keep employees at your organisation by good motivational techniques only. They’ll want to be paid a fair amount and on time. Payroll must be one of the very first systems that is developed when you start a business, but they still need to be maintained and updated when staff join, leave or change pay grade. Improper management of your payroll program can rapidly lead to catastrophe in terms of your staff.
Industrial Relations
Several firms will have to deal with trade union or other workers rights organisations which can be very forceful when defending the interests of their members. When dealing with such bodies it is beneficial to have individuals within your organisation who can communicate effectively with them whilst keeping the interests of your own company in mind as well.
It should be obvious that a offshore business can’t function successfully without having motivated and capable staff.
Workforce Planning
We have seen the influence that human resource management may have on a company and on the whole it seems like good HRM will have a beneficial effect on any business. As a rule, this is the case, but good HRM does not just occur overnight.
One way to implement HRM ideas to your business is through workforce planning – a system that has the aim of making sure your staff can complete 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 needs of any enterprise, 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 function without being limited by a shortage of appropriate labour. It is a bit of a balancing act, but when done properly can produce many benefits.
Requirements
Evaluating your workforce demands is vital 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 has to take these variables into consideration. Also bear in mind any upcoming retirements or times of maternity/paternity leave or you could suffer from a shortage of qualified workers.
Recruitment
Whether you are hiring people externally or from inside your existing workforce you still need to find the correct person to fill the position. As part of your workforce planning you should draw up a job description that details the role that will be carried out as well as a person specification which will give an indication of the sort of person that would be a good 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 process can be as involved or as easy as you deem necessary. Beyond 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 principal goal of staff training and development is to produce a much better quality of worker in your business. Workforce planning can use training to plug upcoming gaps in the skill set of your workforce and is generally quicker and more economical than external recruitment. Training and development can also go some way towards motivating your employees.
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Workforce Motivation
It almost goes without saying that properly motivated workers are going to deliver a better standard of output and have a higher quantity of output than unhappy workers. This improved working rate will undoubtedly lead to an increase in the profitability of a business.
Essentially, all motivational practices can be separated into two models that are often called 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 strike 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. Irrespective of your method, motivational factors can be separated into a further two groupings; financial and non-financial motivators.
Financial
The most common financial motivators are payment schemes. 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 related to production, such as a commission scheme.
Another financial motivation method involves what are called incentive schemes, where additional financial rewards are handed 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 thoughts about the other elements that motivate people to work, although these are often seen as a bonus to an employee. It is widely acknowledged that money is the main motivational factor for the great majority of people.
The Changing Face of HRM
As previously mentioned, HRM is a flexible tool that is there to match up the characteristics of your workforce to the objectives of your business. As a result, it has had to keep adapting to a business climate that is continuously changing for one reason or another. Moreover, 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 legislation that will have an impact of how your business can carry out its operations, or maybe a new manufacturing technology will come along that will revolutionise your sector. Either way, if you want to make certain that your staff is performing to its optimum level then your HRM strategy should be flexible enough to cope with an ever-changing economy.
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