Introduction
Human Resource Management, or HRM for short, is one of the most critical elements in running a successful company, though it is not always treated with the time and emphasis that it deserves. To completely understand what HRM is and its impact on the success or failing of a company, we first need to 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 essentially translates to “using individuals in the business in the best way possible” although that would be an over-simplified assertion that does not echo the real nature and scope of HRM. HRM describes all of the techniques and procedures that are involved in making sure that all members of staff in a business are pulling in the same direction, and more importantly, in the right direction.
At its core, HRM combines three major elements that are essential to the productive output of the staff. These elements 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 staff, and it may even be used to alter the structure of those levels of management as well.
Why is it Necessary?
Put simply, businesses don’t run without employees. As a result, some level of human resource management is needed for any business to operate at all, let alone in an efficient and profitable manner.
Human Resource Management has an effect on every level of your corporate activities with varying degrees of visibility. The most obvious HRM tasks include 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 far more intangible variables but are important nonetheless. Bad HRM practice in these less visible domains can have a damaging impact on your company but go undetected for long intervals.
It also goes without saying that every organisation is different and will have a different set of challenges to face and opportunities to take advantage of. HRM can work as a flexible tool that translates workforce power into financial profits and can adjust to fully utilise the strengths of your firm.
Businesses that have been developed to supply for organisation formats including shelf companies ought to have a well-trained workforce in place.
Impact on Business
While this all sounds very interesting and important, how does it actually impact on the daily operations of your company, and more importantly, how will it help to boost the performance and profitability of your company?
Recruitment & Training
This is most likely the area of a company that is most associated with human resources – recruitment. Nearly 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 opportunities have arisen which mean there are jobs that need to be filled.
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 piece of technology that alters the marketplace, there is an on-going need to keep your business up-to-date and prepared to take advantage of any opportunity.
You may also find that the expensive practice of external recruitment can be avoided if your organisation has adequate training facilities in place. It is much easier to teach an existing employee 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 strategy can be applied at almost every level 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 make certain 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 broad topic by itself – but other employee relations issues may include disciplinary and grievance management. All of these things are an essential part of the overall HRM picture.
Finances
You can’t keep employees at your organisation by good motivational techniques only. They will want to be paid a fair sum and on time. Payroll ought to be one of the first systems that is created when you start a company, but they still need to be taken care of and updated when personnel join, leave or change pay grade. Incorrect management of your payroll system can rapidly lead to disaster in terms of your staff.
Industrial Relations
Numerous companies will have to work with trade union or other workers rights organisations which can be very forceful when protecting the interests of their members. When dealing with such bodies it is advantageous to have people within your organisation who can connect comfortably with them whilst keeping the interests of your own company in mind at the same time.
New employees could learn about your company’s background from the date of company incorporation all the way to the present day as well as specific training material to enforce your corporate philosophy.
Workforce Planning
We have seen the effect that human resource management can have on a company and generally it looks like good HRM will have a positive effect on any company. As a rule, this is the case, but effective HRM doesn’t just happen overnight.
One way to implement HRM ideas to your business is via workforce planning – a system that has the goal of making sure your staff can complete 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 organisation, both in terms of the number of employees necessary and the proper skill mix. Recruitment and training policies are devised with a long term focus in order to make sure that the organisation is able to function without being limited by a lack of appropriate labour. It is a bit of a balancing act, but when done properly can produce many benefits.Workforce planning can be broken down into four main areas; requirements, recruitment, selection, and training and development.
Requirements
Analysing your workforce demands 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 staff levels then your workforce planning must take these variables into consideration.
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 describes the function 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 company. By mixing and prioritising the components of these two descriptions you will be able to identify the ideal job applicant.
Selection
The selection procedure can be as involved or as easy as you deem necessary. Beyond standard job interviews there are numerous ways you can learn about applicants for your jobs, including aptitude tests, group interviews and even psychometric testing. These advanced techniques may not be applicable to all workforce planning assignments but are an option to employers.
Training & Development
The principal goal of staff training and development is to produce a much better standard of worker in your company. Workforce planning can use training to fill upcoming gaps in the skill set of your staff and is usually faster and more economical than external recruitment. Training and development may also go some way toward motivating your employees.
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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 practices can be separated into two sets 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 hit from a stick! It is a relatively old idea but the basic principle is still relevant to businesses today.
Whether you use the carrot approach or the stick approach 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 set service, by an hourly or daily fee, or a rate linked to production, such as a commission structure. Whichever method is used, the workforce is motivated to work because they will get money for doing so.
Another financial motivation technique involves what are called incentive schemes, where additional financial rewards are given out for good overall performance. This may include commission above a fixed salary, performance-related pay levels or even offering a share of company profits.
Non-financial
Many human resource theorists have their own ideas about the different factors that motivate people to do the job, although these are often seen as an added bonus to an employee. It is widely acknowledged that income is the critical motivational factor for the majority of people.
The Changing Face of HRM
As previously mentioned, HRM is a flexible tool that is there to match up the features of your workforce to the goals of your business. As a result, it has had to keep adapting to a corporate climate that is continuously 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.
Maybe there is a new piece of government legislation that will have an impact 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 ensure that your workforce is performing to its maximum level then your HRM strategy should be adaptive enough to cope with an ever-changing economy. After all, what might seem like a risk to many will often appear as an opportunity to a good entrepreneur.