Introduction
Human Resource Management, or HRM for short, is one of the most important elements in running a prosperous company, though it isn’t always treated with the time and emphasis that it deserves. To fully understand what HRM is and its influence on the success or failure of a company, we first need to know what it means.
The purpose of Human Resource Management is to recruit, develop and use the personnel within an enterprise in the manner in which is most appropriate to accomplishing the aims and objectives of the organisation.
This basically translates to “using individuals in the company in the best way possible” though that would be an over-simplified statement that does not reflect the true nature and scope of HRM. HRM describes all of the methods and procedures that are involved in ensuring that all members of staff in a company are pulling in the same direction, and more importantly, in the right direction.
At its center, HRM brings together three major 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 inside your business, not just the shop floor staff, and it may even be used to alter the framework of those levels of management as well.
Why is it Necessary?
Quite simply, businesses don’t work without employees. As such, some level of human resource management is necessary for any business to operate at all, let alone in an effective and profitable manner. Even if you don’t appreciate exactly how HRM affects the everyday 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 evident HRM tasks involve the hiring and firing of employees as well as monetary systems such as payroll. It can also impact on motivation and communication inside your business, which are much more intangible factors but are important nonetheless.
It also goes without saying that each company is unique and will have a unique 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 talents of your firm. Without it, your rivals could be afforded the chance to succeed where you missed out.
HRM is a universal business approach and might be carried out on firms that organise the setting up Ltd Company plus any other sort of enterprise as well.
Impact on Business
While this all sounds very interesting and important, how does it actually influence the daily functions of your company, 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 business that is most affiliated with human resources – recruitment. Nearly every business in the world, and especially companies that are expanding, have to recruit people to work for them. Either existing employees have left, or new possibilities 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 requirement to keep your business up-to-date and ready 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 expensive process of external recruitment can be avoided if your company has sufficient training facilities in place. It is much easier to teach an existing staff member to a higher level and then use external recruitment to fill the gap left at the lower level than it is to recruit directly to a higher level. This technique can be applied at almost every level of management inside your organisation.
Employee Relations
When you have the suitable people 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 achieved via good employee relations. The most obvious 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 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 ought to be one of the very first systems that is developed when you launch a business, but they still need to be taken care of and updated when staff join, leave or switch pay grade.
Industrial Relations
Many companies will have to work with trade union or other workers rights organisations which can be incredibly forceful when defending the interests of their own members. When dealing with such bodies it is beneficial to have individuals 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 companies.
Among the easiest ways to tell if international business companies have excellent worker interaction is to ask present staff if they are satisfied in their jobs.
Workforce Planning
We have seen the influence that human resource management can have on a company and overall it looks like good HRM will have a positive effect on any business. As a rule, this is the case, but good HRM doesn’t just happen overnight. It should be planned according to the objectives of the organisation and then performed thoroughly.
One way to apply HRM ideas to your business is through 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.
Definition
Workforce planning is the process of anticipating in advance the human resource requirements of any enterprise, both in terms of the number of employees required and the proper skill mix. Recruitment and training procedures are designed with a long term emphasis in order to ensure that the organisation is able to operate without being limited by a lack 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 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 must take these factors into consideration. Also bear in mind any approaching retirements or periods of maternity/paternity leave or you could suffer from a shortage of qualified employees.
Recruitment
Whether you are hiring people externally or from inside your existing workforce you still need to find the right 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 company. By mixing and prioritising the elements of these two descriptions 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. Outside of 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. These sophisticated techniques might not be applicable to all workforce planning assignments but are an alternative to organisations.
Training & Development
The principal goal of staff training and development is to produce a better standard of worker in your company. Workforce planning can use training to plug upcoming gaps in the skill set of your workforce which is commonly faster and more cost effective than external recruitment. Training and development may also go some way toward motivating your staff.
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Workforce Motivation
It practically goes without saying that well motivated workers are going to deliver a better standard of output and have a greater quantity of production than unhappy workers. This improved working rate will inevitably lead to an increase in the profitability of a business. Yet motivation remains a bit of taboo topic 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 hit from a stick! It is a fairly old idea but the principle is still relevant to businesses today.
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 people that you employ. Irrespective of your approach, motivational factors can be broken down 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 set amount for a fixed service, by an hourly or daily rate, or a rate related to production, such as a commission structure.
Another financial motivation technique involves what are known as 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. Again, the motivating aspect here is the money alone.
Non-financial
Many human resource advocates have their own thoughts about the different elements that motivate people to work, although these are often seen as an added bonus to an employee. It is widely acknowledged that money is the main motivational factor for the vast majority of people.
The Changing Face of HRM
As previously stated, HRM is a versatile tool that is there to match up the characteristics of your staff to the goals of your business. As such, it has had to keep changing 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 policies and not to rest on your laurels.
Perhaps there is a new piece of government law 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 industry. Either way, if you want to make certain that your workforce is performing to its maximum level then your HRM system should be flexible enough to cope with an ever-changing world.