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 handled with the time and emphasis that it deserves. To fully understand what HRM is and its influence 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 use the staff within an enterprise in the manner in which is most appropriate to accomplishing the aims and objectives of the enterprise.
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 real nature and scope of HRM. HRM describes all of the methods and processes that are involved in making sure that all members of staff in a business are pulling in the same direction, and much more importantly, in the right direction. Without good human resource management a business will be spending energy on tasks that it may not directly gain from.
At its center, HRM brings together three major elements that are fundamental to the productive output of the workforce. These factors include motivation, management and leadership, and organisational structures. As a result, HRM can be applied to all levels of management within your company, not just the shop floor personnel, and it could even be used to alter the framework of those levels of management at the same time.
Why is it Necessary?
Quite simply, businesses don’t work without employees. As such, some level of human resource management is required for any organisation to operate at all, let alone in an effective 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 involve the hiring and firing of employees as well as financial systems such as payroll. It can also impact on motivation and communication within your business, which are much more intangible variables but are important nonetheless.
It also goes without saying that each business is different and will have a different set of challenges to face and opportunities to take advantage of. HRM can act as a versatile tool that translates workforce power into financial profits and can adapt to fully utilise the talents of your company.
The correct management of human resources is essential for businesses offering services with very specific terms like setting up company since customer service is of great significance.
Impact on Business
Whilst this all appears very interesting and important, how does it actually impact on the daily operations of your business, and more importantly, how will it help to boost the performance and success of your company?
Recruitment & Training
This is most likely the area of a business that is most associated with human resources - recruitment. Almost every business in the world, and especially businesses that are expanding, need to recruit people to work for them. Either current employees have left, or new possibilities have arisen which mean there are jobs that need to be filled. HRM can ensure your recruitment system 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 sure 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 organisation up-to-date and ready 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 discover that the expensive process of external recruitment can be avoided if your company has adequate training facilities in place. It is far 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 straight to a higher level.
Employee Relations
Once you have the right men and women working for you it is necessary to keep them working for you, and to make sure they are doing a good job. This can be accomplished by means of good employee relations. The most obvious 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 important 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 ought to be one of the very first systems that is developed when you start a company, but they still need to be taken care of and updated when staff 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 incredibly forceful when defending the interests of their members. When dealing with such bodies it is advantageous to have individuals within your organisation who can connect effectively with them whilst keeping the interests of your own company in mind at the same time. The need for good industrial relations is far more prevalent in public sector organisations.
Human resource management is needed by every shelf company despite how big or small your workforce might be.
Workforce Planning
We have seen the effect that human resource management may have on a business and generally it looks like good HRM will have a beneficial effect on any company. As a rule, this is the case, but good HRM does not just occur overnight. It should be planned according to the objectives of the organisation and then carried out thoroughly.
One way to apply HRM concepts to your business is via workforce planning - a system that has the goal of making sure your workforce can finish the upcoming tasks needed for your company to be successful. It can be defined as:
Definition
Workforce planning is the method of anticipating in advance the human resource requirements of any enterprise, both in terms of the quantity of employees needed and the appropriate skill mix. Recruitment and training policies are devised with a long term focus in order to make sure that the company is able to operate without being limited by a shortage of appropriate labour. It is a bit of a balancing act, but when done properly can bring about many benefits.
Requirements
Analysing your workforce demands is essential to the proper planning of your workforce in the short-term and long-term future. If your business is subject to seasonal shifts in demand, such as in the tourism industry, or suffers from seasonal fluctuations in workforce then your workforce planning has to take these variables into consideration.
Recruitment
Whether you are hiring people externally or from inside your existing workforce you still need to find the right individual 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 individual that would be a good fit for the job and your organisation.
Selection
The selection process can be as involved or as easy as you deem necessary. Beyond standard job selection interviews there are several ways you can learn about about applicants for your jobs, including aptitude tests, group interviews or even psychometric testing. These advanced techniques may not be applicable to all workforce planning projects but are an alternative to employers.
Training & Development
The primary goal of staff training and development is to develop a better quality of worker in your company. Workforce planning can use training to plug upcoming gaps in the skill set of your workforce and 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 produce a better standard of output and have a higher quantity of output than unsatisfied workers. This improved work rate will undoubtedly lead to a rise in the profitability of a company. Yet motivation is still a bit of taboo subject among some managers.
Essentially, all motivational tactics can be separated into two models that are often called 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 approach will largely depend on your own management style, as well as the industry 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 typical financial motivators are payment plans. You can pay workers in numerous different ways, either a fixed amount for a set service, by an hourly or daily rate, or a rate related to production, such as a commission scheme. Whichever 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 by additional financial rewards are given out for good performance. This may include commission beyond a fixed salary, performance-related pay grades or even providing a share of company profits.
Non-financial
Many human resource theorists have their own ideas about the other elements that motivate people to do the job, 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.
The Changing Face of HRM
As previously stated, HRM is a versatile tool that is there to match the characteristics of your staff to the objectives of your organisation. As a result, it has had to keep changing to a corporate climate that is continuously changing for one reason or another.
Perhaps there is a new piece of government law that will have an impact of how your company 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 maximum level then your HRM system should be adaptive enough to cope with an ever-changing economy. After all, what might seem like a risk to most will often appear as an opportunity to a good entrepreneur.