Introduction Human Resource Management, or HRM for short, is one of the most critical factors in running a successful company, though it is not always treated with the time and focus that it deserves. To completely understand what HRM is and its influence on the success or failing of a business, we first must know [...]
Introduction
Human Resource Management, or HRM for short, is one of the most critical factors in running a successful company, though it is not always treated with the time and focus that it deserves. To completely understand what HRM is and its influence on the success or failing of a business, we first must know what it means. The following is a satisfactory definition:
The purpose of Human Resource Management is to recruit, develop and use the workers within an enterprise in the manner in which is most appropriate to achieving the aims and objectives of the organisation.
This effectively translates to “using people in the business in the best way possible” though that would be an over-simplified assertion that doesn’t echo 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 within a company are pulling in the same direction, and much more importantly, in the right direction.
At its core, HRM combines three primary 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 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.
Why is it Necessary?
Quite simply, companies don’t work without employees. As such, some level of human resource management is necessary for any organisation to operate at all, let alone in an effective and prosperous manner.
Human Resource Management has an effect on every level of your corporate activities with various degrees of visibility. The most apparent 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 far more intangible variables but are critical nonetheless.
It also goes without saying that every business is different and will have a specific set of challenges to face and opportunities to take advantage of. HRM can work as a versatile tool that translates workforce potential into financial gains and can adapt to fully utilise the strengths of your company. Without it, your competitors may be afforded the chance to succeed where you missed out.
The proper supervision of human resources is essential for firms delivering services with very specific terms eg. setting up company since client service is of great importance.
Impact on Business
Whilst this all sounds very interesting and important, how does it actually influence the daily operations of your business, and more importantly, how will it help to improve the performance and profitability of your company?
Recruitment & Training
This is most likely the part of a business that is most associated with human resources – recruitment. Nearly every company in the world, and particularly companies that are growing, need to recruit people to work for them. Either existing employees have left, or new possibilities have arisen which mean there are roles that must be filled. HRM can make sure your recruitment system gets the right people into the right jobs at an affordable price.
It is 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 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 ready to take advantage of any opportunity.
You may also discover that the expensive practice of external recruitment can be avoided if your company has adequate training facilities in place. It is much easier to train an existing employee to a higher level and then use external recruitment to fill the gap remaining at the lower level than it is to recruit directly to a higher level.
Employee Relations
When you have the right people working for you it is necessary to keep them doing work for you, and to be sure they are doing a good job. This can be achieved by means of good employee relations. The most obvious employee relations exercise is the art of motivation – a broad topic itself – but other employee relations issues may include disciplinary and grievance management. All of these factors are an important part of the overall HRM picture.
Finances
You cannot keep employees at your organisation by good motivational techniques only. They will want to be paid a fair sum and on time. Payroll must be one of the first systems that is developed when you launch a company, but they still need to be maintained and updated when personnel join, leave or switch 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 own members. When dealing with such bodies it is advantageous to have people within your organisation who can communicate comfortably with them whilst keeping the interests of your own business in mind at the same time.
Among the quickest ways to identify whether international business companies have good employee interaction is to ask current staff if they are content in their work.
Workforce Planning
We have seen the impact that human resource management can have on a company and overall it seems like good HRM will have a beneficial effect on any organisation. As a rule, this is the case, but effective HRM does not just happen overnight.
One way to implement HRM ideas to your company is through workforce planning – a process that has the goal of making sure your workforce can complete the upcoming tasks required for your business to be successful. It can be defined as:
Definition
Workforce planning is the method 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 emphasis 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 bring about many benefits.Workforce planning can be split into four main areas; requirements, recruitment, selection, and training and development.
Requirements
Analysing your workforce demands is vital to the proper planning of your workforce in the short-term and long-term future. If your business is subject to seasonal changes 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 recruiting externally or from within your existing workforce you still want to find the correct person to fill the position. As part of your workforce planning you ought to draw up a job description that describes the role 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 components 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. Outside of regular job interviews there are a number of ways you can learn about candidates for your jobs, including aptitude tests, group interviews and even psychometric testing. These sophisticated techniques may not be relevant to all workforce planning projects but are an option to recruiters.
Training & Development
The primary goal of staff training and development is to produce a better standard of worker in your organisation. 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.
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Workforce Motivation
It almost goes without saying that well motivated employees are going to produce a better standard of output and have a greater quantity of production than unsatisfied workers. This improved work rate will inevitably lead to a rise in the profitability of a business.
Essentially, all motivational tactics can be separated into two models 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 possessions, either by tempting it with a carrot, or threatening it with a hit from a stick! It is a relatively dated idea but the basic principle remains relevant to companies today.
Whether you use the carrot strategy or the stick strategy will largely 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 typical financial motivators are payment schemes. You can pay staff in many different ways, either a fixed amount for a set service, by an hourly or daily fee, or a rate related to production, such as a commission structure. Whatever method is employed, the workforce is motivated to work because they will receive money for doing so.
Another financial motivation method involves what are known as incentive schemes, where additional financial rewards are given out for good performance. This may include commission beyond a fixed salary, performance-related pay levels or even providing 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 an employee. It is widely acknowledged that income is the main motivational factor for the great majority of people. If you would like to learn more about these ideas I would recommend looking up the work of Elton Mayo, Abraham Maslow and Fredrick Herzberg.
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 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.
Perhaps there is a new piece of government law that may 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 industry. Either way, if you want to make sure that your workforce is performing to its optimum level then your HRM system should be flexible enough to cope with an ever-changing world.
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