Introduction
Human Resource Management, or HRM for short, is one of the most important factors in running a prosperous business, though it is not always handled with the time and emphasis that it deserves. To completely 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 purpose of Human Resource Management is to recruit, develop and utilise the workers within an enterprise in the manner in which is most suitable to achieving the aims and objectives of the enterprise.
This essentially translates to “using people in the business in the best way possible” although that would be an over-simplified assertion that does not reflect the true nature and range 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 center, HRM brings together three major elements that are fundamental 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 inside your business, not just the shop floor staff, and it can even be used to alter the structure of those levels of management at the same time. It is a wide-ranging subject that is explored in greater detail in this article.
Why is it Necessary?
Quite simply, businesses don’t work without employees. As such, some level of human resource management is required for any business to operate at all, let alone in an effective and prosperous manner. Even if you don’t realise exactly how HRM affects the daily working of your business you will certainly be employing some form of HRM in order to keep trading.
Human Resource Management has an effect on every level of your corporate activities with various 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 inside your business, which are far more intangible factors but are critical nonetheless.
It also goes without saying that each organisation is different and will have a specific 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 adapt to fully utilise the strengths of your company.
Companies that are created to supply for organisation setups such as shelf companies ought to have a well-trained staff in place.
Impact on Business
While 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 success of your firm? The effect of HRM can be broken down into the following areas.
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 companies that are growing, 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 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 market, there is an on-going need to keep your company up-to-date and prepared to take advantage of any opportunity.
You may also find that the costly practice of external recruitment can be avoided if your company has sufficient training facilities in place. It is far easier to train an existing worker to a higher level and then use outside recruitment to fill the gap remaining at the lower level than it is to recruit directly to a higher level. This approach can be used at almost every single grade of management inside your company.
Employee Relations
Once you have the right men and women working for you it is necessary to keep them doing work for you, and to ensure they are doing a good 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 worker relations issues may include disciplinary and grievance management.
Finances
You cannot keep employees at your organisation by good motivational methods only. They’ll want to be paid a fair sum and on time. Payroll must be one of the very first systems that is created when you launch a business, but they still need to be taken care of and updated when personnel join, leave or change pay grade.
Industrial Relations
Many firms will have to work with trade union or other workers rights establishments which can be very forceful when protecting the interests of their members. When dealing with such bodies it is advantageous to have individuals within your organisation who can communicate effectively with them whilst keeping the interests of your own business in mind at the same time. The demand for good industrial relations is significantly more prevalent in public sector companies.
New employees could study your own organisation’s background from the paperwork regarding company incorporation all the way to the present day as well as specific training material to promote your corporate philosophy.
Workforce Planning
We have seen the effect that human resource management may have on a company and on the whole it looks like good HRM will have a positive effect on any company. As a rule, this is the case, but effective HRM does not just happen overnight.
One way to implement HRM concepts to your company is through workforce planning – a process that has the aim of making sure your staff can finish the upcoming tasks needed for your business 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 required and the proper skill mix. Recruitment and training procedures are designed with a long term focus in order to ensure that the company is able to operate 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.
Requirements
Evaluating your workforce demands is vital to the proper planning of your staff in the short-term and long-term future. If your business is subject to seasonal shifts 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 factors into consideration. Also bear in mind any future retirements or intervals of maternity/paternity leave or you could experience 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 individual to fill the role. As part of your workforce planning you ought to draw up a job description that details the role that will be undertaken as well as a person specification which will give an indication of the sort of individual that would be a good fit for the job and your business. By combining and prioritising the elements 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 regular job interviews there are several ways you can learn 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 develop a much better standard of worker within your company. Workforce planning can use training to plug upcoming gaps in the skill set of your staff and is usually faster and more cost effective than external recruitment. Training and development may also go some way toward motivating your staff.
Before spending great sums of cash on a ready made company procurement campaign research should be done on the competition and consumers within that market.
Workforce Motivation
It almost goes without saying that properly motivated employees 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 remains a bit of taboo subject amongst some managers.
Essentially, all motivational practices can be separated into two models that are often referred to as 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! It is a fairly dated idea but the basic principle is still relevant to companies today.
Whether you use the carrot approach 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 hire. Regardless of your approach, motivational factors can be separated into a further two groupings; financial and non-financial motivators.
Financial
The most typical financial motivators are payment schemes. You can pay staff in many different ways, either a set amount for a set service, by an hourly or daily rate, or a rate linked 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 known as incentive schemes, where by additional financial rewards are given out for good overall performance. This may include commission above a fixed salary, performance-related pay levels 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 different elements 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 key 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 staff to the objectives of your business. As a result, it has had to keep changing to a corporate climate that is constantly changing for one reason or another.
Perhaps there is a new piece of government legislation 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 sector. Either way, if you want to make sure that your workforce is performing to its maximum level then your HRM strategy should be adaptive enough to cope with an ever-changing economy.