Introduction
Human Resource Management, or HRM for short, is one of the most important factors in running a prosperous business, though it isn’t always treated with the time and focus that it deserves. To fully understand what HRM is and its impact on the success or failure 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 use the personnel within an organisation in the manner in which is most appropriate to accomplishing the aims and objectives of the organisation.
This effectively translates to “using people in the company in the best way possible” although that would be an over-simplified statement that does not echo the true 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 business are pulling in the same direction, and much more importantly, in the right direction. Without good human resource management a company will be spending energy on jobs that it may not directly gain from.
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. As a result, HRM can be applied to all levels of management in your organisation, not just the shop floor staff, and it can even be used to adjust the framework of those levels of management at the same time. It is a broad subject that is explored in more detail in this article.
Why is it Necessary?
Put simply, businesses don’t work without employees. As a result, some level of human resource management is needed for any business to operate at all, let alone in an effective and prosperous manner. Even if you don’t appreciate exactly how HRM affects the every day working of your business you will certainly be employing some sort of HRM in order to keep trading.
Human Resource Management has an impact on every level of your corporate activities with varying degrees of visibility. The most obvious HRM tasks involve the hiring and firing of staff as well as monetary systems such as payroll. It may also impact on motivation and communication inside your company, which are much more intangible aspects but are crucial nonetheless. Poor HRM practice in these less visible domains can have a negative impact on your company but go undetected for long periods of time.
It also goes without saying that every business is different and will have a unique set of challenges to face and opportunities to take advantage of. HRM can work as a versatile tool that translates workforce power into financial profits and can adjust to fully utilise the strengths of your firm. Without it, your competitors could be afforded the chance to succeed where you missed out.
We utilise Human Resource Management to make certain our staff offers IBC setup effectively for maximum income.
Impact on Business
Whilst 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 enhance the performance and profitability of your firm?
Recruitment & Training
This is probably the area of a company that is most associated with human resources – recruitment. Nearly every business in the world, and particularly businesses that are growing, must 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’s also important to keep your staff training procedures up-to-date to make sure 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 changes the industry, there is an on-going need to keep your organisation up-to-date and prepared to make use 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 find that the costly process of external recruitment can be avoided if your organisation has adequate training facilities in place. It is far easier to train an existing staff member 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 strategy 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 working for you, and to make sure they are doing a decent job. This can be accomplished through good employee relations. The most evident employee relations practice 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 essential part of the overall HRM picture.
Finances
You cannot keep employees at your company by good motivational methods only. They will want to be paid a fair amount and on time. Payroll should be one of the initial systems that is created when you start a company, but they still need to be maintained and updated when staff join, leave or change pay grade. Incorrect management of your payroll system can quickly lead to disaster in terms of your staff.
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 members. When dealing with such bodies it is beneficial to have people within your organisation who can connect comfortably with them whilst keeping the interests of your own organisation in mind at the same time. The demand for good industrial relations is significantly more prevalent in public sector companies.
One of the easiest ways to identify whether private limited companies posess good employee relations is to ask existing staff if they are satisfied in their jobs.
Workforce Planning
We have seen the impact that human resource management can have on a business and generally it looks like good HRM will have a positive effect on any organisation. As a rule, this is the case, but effective HRM does not just occur overnight.
One way to apply HRM ideas to your company is through workforce planning – a process that has the aim of making sure your workforce can complete the upcoming tasks required for your business to be successful.
Definition
Workforce planning is the method of anticipating ahead of time the human resource needs of any organisation, both in terms of the quantity of employees needed and the proper skill mix. Recruitment and training policies are designed with a long term emphasis in order to ensure 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.
Requirements
Evaluating your workforce requirements 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, for example in the tourism industry, or is prone to seasonal fluctuations in workforce then your workforce planning must take these variables into consideration. Also bear in mind any upcoming retirements or intervals of maternity/paternity leave or you could experience a shortage of qualified workers.
Recruitment
Whether you are hiring people externally or from within your existing workforce you still need to find the correct individual to fill the role. As part of your workforce planning you should 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 individual that would be a perfect fit for the job and your organisation.
Selection
The selection process can be as involved or as easy as you deem necessary. Outside of standard job selection interviews there are a number of ways you can learn about candidates for your jobs, including aptitude tests, group interviews or even psychometric testing. These sophisticated 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 business. Workforce planning can use training to plug upcoming gaps in the skill set of your staff which is generally quicker and more cost effective than external recruitment.
HRM can help communication in your company to make sure that all staff understand that offshore incorporations have become the prime phrase that define your online promotion campaign.
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 unhappy workers. This improved working rate will undoubtedly lead to a rise in the profitability of a company. Yet motivation is still a bit of taboo subject amongst some managers.
Essentially, all motivational tactics 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 remains relevant to businesses today.
Whether you use the carrot approach or the stick strategy will generally depend on your own management style, as well as the business you work in and the type of individuals that you hire.
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. Whatever method is used, the workforce is motivated to work because they will receive money for doing so.
Another financial motivation technique involves what are called incentive schemes, where by additional financial rewards are handed out for good 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
Several human resource advocates have their own ideas about the different factors that motivate people to work, although these are often seen as a bonus to a worker. It is widely acknowledged that income is the critical motivational factor for the vast 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 as well as Fredrick Herzberg.
The Changing Face of HRM
As previously mentioned, HRM is a versatile tool that is there to match the characteristics of your staff to the goals of your organisation. As such, it has had to keep changing to a business climate that is continuously changing for one reason or another. Moreover, it is a good idea to continuously review your own HRM policies and not to rest on your laurels.
Maybe there is a new piece of government legislation that will have an effect of how your company 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 sure that your workforce is performing to its maximum level then your HRM system should be flexible enough to cope with an ever-changing world. After all, what may seem like a danger to most will often appear as an opportunity to a shrewd entrepreneur.
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