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Introduction

Human Resource Management, or HRM for short, is one of the most critical elements in running a prosperous company, though it isn’t always treated with the time and focus that it deserves. To completely understand what HRM is and its impact on the success or failing of a business, we first must know what it means.

The function of Human Resource Management is to recruit, develop and use the personnel within an organisation in the manner in which is most suitable to accomplishing the aims and objectives of the enterprise.

This essentially translates to “using people in the business in the best way possible” though that would be an over-simplified statement that doesn’t echo the real nature and range of HRM. HRM describes all of the techniques and processes that are involved in ensuring that all members of staff within a company are pulling in the same direction, and more significantly, in the right direction.

At its core, HRM combines 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 applied to all levels of management in your business, not just the shop floor staff, and it could even be used to adjust the structure of those levels of management at the same time. It is a wide-ranging subject that is explored in more detail in this article.

Why is it Necessary?

Quite simply, businesses don’t run without employees. As such, some level of human resource management is needed for any business to operate at all, let alone in an efficient and prosperous manner. Even if you don’t realise exactly how HRM affects the every day working of your company you will surely be using some kind of HRM in order to keep trading.

Human Resource Management has an impact on every level of your corporate activities with various degrees of visibility. The most apparent HRM tasks include the hiring and firing of employees as well as monetary systems such as payroll. It can also impact on motivation and communication within your company, which are much more intangible aspects but are critical nonetheless.

It also goes without saying that each organisation 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 converts workforce power into financial gains and can adjust to fully utilise the talents of your firm.

HRM is a universal business technique and might be applied to firms who will help in setting up a company plus any other sort of business as well.

Impact on Business

While this all sounds very interesting and significant, how does it actually influence the daily operations of your company, and more importantly, how will it help to enhance the performance and success of your firm?

Recruitment & Training

This is probably the part of a company 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 opportunities have arisen which mean there are jobs that must be filled. HRM can ensure your recruitment system gets the appropriate people into the right jobs at a cost-effective price.

It’s 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 new piece of legislation or a new bit of technology that changes the marketplace, there is an on-going need to keep your organisation up-to-date and prepared to take advantage 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 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 teach an existing worker to a higher level and then use external recruitment to fill the gap remaining at the lower level than it is to hire straight to a higher level.

Employee Relations

Once you have the right people working for you it is important to keep them doing work for you, and to make certain they are doing a good job. This can be accomplished by means of good employee relations. The most obvious employee relations practice is the art of motivation – a wide topic by itself – but other employee relations issues can include disciplinary and grievance management.

Finances

You can’t keep employees at your company 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 company, but they still need to be taken care of and updated when staff join, leave or switch pay grade.

Industrial Relations

Several firms will have to work with trade union or other workers rights establishments which can be very forceful when protecting the interests of their own members. When dealing with such bodies it is advantageous to have individuals within your organisation who can connect comfortably with them whilst keeping the interests of your own organisation in mind as well.

It ought to be obvious that any company international business is unable to function successfully without motivated and capable personnel.

Workforce Planning

We have seen the effect that human resource management can have on a company and on the whole it looks like good HRM will have a beneficial effect on any business. As a rule, this is the case, but effective HRM does not just occur overnight.

One way to apply HRM ideas to your business is via workforce planning – a system that has the goal of making sure your workforce can complete the upcoming tasks needed for your company 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 enterprise, both in terms of the number of employees needed and the proper skill mix. Recruitment and training policies are devised with a long term emphasis in order to make sure 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 correctly can produce many benefits.Workforce planning can be broken down into four main parts; requirements, recruitment, selection, and training and development.

Requirements

Evaluating your workforce requirements is essential to the proper planning of your staff in the short-term and long-term future. If your company is subject to seasonal shifts in demand, for example in the tourism industry, or suffers from seasonal fluctuations in workforce then your workforce planning needs to take these factors into consideration. Also bear in mind any approaching retirements or times 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 want to find the correct individual to fill the position. As part of your workforce planning you should draw up a job description that describes the function that will be carried out as well as a person specification which will give an indication of the kind of person that would be a good fit for the job and your organisation.

Selection

The selection procedure can be as involved or as simple as you deem necessary. Over and above regular job interviews there are numerous ways you can learn about candidates 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 better quality of worker in your organisation. Workforce planning can use training to plug upcoming gaps in the skill set of your workforce and is usually faster 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 work and have a greater quantity of output than unhappy workers. This improved working rate will undoubtedly lead to a rise in the profitability of a business.

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 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!

Whether you use the carrot strategy or the stick approach will generally depend on your own management approach, as well as the industry you work in and the type of people that you hire. Regardless of your method, motivational factors can be separated into a further two sets; financial and non-financial motivators.

Financial

The most typical financial motivators are payment plans. You can pay staff in numerous different ways, either a fixed amount for a fixed service, by an hourly or daily rate, or a rate related to production, such as a commission scheme.

Another financial motivation technique involves what are called incentive schemes, where by additional financial rewards are handed out for good overall performance. This may include commission beyond a fixed salary, performance-related pay grades or even offering a share of company profits. Once again, the motivating aspect here is the money alone.

Non-financial

Several human resource theorists have their own thoughts about the other elements that motivate people to do the job, although these are often seen as a bonus to an employee. It is broadly acknowledged that income is the critical motivational factor for the vast majority of people. If you want to learn more about these theories I would recommend looking up the work of Elton Mayo, Abraham Maslow and Fredrick Herzberg.

The Changing Face of HRM

As previously stated, HRM is a versatile application that is there to match up the characteristics of your workforce to the objectives of your business. As such, it has had to keep changing to a corporate climate that is continuously changing for one reason or another. Moreover, it is a good idea to constantly evaluate 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 operations, or maybe a fresh 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 highest level then your HRM strategy should be flexible enough to cope with an ever-changing world. After all, what might seem like a danger to most will often appear as an opportunity to a shrewd entrepreneur.