A Brief Guide To Human Resource Management

Introduction

Human Resource Management, or HRM for short, is one of the most critical factors in running a prosperous company, though it isn’t always handled 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 must know what it means. The following is a good definition:

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

This effectively translates to “using people in the company in the best way possible” though that would be an over-simplified statement that does not echo the real nature and range of HRM. HRM describes all of the strategies and procedures that are involved in ensuring that all members of staff within a business are pulling in the same direction, and much more significantly, in the right direction. Without having good human resource management a business will be expending energy on jobs that it may not directly gain from.

At its center, HRM brings together 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 inside your company, not just the shop floor personnel, and it can even be used to modify the structure of those levels of management at the same time.

Why is it Necessary?

Put simply, businesses don’t operate without employees. As such, some level of human resource management is needed for any organisation to operate at all, let alone in an efficient and prosperous manner. Even if you don’t realise exactly how HRM affects the everyday working of your enterprise you will surely be employing some sort of HRM in order to keep trading.

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 staff as well as monetary systems such as payroll. It can also impact on motivation and communication inside your business, which are much more intangible aspects 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 act as a flexible tool that converts workforce potential into financial profits and can adapt to fully utilise the strengths of your company.

HRM is a general business technique and can be employed on firms that organise the setting up a company as well as almost any other type of enterprise too.

Impact on Business

Whilst this all sounds very interesting and important, how does it actually influence the daily functions of your business, and more importantly, how will it help to boost the performance and success of your firm?

Recruitment & Training

This is probably the area of a company that is most associated with human resources – recruitment. Almost every business in the world, and particularly companies that are growing, need to recruit people to work for them. Either current employees have left, or new opportunities 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 sure that your staff is fully capable of doing the job they are there to do. Regardless of whether it is a new piece of legislation or a new bit of technology that alters the industry, there is an on-going requirement to keep your company up-to-date and prepared 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 find that the expensive practice of external recruitment can be avoided if your company has sufficient training facilities in place. It is far easier to teach an existing employee 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. This technique can be applied at almost every grade of management inside your organisation.

Employee Relations

Once you have the suitable people working for you it is important to keep them working for you, and to make certain they are doing a good job. This can be achieved via good employee relations. The most evident employee relations exercise is the art of motivation – a wide topic itself – but other employee relations issues can include disciplinary and grievance management.

Finances

You cannot keep employees at your company by good motivational techniques only. They’ll want to be paid a fair sum and on time. Payroll should be one of the primary 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 switch pay grade. Poor management of your payroll program can quickly lead to catastrophe in terms of your staff.

Industrial Relations

Numerous companies 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 interacting with such bodies it is beneficial to have people within your company who can communicate comfortably with them whilst keeping the interests of your own company in mind at the same time.

Regardless of the market they operate within, when a international business company looks to grow they have to use recruitment to expand its existing workforce.

Workforce Planning

We have seen the effect that human resource management may have on a company and generally it seems like good HRM will have a good effect on any organisation. As a rule, this is the case, but effective HRM does not just happen overnight.

One way to implement HRM concepts to your business is via workforce planning – a system that has the goal of making sure your staff can finish the upcoming tasks required for your company to be successful.

Definition

Workforce planning is the process of anticipating in advance the human resource requirements of any organisation, both in terms of the quantity of employees required and the proper skill mix. Recruitment and training policies are designed with a long term emphasis in order to make sure that the organisation 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.

Requirements

Analysing your workforce requirements is essential to the proper planning of your workforce in the short-term and long-term future. If your company is subject to seasonal changes in demand, for example in the tourism industry, or suffers from seasonal fluctuations in staff levels then your workforce planning needs to take these factors into consideration. Also bear in mind any approaching retirements or periods of maternity/paternity leave or you could experience a shortage of qualified personnel.

Recruitment

Whether you are recruiting 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 ought to draw up a job description that details the job that will be undertaken as well as a person specification which will give an indication of the sort of person that would be a perfect fit for the job and your company.

Selection

The selection process can be as involved or as simple as you deem necessary. Beyond standard job 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 relevant to all workforce planning assignments but are an option to companies.

Training & Development

The main goal of staff training and development is to produce a much better standard of worker within your organisation. Workforce planning can use training to plug upcoming gaps in the skill set of your staff and is usually quicker and more economical than external recruitment. Training and development can also go some way towards motivating your staff.

Before spending great sums of cash upon a ready made company aquisition project investigation should be carried out on the competitors and customers in that market.

Workforce Motivation

It practically goes without saying that properly motivated workers are going to produce a better standard of output and have a higher quantity of production than unsatisfied workers. This improved working rate will undoubtedly lead to an increase in the profitability of a company.

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 hit from a stick!

Whether you use the carrot strategy or the stick approach will generally 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 broken down into a further two sets; financial and non-financial motivators.

Financial

The most common financial motivators are payment schemes. You can pay workers in a number of different ways, either a fixed amount for a fixed service, by an hourly or daily fee, or a rate related to production, such as a commission scheme.

Another financial motivation technique involves what are known as incentive schemes, where by additional financial rewards are given out for good performance. This may include commission above a fixed salary, performance-related pay levels or even offering a share of company profits. Once again, the motivating factor here is the money alone.

Non-financial

Many human resource theorists have their own thoughts about the other factors that motivate people to do the job, although these are often seen as a bonus to a worker. It is broadly acknowledged that money is the main motivational factor for the vast majority of people.

The Changing Face of HRM

As previously mentioned, HRM is a flexible tool that is there to match the characteristics of your workforce to the goals of your organisation. As a result, it has had to keep adapting to a business climate that is constantly changing for one reason or another. Furthermore, it is a good idea to constantly review your own HRM procedures and not to rest on your laurels.

Perhaps there is a new piece of government law that will have an impact of how your business can carry out its trading, or maybe a new manufacturing technology will come along that can 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 flexible enough to cope with an ever-changing world.