Introduction
Human Resource Management, or HRM for short, is one of the most critical elements in running a successful business, although it isn’t 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 company, we first must know what it means. The following is a good 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 enterprise.
This effectively translates to “using people in the business in the best way possible” though that would be an over-simplified statement that does not reflect the real nature and range of HRM. HRM describes all of the strategies and processes that are involved in making sure that all members of staff in a company are pulling in the same direction, and more importantly, in the right direction.
At its core, HRM combines three primary 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 within your company, not just the shop floor staff, and it can even be used to modify the structure of those levels of management as well.
Why is it Necessary?
Put simply, businesses don’t operate without employees. As a result, some level of human resource management is needed 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 business activities with various degrees of visibility. The most evident HRM tasks include the hiring and firing of staff as well as monetary systems such as payroll. It may also impact on motivation and communication inside your business, which are far more intangible factors but are crucial nonetheless. Inadequate HRM practice in these less visible arenas can have a damaging impact on your company but go undetected for long periods of time.
It also goes without saying that each business is different and will have a unique set of issues to face and opportunities to take advantage of. HRM can work as a flexible tool that translates workforce power into financial gains and can adjust to fully utilise the talents of your firm.
We utilise Human Resource Management to make certain our staff offers IBC formation effectively for maximum prosperity.
Impact on Business
Whilst this all sounds very interesting and significant, how does it actually impact on the daily operations of your business, and more importantly, how will it help to boost the performance and profitability of your company?
Recruitment & Training
This is probably the area of a company that is most affiliated with human resources – recruitment. Nearly every company in the world, and particularly companies that are expanding, have to recruit people to work for them. Either existing employees have left, or new opportunities have arisen which mean there are jobs that have to be filled. HRM can ensure your recruitment system gets the appropriate people into the right jobs at a cost-effective 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 new piece of legislation or a new bit of technology that alters the marketplace, there is an on-going need to keep your company 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 discover that the costly practice 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 left at the lower level than it is to hire straight to a higher level. This approach can be applied at almost every grade of management within 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 be sure they are doing a good job. This can be accomplished through good employee relations. The most obvious employee relations exercise is the art of motivation – a wide topic by itself – but other worker relations issues may include disciplinary and grievance management.
Finances
You can’t keep employees at your organisation by good motivational methods only. They will want to be paid a fair sum and on time. Payroll ought to be one of the first systems that is developed when you start a company, but they still need to be maintained and updated when staff join, leave or change pay grade. Improper management of your payroll program can quickly lead to catastrophe in terms of your staff.
Industrial Relations
Many companies will have to work with trade union or other workers rights organisations which can be very forceful when defending the interests of their members. When dealing with such bodies it is advantageous to have individuals within your organisation who can connect effectively with them whilst keeping the interests of your own business in mind as well.
A specialist business consultancy business is often employed to assist in forming a company and to form their particular plan for their inside and external recruitment requirements.
Workforce Planning
We have seen the effect that human resource management may have on a business and on the whole it seems like good HRM will have a beneficial effect on any organisation. As a rule, this is the case, but effective HRM doesn’t just occur overnight. It should be planned according to the targets of the organisation and then performed thoroughly.
One way to implement HRM ideas to your company is via workforce planning – a system that has the goal of making sure your staff can finish the upcoming tasks needed for your business to be successful.
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 required and the proper skill mix. Recruitment and training procedures are devised 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. Workforce planning can be split into four main parts; requirements, recruitment, selection, and training and development.
Requirements
Evaluating your workforce demands is vital 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 is prone to seasonal fluctuations in workforce then your workforce planning has to take these factors into consideration.
Recruitment
Whether you are recruiting externally or from within your existing workforce you still need to find the right person to fill the role. As part of your workforce planning you should draw up a job description that details the role that will be carried out as well as a person specification which will give an indication of the kind of individual that would be a good fit for the job and your business.
Selection
The selection process can be as involved or as simple as you deem necessary. Outside of standard job selection interviews there are several ways you can learn about about candidates for your jobs, including aptitude tests, group interviews or even psychometric testing. These sophisticated techniques might not be relevant to all workforce planning assignments but are an option to recruiters.
Training & Development
The main goal of staff training and development is to develop a much better standard of worker within your organisation. Workforce planning can use training to fill upcoming gaps in the skill set of your staff and is generally faster and more cost effective than external recruitment. Training and development may also go some way toward motivating your employees.
HRM can help communication inside of your own company to ensure all personnel recognise that offshore incorporations have become the prime words that define your online promotion campaign.
Workforce Motivation
It practically goes without saying that well motivated workers are going to deliver a better standard of work and have a higher quantity of production than unhappy workers. This improved work rate will undoubtedly lead to a rise in the profitability of a company.
Essentially, all motivational practices can be separated into two models that are often called the “carrot and stick” approach to motivation. The analogy relates to the two approaches to make a donkey carry your possessions, either by tempting it with a carrot, or threatening it with a strike from a stick!
Whether you use the carrot approach or the stick approach will largely depend on your own management approach, as well as the industry you work in and the type of individuals that you hire.
Financial
The most common financial motivators are payment schemes. You can pay staff in many 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. Whatever method is employed, the workforce is motivated to work because they will get money for doing so.
Another financial motivation technique involves what are known as incentive schemes, where additional financial rewards are given out for good overall performance. This may include commission above a fixed salary, performance-related pay grades or even providing a share of company profits.
Non-financial
Several human resource advocates have their own thoughts about the other elements that motivate people to work, although these are often seen as a bonus to a worker. It is widely acknowledged that income is the main motivational factor for the vast majority of people.
The Changing Face of HRM
As previously stated, HRM is a versatile application that is there to match the characteristics of your staff to the objectives of your organisation. 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 law that may have an effect of how your company can carry out its trading, or maybe a fresh manufacturing technology will come along that can revolutionise your industry. Either way, if you want to make sure that your staff is performing to its optimum level then your HRM system should be adaptive enough to cope with an ever-changing economy.