Introduction
Human Resource Management, or HRM for short, is one of the most critical elements in running a prosperous company, although it is not always treated with the time and emphasis that it deserves. To fully understand what HRM is and its influence on the success or failing of a business, we first need to know what it means.
The function of Human Resource Management is to recruit, develop and utilise the personnel within an organisation in the manner in which is most suitable to achieving the aims and objectives of the enterprise.
This basically translates to “using individuals in the company in the best way possible” though that would be an over-simplified assertion that doesn’t echo the real nature and scope of HRM. HRM describes all of the methods and procedures that are involved in making certain that all members of staff within a business are pulling in the same direction, and more importantly, in the right direction. Without good human resource management a company will be spending energy on tasks that it may not directly gain from.
At its core, HRM brings together three primary elements that are fundamental to the productive output of the staff. These factors include motivation, management and leadership, and organisational structures. As a result, HRM can be applied to all levels of management in your company, not just the shop floor personnel, and it may even be used to adjust the framework of those levels of management at the same time.
Why is it Necessary?
Quite simply, businesses don’t operate without workers. As a result, some level of human resource management is needed for any organisation to operate at all, let alone in an efficient and profitable manner.
Human Resource Management has an effect on every level of your business activities with various degrees of visibility. The most obvious 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 much more intangible factors but are critical nonetheless. Inadequate HRM practice in these less visible arenas can have a negative impact on your company but go unnoticed for long intervals.
It also goes without saying that every business is unique 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 potential into financial gains and can adapt to fully utilise the talents of your firm.
The proper management of human resources is essential for firms offering services with very specific terms like register ltd company since customer service is of great importance.
Impact on Business
Whilst this all sounds very interesting and important, how does it actually influence the daily operations of your company, and more importantly, how will it help to improve the performance and success of your company? The impact 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 businesses that are growing, need to recruit people to work for them. Either current employees have left, or new possibilities 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 roles at an affordable price.
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 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 ready to make use of any opportunity.
You may also discover that the expensive process of external recruitment can be averted if your company has adequate training facilities in place. It is much easier to teach an existing employee 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.
Employee Relations
Once you have the suitable men and women working for you it is important to keep them doing work for you, and to ensure they are doing a good job. This can be achieved through 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 cannot keep employees at your company by good motivational techniques alone. They will want to be paid a fair sum and on time. Payroll should be one of the first systems that is created when you launch a company, but they still need to be maintained and updated when personnel join, leave or change pay grade. Poor management of your payroll system can rapidly lead to catastrophe in terms of your staff.
Industrial Relations
Several companies will have to work with trade union or other workers rights organisations which can be incredibly forceful when defending the interests of their members. When dealing with such bodies it is advantageous to have people within your organisation who can communicate comfortably with them whilst keeping the interests of your own business in mind at the same time. The need for good industrial relations is significantly more prevalent in public sector organisations.
It should be clear that a offshore business can’t operate efficiently without motivated and capable personnel.
Workforce Planning
We have seen the impact that human resource management may have on a company and on the whole it looks like good HRM will have a good effect on any company. As a rule, this is the case, but good HRM doesn’t just happen overnight.
One way to implement HRM ideas to your business is through workforce planning – a system that has the goal of making sure your workforce can complete the upcoming tasks required for your business to be successful. It can be defined as:
Definition
Workforce planning is the method of anticipating in advance the human resource needs of any organisation, both in terms of the number of employees necessary and the appropriate skill mix. Recruitment and training procedures are devised with a long term emphasis in order to ensure 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 properly can produce many benefits.
Requirements
Analysing your workforce demands is essential to the proper planning of your workforce in the short-term and long-term future. If your business is subject to seasonal changes in demand, such as in the tourism industry, or is prone to seasonal fluctuations in workforce then your workforce planning has to take these factors into consideration. Also bear in mind any approaching retirements or times of maternity/paternity leave or you could suffer from a shortage of qualified employees.
Recruitment
Whether you are hiring people externally or from within your existing workforce you still want to find the right person to fill the position. As part of your workforce planning you ought to draw up a job description that details the function that will be undertaken 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 company. By combining and prioritising the elements of these two descriptions you will be able to recognise the ideal job applicant.
Selection
The selection process can be as involved or as easy as you deem necessary. Beyond standard job selection interviews there are a number of ways you can learn about about applicants for your jobs, including aptitude tests, group interviews and even psychometric testing.
Training & Development
The principal goal of staff training and development is to produce a better standard of worker in your organisation. Workforce planning can use training to plug upcoming gaps in the skill set of your workforce which is usually faster and more cost effective than external recruitment. Training and development may also go some way towards motivating your staff.
Search engine optimisation companies can take a critical phrase, like ready made companies , then create a plan that aims to place your web site at the top of the search engines.
Workforce Motivation
It almost goes without saying that properly motivated employees are going to produce a better standard of work and have a higher quantity of output than unhappy workers. This improved work rate will undoubtedly lead to an increase in the profitability of a business.
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 generally depend on your own management style, as well as the business you work in and the type of people 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 staff in numerous different ways, either a set amount for a fixed service, by an hourly or daily fee, or a rate related to production, such as a commission structure. Whichever 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 given out for good performance. This may include commission above a fixed salary, performance-related pay levels or even providing a share of company profits.
Non-financial
Many human resource advocates have their own thoughts about the other factors that motivate people to work, although these are often seen as an added bonus to a worker. It is widely acknowledged that money 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 up the characteristics of your staff to the goals of your organisation. As a result, it has had to keep changing to a business climate that is constantly changing for one reason or another.
Perhaps there is a new piece of government legislation that may have an effect of how your company can carry out its operations, or maybe a new manufacturing technology will come along that can 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 world. After all, what may seem like a danger to many will often appear as an opportunity to a good entrepreneur.