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 handled with the time and focus that it deserves. To fully understand what HRM is and its influence on the success or failure of a business, we first must know what it means.
The purpose of Human Resource Management is to recruit, develop and use the staff within an organisation in the manner in which is most appropriate to achieving the aims and objectives of the organisation.
This basically translates to “using people in the company in the best way possible” though that would be an over-simplified statement that does not reflect the true nature and scope of HRM. HRM describes all of the strategies and procedures that are involved in making sure that all members of staff in a business are pulling in the same direction, and much more significantly, in the right direction.
At its center, HRM brings together three major elements that are fundamental to the productive output of the workforce. These elements 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 workers, and it can even be used to alter the structure of those levels of management as well. It is a wide-ranging subject that is explained in greater detail in this article.
Why is it Necessary?
Put simply, companies don’t run without workers. As such, some level of human resource management is necessary for any business to operate at all, let alone in an efficient and prosperous manner. Even if you don’t appreciate exactly how HRM affects the everyday running of your business you will certainly be using some kind 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 apparent HRM tasks include the hiring and firing of employees as well as financial systems such as payroll. It may also impact on motivation and communication inside your business, which are far more intangible aspects but are crucial nonetheless. Inadequate HRM practice in these less visible arenas can have a negative impact on your company but go unnoticed for long periods of time.
It also goes without saying that every organisation is unique and will have a unique set of challenges to face and opportunities to take advantage of. HRM can act as a versatile tool that translates workforce potential into financial gains and can adapt to fully utilise the talents of your firm. Without it, your competitors may well be afforded the chance to succeed where you missed out.
My company specialise in supplying offshore service throughout the globe and need to manage a large workforce.
Impact on Business
While this all sounds very interesting and significant, how does it actually influence the daily functions of your business, and more importantly, how will it help to enhance the performance and profitability of your company? The effect of HRM can be broken down into the following areas.
Recruitment & Training
This is most likely the area of a business that is most affiliated with human resources – recruitment. Almost every business in the world, and particularly companies that are expanding, must recruit people to work for them. Either current employees have left, or new possibilities 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 certain 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 bit of technology that alters the marketplace, there is an on-going requirement to keep your organisation up-to-date and prepared to make use of any opportunity.
You may also discover that the costly practice of external recruitment can be averted if your organisation has sufficient training facilities in place. It is much easier to train an existing staff member to a higher level and then use external recruitment to fill the gap left at the lower level than it is to hire directly to a higher level.
Employee Relations
When you have the right people working for you it is necessary to keep them working for you, and to ensure they are doing a decent job. This can be achieved via good employee relations. The most obvious employee relations practice is the art of motivation – a broad topic by itself – but other worker relations issues can include disciplinary and grievance management. All of these things are an essential part of the overall HRM picture.
Finances
You can’t keep employees at your organisation by good motivational methods alone. They’ll want to be paid a fair amount 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 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 workforce.
Industrial Relations
Many companies will have to deal with trade union or other workers rights organisations which can be incredibly forceful when defending the interests of their own members. When dealing with such bodies it is beneficial to have individuals within your company who can connect comfortably with them whilst keeping the interests of your own organisation in mind at the same time.
A professional business consultancy firm is often employed to help companies bvi devise their specific plan for their internal and external recruitment requirements.
Workforce Planning
We have seen the influence that human resource management may have on a company 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 good HRM doesn’t just happen overnight. It should be planned according to the objectives of the organisation and then performed thoroughly.
One way to apply HRM concepts to your company is via workforce planning – a system that has the aim of making sure your staff can finish 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 needs of any enterprise, both in terms of the quantity of employees needed and the proper 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 correctly can produce many benefits.Workforce planning can be split into four main parts; requirements, recruitment, selection, and training and development.
Requirements
Evaluating your workforce requirements is vital to the proper planning of your staff in the short-term and long-term future. If your business is subject to seasonal shifts in demand, such as in the tourism industry, or suffers from seasonal fluctuations in workforce then your workforce planning has to take these variables into consideration. Also bear in mind any future retirements or periods of maternity/paternity leave or you could experience a shortage of qualified employees.
Recruitment
Whether you are hiring people externally or from within your existing workforce you still need to find the right individual 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 type of person that would be a perfect fit for the job and your business. By mixing and prioritising the components of these two descriptions you will be able to identify the ideal job candidate.
Selection
The selection procedure can be as involved or as easy as you deem necessary. Over and above regular job selection interviews there are several ways you can learn about applicants for your jobs, including aptitude tests, group interviews and even psychometric testing. These advanced techniques might not be applicable to all workforce planning projects but are an option to organisations.
Training & Development
The main goal of staff training and development is to develop a much better quality of worker in your business. Workforce planning can use training to plug upcoming gaps in the skill set of your staff and is usually quicker and more cost effective than external recruitment. Training and development may also go some way toward motivating your employees.
It doesn’t take long to perform a test lookup for offshore corporations in order to identify the primary competitors for that particular niche of the online business world.
Workforce Motivation
It practically goes without saying that well motivated workers are going to deliver a better standard of work and have a greater quantity of output 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 models 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 possessions, either by tempting it with a carrot, or threatening it with a hit from a stick! It is a fairly old idea but the principle is still relevant to companies today.
Whether you use the carrot approach or the stick strategy will largely depend on your own management approach, as well as the industry you work in and the type of individuals that you employ.
Financial
The most common financial motivators are payment plans. 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.
Another financial motivation technique involves what are known as incentive schemes, where additional financial rewards are given out for good performance. This may include commission beyond a fixed salary, performance-related pay grades or even offering a share of company profits.
Non-financial
Several human resource advocates have their own ideas about the different factors that motivate people to do the job, although these are often seen as a bonus to an employee. It is widely acknowledged that money is the key motivational factor for the majority of people. If you want 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 flexible tool that is there to match up the features of your staff to the goals of your organisation. As a result, it has had to keep changing to a business climate that is continuously changing for one reason or another.
Perhaps there is a new piece of government legislation that may have an impact of how your business can carry out its trading, or maybe a fresh manufacturing technology will come along that will revolutionise your sector. Either way, if you want to ensure that your workforce is performing to its maximum level then your HRM strategy 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 good entrepreneur.