Introduction
Human Resource Management, or HRM for short, is one of the most critical factors in running a successful company, 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 failure of a business, we first need to know what it means. The following is a satisfactory definition:
The purpose of Human Resource Management is to recruit, develop and utilise the staff within an enterprise in the manner in which is most appropriate to achieving the aims and objectives of the enterprise.
This essentially translates to “using individuals in the company 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 methods and processes that are involved in making sure that all members of staff in a business are pulling in the same direction, and more importantly, in the right direction. Without good human resource management a business will be spending effort on jobs that it may not directly benefit from.
At its center, HRM brings together three primary 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 employed on all levels of management within your organisation, not just the shop floor personnel, and it could even be used to modify the framework of those levels of management at the same time.
Why is it Necessary?
Quite simply, companies don’t run without employees. As such, some level of human resource management is needed for any organisation to operate at all, let alone in an effective and profitable manner.
Human Resource Management has an impact on every level of your corporate activities with various degrees of visibility. The most obvious HRM tasks include the hiring and firing of staff as well as financial systems such as payroll. It can also impact on motivation and communication inside your business, which are far more intangible variables but are important nonetheless. Poor HRM practice in these less visible arenas can have a damaging impact on your organisation but go unnoticed for long intervals.
It also goes without saying that every organisation is unique and will have a different set of challenges to face and opportunities to take advantage of. HRM can act as a versatile tool that converts workforce power into financial profits and can adjust to fully utilise the talents of your company.
We utilise Human Resource Management to ensure our own workforce offers offshore company formation efficiently for the highest level of income.
Impact on Business
While this all appears very interesting and significant, how does it actually impact on the daily functions 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 associated with human resources – recruitment. Almost every company in the world, and particularly businesses that are expanding, must 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 right people into the right jobs at an affordable 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 ready 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 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 external recruitment to fill the gap remaining at the lower level than it is to recruit directly to a higher level. This approach can be applied at almost every single grade of management within your organisation.
Employee Relations
Once you have the suitable people working for you it is necessary 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 evident employee relations practice is the art of motivation – a broad topic itself – but other employee relations issues can include disciplinary and grievance management. All of these things are an essential part of the overall HRM strategy.
Finances
You cannot keep employees at your organisation by good motivational methods alone. They will want to be paid a fair sum and on time. Payroll ought to be one of the very first systems that is created when you start a company, but they still need to be taken care of and updated when staff join, leave or switch pay grade.
Industrial Relations
Several companies will have to work with trade union or other workers rights organisations 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. The demand for good industrial relations is significantly more prevalent in public sector companies.
Regardless of the sector they operate in, when a international business company looks to expand it have to use recruitment to expand its current workforce.
Workforce Planning
We have seen the impact that human resource management may have on a business and generally it looks like good HRM will have a good effect on any business. As a rule, this is the case, but good HRM does not just happen overnight. It should be designed according to the goals of the company and then carried out thoroughly.
One way to implement HRM ideas to your business is through workforce planning – a system that has the aim of making sure your staff can finish the upcoming tasks required for your business to be successful.
Definition
Workforce planning is the method of anticipating ahead of time the human resource needs of any enterprise, both in terms of the number of employees required and the proper skill mix. Recruitment and training procedures are designed with a long term focus in order to make sure that the organisation is able to function without being limited by a shortage of appropriate labour. It is a bit of a balancing act, but when done properly can bring about many benefits.
Requirements
Evaluating your workforce requirements 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, such as in the tourism industry, or is prone to seasonal fluctuations in workforce then your workforce planning needs to take these factors into consideration. Also bear in mind any upcoming retirements or periods of maternity/paternity leave or you could suffer from a shortage of qualified workers.
Recruitment
Whether you are recruiting 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 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 person that would be a perfect fit for the job and your organisation.
Selection
The selection process can be as involved or as easy as you deem necessary. Outside of regular job interviews there are several ways you can learn about about candidates for your jobs, including aptitude tests, group interviews or even psychometric testing.
Training & Development
The main goal of staff training and development is to develop 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.
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Workforce Motivation
It practically goes without saying that properly motivated employees are going to produce a better standard of output and have a greater quantity of production than unhappy workers. This improved working rate will inevitably lead to an increase in the profitability of a business.
Essentially, all motivational tactics can be separated into two models that are often called the “carrot and stick” approach to motivation. The analogy relates to the two ways 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 strategy or the stick strategy will generally depend on your own management style, as well as the industry you work in and the type of individuals that you employ. Regardless of your approach, motivational factors can be separated into a further two groups; financial and non-financial motivators.
Financial
The most common financial motivators are payment plans. You can pay staff in a number of different ways, either a fixed amount for a fixed service, by an hourly or daily fee, or a rate linked to production, such as a commission structure. Whichever method is employed, the workforce is motivated to work because they will receive money for doing so.
Another financial motivation method involves what are known as incentive schemes, where by additional financial rewards are handed out for good overall performance. This may include commission above a fixed salary, performance-related pay levels or even offering a share of company profits.
Non-financial
Many human resource theorists 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 broadly 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 flexible tool that is there to match up the features of your workforce to the goals of your business. As a result, it has had to keep adapting to a corporate climate that is constantly changing for one reason or another. Moreover, it is a good idea to continuously evaluate your own HRM policies and not to rest on your laurels.
Maybe there is a new piece of government law that may have an effect of how your business can carry out its operations, or maybe a new manufacturing technology will come along that will revolutionise your sector. 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.
