Introduction
Human Resource Management, or HRM for short, is one of the most critical elements in running a prosperous company, though it is not always treated with the time and emphasis that it deserves. To completely understand what HRM is and its influence on the success or failure of a company, we first must know what it means.
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 basically translates to “using individuals in the company in the best way possible” although that would be an over-simplified assertion that doesn’t reflect the true nature and range of HRM. HRM describes all of the techniques and procedures that are involved in making certain that all members of staff in a company are pulling in the same direction, and much more importantly, in the right direction.
At its core, HRM brings together three major elements that are essential 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 inside your company, not just the shop floor staff, and it can even be used to modify the structure of those levels of management at the same time. It is a wide-ranging subject that is explained in greater detail in this article.
Why is it Necessary?
Quite simply, businesses don’t operate without employees. As such, some level of human resource management is required for any business 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 involve the hiring and firing of employees as well as financial systems such as payroll. It may also impact on motivation and communication inside your company, which are far more intangible factors but are critical nonetheless. Inadequate HRM practice in these less visible domains can have a damaging impact on your organisation but go unnoticed for long periods of time.
It also goes without saying that every company is unique and will have a specific set of issues to face and opportunities to take advantage of. HRM can work as a flexible tool that converts workforce potential into financial profits and can adjust to fully utilise the talents of your company.
HRM is a universal business approach and can be applied to organisations that can assist with setting up your Ltd Company as well as any other sort of business too.
Impact on Business
While this all sounds very interesting and important, how does it actually influence the daily functions of your company, and more importantly, how will it help to boost the performance and profitability of your firm? The impact of HRM can be broken down into the following areas.
Recruitment & Training
This is most likely the part of a company that is most associated with human resources - recruitment. Almost every business in the world, and especially companies 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 roles that have to be filled.
It’s also important to keep your staff training procedures up to date to make sure that your workforce 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 piece of technology that alters the industry, there is an on-going requirement to keep your organisation up-to-date and ready to take advantage 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 costly process of external recruitment can be avoided if your organisation 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 strategy can be applied at almost every grade of management within your business.
Employee Relations
When you have the right men and women working for you it is necessary to keep them doing work for you, and to make sure they are doing a good job. This can be accomplished via good employee relations. The most obvious 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 important part of the overall HRM strategy.
Finances
You cannot keep employees at your company by good motivational methods only. They will want to be paid a fair sum and on time. Payroll should be one of the first systems that is developed when you launch a business, but they still need to be taken care of and updated when staff join, leave or change pay grade. Improper management of your payroll program can quickly lead to disaster in terms of your workforce.
Industrial Relations
Many companies will have to work with trade union or other workers rights organisations which can be incredibly forceful when protecting the interests of their members. When interacting with such bodies it is advantageous to have individuals within your organisation who can communicate comfortably with them whilst keeping the interests of your own company in mind at the same time.
One of the simplest ways to identify if private limited companies feature good employee relations is to ask present staff if they are satisfied in their work.
Workforce Planning
We have seen the influence that human resource management may have on a business and on the whole it looks like good HRM will have a beneficial effect on any business. As a rule, this is the case, but effective HRM does not just happen overnight.
One way to implement HRM ideas to your company is via workforce planning - a process that has the aim of making sure your staff can finish the upcoming tasks required for your business to be successful. It can be defined as:
Definition
Workforce planning is the process of anticipating ahead of time the human resource needs of any enterprise, both in terms of the number of employees needed and the appropriate skill mix. Recruitment and training policies are devised with a long term focus 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 bring about many benefits.Workforce planning can be broken down into four main areas; requirements, recruitment, selection, and training and development.
Requirements
Analysing your workforce demands is vital to the proper planning of your workforce in the short-term and long-term future. If your business is subject to seasonal shifts in demand, for example in the tourism industry, or is prone to seasonal fluctuations in staff levels then your workforce planning has to take these variables into consideration.
Recruitment
Whether you are hiring people externally or from inside your existing workforce you still want to find the correct 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 good fit for the job and your company.
Selection
The selection procedure can be as involved or as easy as you deem necessary. Beyond 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.
Training & Development
The main goal of staff training and development is to develop a better quality of worker in your organisation. Workforce planning can use training to plug upcoming gaps in the skill set of your staff and is usually faster and more cost effective than external recruitment. Training and development may also go some way towards motivating your staff.
Online competition can be incredibly difficult, especially in terms like incorporate company market place since there are numerous good firms offering a product.
Workforce Motivation
It practically goes without saying that well motivated employees are going to deliver a better standard of work and have a higher quantity of production than unsatisfied workers. This improved working rate will inevitably 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 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 style, as well as the business you work in and the type of people that you hire.
Financial
The most typical financial motivators are payment plans. You can pay workers in numerous different ways, either a fixed amount for a set service, by an hourly or daily fee, or a rate related to production, such as a commission structure.
Another financial motivation method involves what are called incentive schemes, where by additional financial rewards are given out for good overall performance. This may include commission beyond a fixed salary, performance-related pay levels or even offering a share of company profits.
Non-financial
Several human resource advocates have their own ideas about the different elements that motivate people to do the job, although these are often seen as an added bonus to an employee. It is broadly acknowledged that money is the key motivational factor for the majority of people.
The Changing Face of HRM
As previously stated, HRM is a versatile tool that is there to match the characteristics of your staff to the objectives 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.
Perhaps there is a new piece of government legislation that may have an impact of how your company can carry out its trading, 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 highest level then your HRM strategy should be flexible enough to cope with an ever-changing economy.
