HRM

Introduction

Human Resource Management, or HRM for short, is one of the most important elements in running a prosperous business, though it isn’t always handled with the time and focus that it deserves. To fully understand what HRM is and its impact 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 staff 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 people in the business in the best way possible” although 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 ensuring that all members of staff in a business are pulling in the same direction, and more significantly, in the right direction. Without good human resource management a business will be expending energy on jobs that it may not directly gain from.

At its core, HRM combines three primary elements that are essential to the productive output of the staff. These factors include motivation, management and leadership, and organisational structures. Consequently, HRM can be applied to all levels of management within your business, not just the shop floor personnel, and it can even be used to adjust the framework of those levels of management as well.

Why is it Necessary?

Put simply, businesses don’t run without employees. As a result, some level of human resource management is needed for any organisation to operate at all, let alone in an efficient and prosperous manner.

Human Resource Management has an impact on every level of your corporate activities with varying degrees of visibility. The most apparent HRM tasks include the hiring and firing of staff as well as monetary systems such as payroll. It can also impact on motivation and communication within your company, which are much more intangible variables but are critical nonetheless. Inadequate HRM practice in these less visible arenas can have a negative impact on your organisation but go undetected for long intervals.

It also goes without saying that every 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 profits and can adapt to fully utilise the talents of your company.

HRM is a universal business technique and can be employed on organisations that can assist with setting up a Ltd Company plus any other sort of business too.

Impact on Business

While this all sounds very interesting and significant, how does it actually impact on the daily functions of your business, and more importantly, how will it help to enhance the performance and profitability of your firm? The effect of HRM can be broken down into the following areas.

Recruitment & Training

This is probably the area of a business that is most associated with human resources – recruitment. Almost every business in the world, and especially companies that are growing, have to recruit people to work for them. Either existing employees have left, or new possibilities have arisen which mean there are jobs that must be filled. HRM can make sure your recruitment process gets the right people into the right jobs 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. Whether it is a new piece of legislation or a new bit of technology that changes the industry, there is an on-going need to keep your company up-to-date and ready to make use of any opportunity.

You may also find that the expensive practice of external recruitment can be avoided if your company has sufficient training facilities in place. It is far easier to train 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 straight to a higher level. This approach can be applied at almost every level of management within your business.

Employee Relations

When you have the right people working for you it is important to keep them doing work for you, and to make sure they are doing a decent job. This can be accomplished by means of good employee relations. The most obvious employee relations practice is the art of motivation – a wide topic itself – but other worker relations issues may include disciplinary and grievance management. All of these things are an important part of the overall HRM picture.

Finances

You can’t keep employees at your organisation by good motivational methods alone. They will want to be paid a fair amount and on time. Payroll should be one of the very first systems that is developed when you start a business, but they still need to be maintained and updated when personnel join, leave or change pay grade.

Industrial Relations

Several firms will have to work with trade union or other workers rights establishments 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 organisation who can communicate comfortably with them whilst keeping the interests of your own organisation in mind at the same time. The demand for good industrial relations is far more prevalent in public sector organisations.

Among the simplest ways to tell if international business companies have excellent employee relations is to ask present staff if they are content in their work.

Workforce Planning

We have seen the impact that human resource management can have on a business and generally it seems like good HRM will have a positive effect on any organisation. As a rule, this is the case, but good HRM doesn’t just occur overnight.

One way to implement HRM ideas to your business is through workforce planning – a process that has the goal of making sure your workforce can complete the upcoming tasks required for your company to be successful. It can be defined as:

Definition

Workforce planning is the method of anticipating in advance the human resource needs of any enterprise, both in terms of the number of employees necessary and the proper skill mix. Recruitment and training procedures are devised with a long term emphasis in order to make sure that the company is able to operate without being limited by a lack of appropriate labour. Workforce planning can be broken down into four main areas; requirements, recruitment, selection, and training and development.

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 suffers from seasonal fluctuations in workforce then your workforce planning has to take these variables into consideration.

Recruitment

Whether you are hiring people externally or from within your existing workforce you still want to find the correct person to fill the position. As part of your workforce planning you ought to draw up a job description that describes the job 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 procedure can be as involved or as simple as you deem necessary. Outside of standard job interviews there are a number of ways you can learn about about candidates for your jobs, including aptitude tests, group interviews and even psychometric testing. These sophisticated 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 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 usually quicker and more cost effective than external recruitment.

An on-line marketing campaign should concentrate on specific phrases, for example setting up business , that concentrate the efforts of all your marketing workers.

Workforce Motivation

It almost goes without saying that properly motivated workers are going to produce a better standard of work and have a greater quantity of production than unhappy workers. This improved work rate will inevitably lead to a rise in the profitability of a company. Yet motivation is still a bit of taboo topic amongst some managers.

Essentially, all motivational tactics 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 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 approach or the stick strategy will generally depend on your own management style, as well as the business you work in and the type of individuals that you hire.

Financial

The most common financial motivators are payment schemes. You can pay workers in numerous different ways, either a fixed amount for a set service, by an hourly or daily rate, or a rate linked to production, such as a commission structure.

Another financial motivation technique involves what are called incentive schemes, where 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. Once again, the motivating factor here is the money alone.

Non-financial

Many human resource advocates have their own thoughts about the different elements that motivate people to do the job, although these are often seen as a bonus to a worker. It is widely acknowledged that income is the key motivational factor for the vast majority of people. If you want to learn more about these theories I would recommend looking up the work of Elton Mayo, Abraham Maslow and Fredrick Herzberg.

The Changing Face of HRM

As previously mentioned, HRM is a flexible tool that is there to match the characteristics of your workforce to the goals of your business. 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 law 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 staff is performing to its maximum level then your HRM system should be adaptive enough to cope with an ever-changing economy. After all, what might seem like a danger to many will often appear as an opportunity to a good entrepreneur.