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 handled with the time and focus 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 following is a good definition:
The purpose of Human Resource Management is to recruit, develop and use the personnel within an enterprise in the manner in which is most appropriate to accomplishing the aims and objectives of the organisation.
This basically translates to “using individuals in the business in the best way possible” although that would be an over-simplified assertion that doesn’t reflect the real nature and range of HRM. HRM describes all of the strategies and processes that are involved in making sure that all members of staff within a company are pulling in the same direction, and much more significantly, in the right direction.
At its core, HRM combines three primary elements that are essential to the productive output of the staff. These elements 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 at the same time.
Why is it Necessary?
Quite simply, businesses don’t operate without employees. As a result, some level of human resource management is necessary for any organisation to operate at all, let alone in an efficient and profitable manner. Even if you don’t appreciate exactly how HRM affects the everyday working of your enterprise you will certainly be using some sort 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 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 within your business, which are much more intangible variables but are critical nonetheless.
It also goes without saying that every organisation is unique and will have a different set of issues to face and opportunities to take advantage of. HRM can act as a versatile tool that translates workforce power into financial gains and can adjust to fully utilise the talents of your firm. Without it, your competitors may be afforded the chance to prosper where you missed out.
HRM is a universal business technique and could be employed on firms that organise the setting up a company plus almost any other sort of business too.
Impact on Business
While this all appears very interesting and significant, how does it actually influence the daily functions of your business, and more importantly, how will it help to boost the performance and success of your firm? The effect of HRM can be broken down into the following areas.
Recruitment & Training
This is most likely the part of a business that is most affiliated with human resources – recruitment. Nearly every company in the world, and particularly businesses that are expanding, have to recruit people to work for them. Either existing employees have left, or new opportunities 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 roles at a cost-effective price.
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 fresh piece of legislation or a new piece of technology that changes the industry, there is an on-going requirement to keep your company up-to-date and prepared to make use of any opportunity. There is an expression 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 practice of external recruitment can be avoided if your company has adequate training facilities in place. It is much easier to train an existing worker to a higher level and then use outside recruitment to fill the gap remaining at the lower level than it is to recruit straight to a higher level. This approach can be used at almost every level of management inside your company.
Employee Relations
When you have the right men and women working for you it is important to keep them doing work for you, and to make sure they are doing a good job. This can be accomplished through good employee relations. The most evident employee relations exercise is the art of motivation – a broad topic itself – but other worker relations issues can include disciplinary and grievance management.
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 must 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
Numerous companies will have to deal 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 company in mind as well.
It is critical to keep in mind that every single offshore ltd firm is different and their own strengths and weaknesses should be taken into consideration in any HRM plan.
Workforce Planning
We have seen the impact that human resource management can have on a business and overall it looks like good HRM will have a beneficial effect on any company. As a rule, this is the case, but good HRM does not just happen overnight. It should be planned according to the goals of the organisation and then performed thoroughly.
One way to apply HRM concepts to your company is through workforce planning – a system that has the aim of making sure your staff can finish the upcoming tasks required for your company to be successful. It can be defined as:
Definition
Workforce planning is the process of anticipating in advance the human resource needs of any enterprise, both in terms of the number of employees needed and the appropriate skill mix. Recruitment and training procedures are designed with a long term emphasis in order to make sure that the organisation is able to operate without being limited by a lack of appropriate labour. Workforce planning can be split into four main parts; requirements, recruitment, selection, and training and development.
Requirements
Evaluating your workforce demands is essential 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 factors into consideration. Also bear in mind any upcoming retirements or periods of maternity/paternity leave or you could experience a shortage of qualified workers.
Recruitment
Whether you are hiring people externally or from inside your existing workforce you still want to find the correct person to fill the role. 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 sort of person that would be a perfect fit for the job and your company. By combining and prioritising the components of these two documents you will be able to recognise the ideal job candidate.
Selection
The selection procedure can be as involved or as simple as you deem necessary. Outside of standard job selection interviews there are numerous ways you can learn about applicants for your jobs, including aptitude tests, group interviews and even psychometric testing.
Training & Development
The primary goal of staff training and development is to develop a better quality of worker within your business. Workforce planning can use training to plug upcoming gaps in the skill set of your workforce which is usually quicker and more economical than external recruitment. Training and development may also go some way towards motivating your staff.
Before spending large sums of cash upon a ready made company procurement project analysis ought to be done on the competition and consumers within that market.
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 inevitably lead to an increase in the profitability of a business. Yet motivation remains a bit of taboo topic amongst some managers.
Essentially, all motivational tactics can be separated into two models that are often called the “carrot and stick” approach to motivation. The analogy refers to the two ways 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 dated idea but the basic principle is still relevant to companies today.
Whether you use the carrot strategy or the stick approach will generally depend on your own management approach, 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 a number of 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 known as incentive schemes, where by additional financial rewards are handed out for good performance. This may include commission beyond a fixed salary, performance-related pay levels or even offering a share of company profits.
Non-financial
Many 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 broadly acknowledged that income is the key motivational factor for the vast 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 stated, HRM is a versatile tool that is there to match the characteristics of your workforce to the objectives of your organisation. As such, it has had to keep changing to a corporate climate that is constantly changing for one reason or another.
Maybe there is a new piece of government legislation that will 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 industry. Either way, if you want to make certain that your staff is performing to its highest level then your HRM strategy should be flexible enough to cope with an ever-changing world.






