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 emphasis 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 function of Human Resource Management is to recruit, develop and utilise the workers within an enterprise in the manner in which is most appropriate to achieving the aims and objectives of the organisation.
This essentially translates to “using people in the business 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 methods and processes that are involved in making certain that all members of staff within a business are pulling in the same direction, and more importantly, in the right direction.
At its center, HRM combines three major elements that are essential to the productive output of the workforce. These elements include motivation, management and leadership, and organisational structures. Consequently, HRM can be employed on all levels of management in your company, not just the shop floor staff, and it may 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 workers. As such, some level of human resource management is required for any organisation 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 varying degrees of visibility. The most apparent HRM tasks include the hiring and firing of employees as well as monetary systems such as payroll. It can also impact on motivation and communication within your company, which are much more intangible factors but are crucial nonetheless.
It also goes without saying that each business is unique and will have a unique set of issues to face and opportunities to take advantage of. HRM can work 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 rivals might be afforded the chance to prosper where you missed out.
HRM approaches can encourage a friendly working environment for One firm I know about that are specialists in new offshore formation constantly put employee inspiration near the top of their priority checklist.
Impact on Business
While this all appears very interesting and important, how does it actually influence the daily operations of your company, and more importantly, how will it help to boost the performance and profitability of your company?
Recruitment & Training
This is most likely the area of a company that is most affiliated with human resources - recruitment. Nearly every company in the world, and especially businesses 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 have to be filled.
It is 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. Whether it is a new piece of legislation or a new bit of technology that changes the marketplace, there is an on-going requirement to keep your company up-to-date and ready to take advantage of any opportunity.
You may also find that the costly practice of external recruitment can be avoided if your organisation has sufficient training facilities in place. It is much easier to train an existing worker 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 important to keep them working for you, and to make sure they are doing a decent job. This can be achieved by means of good employee relations. The most obvious employee relations exercise is the art of motivation - a broad topic itself - but other worker relations issues can include disciplinary and grievance management. All of these things are an important part of the overall HRM picture.
Finances
You cannot 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 taken care of and updated when staff join, leave or switch pay grade.
Industrial Relations
Many companies will have to deal with trade union or other workers rights organisations which can be very forceful when defending the interests of their members. When interacting with such bodies it is advantageous to have people within your company who can communicate effectively with them whilst keeping the interests of your own business in mind as well.
It is important to remember every single offshore ltd company is different and their strengths and weak points must be considered in any HRM plan.
Workforce Planning
We have seen the impact that human resource management may have on a business and on the whole it seems like good HRM will have a positive effect on any company. As a rule, this is the case, but effective HRM doesn’t just occur overnight. It should be planned according to the goals of the company and then carried out thoroughly.
One way to apply HRM concepts to your business is through workforce planning - a system that has the aim of making sure your workforce can complete the upcoming tasks needed for your business to be successful.
Definition
Workforce planning is the process of anticipating in advance the human resource requirements of any organisation, both in terms of the number of employees required and the proper skill mix. Recruitment and training procedures are designed 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.
Requirements
Evaluating your workforce requirements is essential to the proper planning of your workforce in the short-term and long-term future. If your company 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 recruiting externally or from inside your existing workforce you still want to find the right individual to fill the position. As part of your workforce planning you should draw up a job description that details the job that will be undertaken as well as a person specification which will give an indication of the kind of individual that would be a good fit for the job and your organisation. By mixing and prioritising the elements of these two documents you will be able to identify the ideal job candidate.
Selection
The selection process can be as involved or as easy as you deem necessary. Over and above standard job selection interviews there are a number of ways you can learn about 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 within your company. Workforce planning can use training to plug upcoming gaps in the skill set of your workforce which is generally faster and more economical than external recruitment. Training and development may also go some way towards motivating your staff.
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Workforce Motivation
It almost goes without saying that properly motivated employees are going to deliver a better standard of output and have a higher quantity of output than unhappy workers. This improved working rate will undoubtedly lead to a rise in the profitability of a company. Yet motivation is still a bit of taboo topic among some managers.
Essentially, all motivational tactics 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 belongings, either by tempting it with a carrot, or threatening it with a strike from a stick! It is a relatively old idea but the principle is still relevant to companies today.
Whether you use the carrot approach or the stick approach will largely depend on your own management approach, as well as the business you work in and the type of individuals that you employ.
Financial
The most common financial motivators are payment plans. You can pay workers in many different ways, either a fixed amount for a set service, by an hourly or daily rate, or a rate related to production, such as a commission scheme. Whatever method is used, the workforce is motivated to work because they will get money for doing so.
Another financial motivation method involves what are known as incentive schemes, where by additional financial rewards are given out for good 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 advocates have their own thoughts about the other 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.
The Changing Face of HRM
As previously stated, HRM is a versatile application that is there to match the features of your workforce to the goals of your business. As such, it has had to keep changing to a corporate 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 business can carry out its operations, or maybe a fresh manufacturing technology will come along that will revolutionise your sector. Either way, if you want to make certain that your workforce is performing to its highest level then your HRM system should be flexible enough to cope with an ever-changing world. After all, what may seem like a threat to most will often appear as an opportunity to a shrewd entrepreneur.
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