Introduction
Human Resource Management, or HRM for short, is one of the most important elements in running a successful business, though it is not always handled with the time and emphasis that it deserves. To fully understand what HRM is and its impact on the success or failure of a company, 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 suitable to accomplishing the aims and objectives of the organisation.
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 true nature and range of HRM. HRM describes all of the techniques and processes that are involved in making certain that all members of staff in a company are pulling in the same direction, and much more significantly, in the right direction. Without good human resource management a business will be spending energy on jobs that it may not directly benefit from.
At its center, HRM combines three primary elements that are essential to the productive output of the workforce. These factors include motivation, management and leadership, and organisational structures. As a result, HRM can be applied to all levels of management within your organisation, not just the shop floor staff, and it can even be used to alter the structure of those levels of management as well. It is a wide-ranging subject that is explained in greater detail in this article.
Why is it Necessary?
Put simply, businesses don’t work without workers. As such, 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 realise exactly how HRM affects the every day working of your company you will surely be using some sort of HRM in order to keep trading.
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 staff as well as financial systems such as payroll. It may also impact on motivation and communication within your company, which are far more intangible aspects but are crucial nonetheless. Inadequate HRM practice in these less visible arenas can have a damaging impact on your organisation but go undetected for long periods of time.
It also goes without saying that every organisation is different and will have a specific set of issues to face and opportunities to take advantage of. HRM can work as a versatile tool that converts workforce power into financial profits and can adapt to fully utilise the talents of your firm. Without it, your rivals could be afforded the chance to prosper where you missed out.
My business specialise in offering offshore service around the world and need to handle a large staff.
Impact on Business
While this all appears very interesting and important, how does it actually influence 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. Nearly every company in the world, and particularly 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 need to be filled. HRM can make sure your recruitment system gets the right people into the right roles at a cost-effective price.
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. Regardless of whether it is a fresh piece of legislation or a new bit 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.
You may also find that the expensive practice of external recruitment can be averted if your company has adequate training facilities in place. It is far easier to train an existing staff member to a higher level and then use external recruitment to fill the gap left at the lower level than it is to recruit directly to a higher level. This approach can be applied at almost every grade of management within your business.
Employee Relations
Once you have the suitable people working for you it is important to keep them working for you, and to make certain they are doing a good job. This can be achieved via good employee relations. The most evident employee relations exercise is the art of motivation – a wide 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 strategy.
Finances
You can’t keep employees at your company by good motivational techniques 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 business, but they still need to be maintained and updated when staff join, leave or change pay grade. Incorrect management of your payroll program can rapidly lead to catastrophe in terms of your workforce.
Industrial Relations
Many companies will have to deal with trade union or other workers rights organisations which can be incredibly forceful when protecting the interests of their own members. When interacting with such bodies it is beneficial to have people within your organisation who can connect effectively 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 firms.
Regardless of the industry they operate in, anytime a offshore bvi seeks to expand it must use recruitment to expand its existing workforce.
Workforce Planning
We have seen the effect that human resource management can have on a company and generally it looks like good HRM will have a beneficial effect on any business. As a rule, this is the case, but good HRM does not just occur overnight. It should be designed according to the objectives of the company and then carried out thoroughly.
One way to implement HRM concepts to your company is through workforce planning – a process that has the goal of making sure your staff can complete the upcoming tasks needed for your company to be successful.
Definition
Workforce planning is the process of anticipating ahead of time the human resource requirements of any organisation, both in terms of the number of employees needed and the proper skill mix. Recruitment and training procedures are devised with a long term emphasis in order to make sure that the organisation is able to function without being limited by a lack of appropriate labour.
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 changes in demand, for example in the tourism industry, or suffers from seasonal fluctuations in workforce then your workforce planning needs to take these factors into consideration.
Recruitment
Whether you are hiring people externally or from inside your existing workforce you still need to find the correct individual to fill the role. As part of your workforce planning you ought to 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 type of person that would be a perfect fit for the job and your company. By mixing and prioritising the components of these two descriptions 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. Beyond standard job interviews there are several ways you can learn about about candidates for your jobs, including aptitude tests, group interviews and even psychometric testing.
Training & Development
The primary goal of staff training and development is to produce a better standard of worker in your business. Workforce planning can use training to plug upcoming gaps in the skill set of your staff and is commonly faster and more cost effective than external recruitment.
HRM can help communication in your business in order to ensure that all staff recognise that offshore incorporations are actually the primary words that define your on-line marketing push.
Workforce Motivation
It almost goes without saying that well motivated workers are going to produce a better standard of work and have a higher quantity of production than unsatisfied workers. This improved working rate will undoubtedly lead to an increase in the profitability of a business. Yet motivation remains a bit of taboo subject among some managers.
Essentially, all motivational practices can be separated into two sets that are often called the “carrot and stick” approach to motivation. The analogy relates to the two ways to make a donkey carry your belongings, either by tempting it with a carrot, or threatening it with a hit from a stick!
Whether you use the carrot strategy or the stick approach will generally depend on your own management approach, 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 groupings; financial and non-financial motivators.
Financial
The most common financial motivators are payment plans. You can pay workers in numerous different ways, either a set amount for a fixed service, by an hourly or daily rate, or a rate related to production, such as a commission structure. Whichever method is used, the workforce is motivated to work because they will get money for doing so.
Another financial motivation technique involves what are called 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 providing a share of company profits. Once again, the motivating aspect here is the money alone.
Non-financial
Several human resource advocates have their own thoughts about the different elements that motivate people to work, although these are often seen as a bonus to a worker. It is widely acknowledged that money is the critical 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 and Fredrick Herzberg.
The Changing Face of HRM
As previously mentioned, HRM is a versatile tool that is there to match up the features of your workforce to the objectives of your business. As a result, 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 will have an impact of how your company 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 ensure 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 danger to many will often appear as an opportunity to a shrewd entrepreneur.