Web Profits Blog

Introduction

Human Resource Management, or HRM for short, is one of the most important factors in running a prosperous company, though it is not always handled with the time and focus that it deserves. To completely understand what HRM is and its impact on the success or failing of a business, we first must know what it means.

The purpose of Human Resource Management is to recruit, develop and utilise the staff within an organisation 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” though that would be an over-simplified assertion that doesn’t echo the real nature and range of HRM. HRM describes all of the strategies and processes that are involved in making certain that all members of staff in a business are pulling in the same direction, and much more significantly, in the right direction.

At its center, HRM combines three primary elements that are fundamental to the productive output of the staff. These factors 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 could even be used to adjust the structure of those levels of management as well.

Why is it Necessary?

Quite simply, businesses don’t work without employees. As a result, 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 impact on every level of your business activities with various 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 inside your business, which are much more intangible aspects but are important nonetheless. Bad HRM practice in these less visible domains can have a damaging impact on your organisation but go unnoticed for long intervals.

It also goes without saying that each business is unique and will have a unique set of challenges 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.

HRM is a general business technique and might be applied to firms that can assist with setting up a company plus any other type of enterprise too.

Impact on Business

While this all sounds 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 company?

Recruitment & Training

This is most likely the part of a company that is most affiliated with human resources – recruitment. Nearly every company in the world, and particularly companies that are expanding, need to recruit people to work for them. Either existing employees have left, or new opportunities have arisen which mean there are roles 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’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. Whether it is a fresh piece of legislation or a new piece of technology that changes the marketplace, there is an on-going need to keep your organisation up-to-date and prepared 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 find that the expensive process of external recruitment can be averted if your company has adequate training facilities in place. It is far easier to train an existing employee to a higher level and then use outside recruitment to fill the gap remaining at the lower level than it is to hire directly to a higher level. This approach can be applied at almost every grade of management inside your business.

Employee Relations

Once you have the right people working for you it is necessary to keep them doing work 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 practice is the art of motivation – a broad topic itself – but other employee relations issues can include disciplinary and grievance management.

Finances

You can’t keep employees at your organisation by good motivational methods only. They will want to be paid a fair amount and on time. Payroll ought to be one of the primary systems that is developed when you launch a business, but they still need to be maintained and updated when staff join, leave or switch pay grade. Poor management of your payroll program can quickly lead to disaster in terms of your workforce.

Industrial Relations

Several firms will have to deal with trade union or other workers rights establishments which can be very forceful when defending the interests of their members. When interacting with such bodies it is advantageous to have individuals within your company who can connect comfortably with them whilst keeping the interests of your own organisation in mind at the same time.

Regardless of the industry they trade in, anytime any offshore bvi looks to expand they have to use recruitment to expand its current workforce.

Workforce Planning

We have seen the effect 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 organisation. As a rule, this is the case, but good HRM does not just occur overnight.

One way to apply HRM concepts to your business is via workforce planning – a process that has the aim of making sure your staff can finish 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 enterprise, both in terms of the number of employees necessary and the proper 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. Workforce planning can be broken down into four main areas; requirements, recruitment, selection, and training and development.

Requirements

Analysing your workforce requirements 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, for example in the tourism industry, or suffers from seasonal fluctuations in workforce then your workforce planning has to take these variables into consideration. Also bear in mind any upcoming retirements or intervals of maternity/paternity leave or you could experience a shortage of qualified personnel.

Recruitment

Whether you are hiring people externally or from within your existing workforce you still need to find the correct person to fill the position. As part of your workforce planning you ought to draw up a job description that details the role that will be undertaken as well as a person specification which will give an indication of the kind of individual that would be a perfect fit for the job and your business.

Selection

The selection procedure can be as involved or as simple as you deem necessary. Outside of 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 quality of worker within your company. Workforce planning can use training to fill upcoming gaps in the skill set of your workforce which is commonly faster and more cost effective than external recruitment.

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Workforce Motivation

It almost goes without saying that properly motivated workers are going to deliver a better standard of work and have a higher quantity of production than unhappy workers. This improved work rate will undoubtedly lead to a rise in the profitability of a company. Yet motivation remains a bit of taboo subject amongst some managers.

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 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!

Whether you use the carrot strategy or the stick strategy will generally depend on your own management approach, as well as the business you work in and the type of people that you hire. Irrespective of your approach, motivational factors can be broken down into a further two groups; financial and non-financial motivators.

Financial

The most common financial motivators are payment plans. You can pay staff in numerous different ways, either a fixed amount for a fixed service, by an hourly or daily fee, or a rate linked to production, such as a commission scheme. Whichever method is employed, the workforce is motivated to work because they will receive money for doing so.

Another financial motivation method involves what are known as 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 grades 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 an added bonus to an employee. It is broadly acknowledged that income is the critical motivational factor for the vast majority of people.

The Changing Face of HRM

As previously mentioned, HRM is a versatile application that is there to match up the characteristics of your workforce to the objectives of your business. As such, it has had to keep adapting to a business climate that is constantly changing for one reason or another. Furthermore, it is a good idea to continuously evaluate your own HRM procedures and not to rest on your laurels.

Maybe there is a new piece of government law that may have an impact of how your business can carry out its trading, or maybe a fresh manufacturing technology will come along that will revolutionise your sector. Either way, if you want to make certain that your staff is performing to its optimum level then your HRM strategy should be flexible enough to cope with an ever-changing economy.