Making The Best Use Of HR

Introduction

Human Resource Management, or HRM for short, is one of the most critical elements in running a successful business, though it is not always treated with the time and focus that it deserves. To fully understand what HRM is and its influence on the success or failure of a business, we first need to know what it means. The following is a satisfactory 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 enterprise.

This basically translates to “using people in the company in the best way possible” though that would be an over-simplified assertion 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 company are pulling in the same direction, and much more significantly, in the right direction. Without having good human resource management a company will be spending energy on tasks that it may not directly benefit from.

At its core, HRM brings together three major elements that are essential to the productive output of the workforce. These elements include motivation, management and leadership, and organisational structures. As a result, HRM can be employed on all levels of management in your company, not just the shop floor workers, and it can even be used to modify the structure of those levels of management at the same time.

Why is it Necessary?

Put simply, businesses don’t run without employees. As such, some level of human resource management is needed for any business 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 various degrees of visibility. The most evident HRM tasks include the hiring and firing of employees as well as financial systems such as payroll. It can also impact on motivation and communication inside your business, which are much more intangible variables but are critical nonetheless. Bad HRM practice in these less visible arenas can have a negative impact on your organisation but go unnoticed for long periods of time.

It also goes without saying that every organisation is different and will have a unique set of challenges to face and opportunities to take advantage of. HRM can act as a versatile tool that translates workforce potential into financial gains and can adjust to fully utilise the strengths of your company. Without it, your competitors may be afforded the chance to prosper where you missed out.

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Impact on Business

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

Recruitment & Training

This is probably the area of a company that is most associated with human resources – recruitment. Nearly every company in the world, and particularly companies that are growing, need to recruit people to work for them. Either current employees have left, or new opportunities have arisen which mean there are jobs that must be filled. HRM can ensure 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 certain 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 bit of technology that alters the market, there is an on-going need to keep your business up-to-date and ready to take advantage of any opportunity.

You may also find that the expensive process of external recruitment can be avoided if your company has adequate training facilities in place. It is much easier to teach an existing staff member 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 level of management inside your company.

Employee Relations

Once you have the suitable people working for you it is necessary to keep them doing work for you, and to be sure they are doing a good job. This can be accomplished through good employee relations. The most evident employee relations practice is the art of motivation – a wide topic by itself – but other employee relations issues can 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 company by good motivational methods only. They’ll want to be paid a fair sum and on time. Payroll ought to be one of the first systems that is created when you launch a company, but they still need to be maintained and updated when staff join, leave or change pay grade.

Industrial Relations

Several firms will have to work 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 comfortably with them whilst keeping the interests of your own business in mind at the same time. The demand for good industrial relations is far more prevalent in public sector organisations.

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Workforce Planning

We have seen the effect that human resource management can have on a company and generally it seems like good HRM will have a positive effect on any organisation. As a rule, this is the case, but effective HRM does not just happen overnight. It should be planned according to the goals of the organisation and then carried out thoroughly.

One way to implement HRM concepts to your business is through workforce planning – a process that has the aim of making sure your workforce can finish the upcoming tasks required for your company to be successful.

Definition

Workforce planning is the method of anticipating ahead of time the human resource needs of any enterprise, both in terms of the number of employees necessary and the appropriate skill mix. Recruitment and training policies are designed with a long term focus in order to ensure that the organisation is able to operate without being limited by a shortage of appropriate labour. Workforce planning can be split into four main parts; requirements, recruitment, selection, and training and development.

Requirements

Analysing 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, for example in the tourism industry, or suffers from seasonal fluctuations in staff levels then your workforce planning needs to take these variables into consideration. Also bear in mind any approaching retirements or periods of maternity/paternity leave or you could suffer from a shortage of qualified employees.

Recruitment

Whether you are recruiting externally or from within your existing workforce you still need to find the right person to fill the role. As part of your workforce planning you should draw up a job description that describes the role that will be carried out as well as a person specification which will give an indication of the type of individual that would be a perfect fit for the job and your company. By mixing and prioritising the elements of these two descriptions you will be able to identify the ideal job candidate.

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 may not be relevant to all workforce planning projects but are an alternative to organisations.

Training & Development

The primary goal of staff training and development is to develop a much better quality of worker within your organisation. Workforce planning can use training to plug upcoming gaps in the skill set of your workforce and is usually quicker and more economical than external recruitment.

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Workforce Motivation

It practically 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 work rate will inevitably lead to a rise in the profitability of a business. 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 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 remains relevant to companies today.

Whether you use the carrot strategy or the stick strategy will largely depend on your own management approach, as well as the industry you work in and the type of people that you employ. Irrespective of your approach, motivational factors can be separated into a further two sets; 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 set service, by an hourly or daily rate, or a rate linked to production, such as a commission scheme.

Another financial motivation technique involves what are called incentive schemes, where by additional financial rewards are given out for good overall performance. This may include commission beyond 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 theorists have their own ideas about the other factors that motivate people to work, although these are often seen as an added bonus to an employee. It is broadly acknowledged that money is the key motivational factor for the great majority of people.

The Changing Face of HRM

As previously mentioned, HRM is a flexible application that is there to match the characteristics of your workforce to the goals of your organisation. As such, 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 will have an effect of how your business can carry out its trading, or maybe a fresh manufacturing technology will come along that can revolutionise your industry. Either way, if you want to make sure that your workforce is performing to its optimum level then your HRM system should be flexible enough to cope with an ever-changing economy.