Basics of Human Resource Management (HRM)

Human Resource Management (HRM) is all about managing people who in the business are the most important asset. It is the strategic approach to the effective management of the organization’s workers.

Human Resource Management (HRM) is the management function of using and developing people within a business to meet its business objectives. It refers to that part of an organization’s activities designed to attract, recruit train, develop, evaluate and maintain an effective workforce that they help the business gain a competitive advantage.

From personnel management to Human Resource Management (HRM)

Human Resource Management (HRM) is a relatively new term and has only come into use over the last 20-30 years. Traditionally, the function of dealing with employees was described as personnel management. Many organizations, in fact, continue to use this term.

In many cases, Human Resource Management (HRM) and personnel management are used to mean the same thing. For example, some organizations which continue to use the term personnel department describe its work as managing the human resources of the organization.

However, in fact, Human Resource Management (HRM) as the management function has developed from the work of traditional personnel departments. These personnel departments used to be responsible for just the recruiting, training, discipline and welfare of staff. But, they tended to be bureaucratic with an inflexible approach to employee issues and focused only on recruitment, selection and discipline of the workers rather than development and training. Also, they were reluctant to coordinate any Human Resources (HR) with other departments nor represented at board of directors’ level, hence not a part of the strategic management team.  

Therefore, despite this, modern Human Resource Management (HRM) must be seen as different from Personnel Management in two aspects:

Strategic. Human Resource Management (HRM) takes a more strategic view than personnel management. It is concerned with making sure that the management of people fits in with the strategic objectives of an organization and, like all other departments is also involved with deciding what the organization’s strategy should be. For example, in the past, personnel departments often played no part in deciding strategic objectives.
Integrated. Human Resource Management (HRM) is more integrated than personnel management. It is responsible for bringing together all the elements of managing human resources and making sure that they fit together in a coherent way. Traditionally, the various elements undertaken by a personnel department were seen as separate tasks. As a result, they were often carried out in isolation. For example, new employees would be recruited without any consideration being given to their future training and development.

Overall, Human Resource Management (HRM) differs from personnel management in that it takes a much more strategic and integrated approach, although the activities it performs are much the same. This is why the terms are often used interchangeably.

Purpose of modern Human Resource Management (HRM)

No matter what the size or objectives of a business organization are, the most valuable resource it possesses is always its workforce. It is because without workers who are both efficient and effective, the long-term success of a firm cannot be assured.

The main purpose of Human Resource Management (HRM) is to recruit, train and use the employees of a business organization in the most productive way, so that they can help the firm to achieve its objectives effectively and efficiently.

Recruitment is the process of hiring suitable workers. This applies to all human resource of an organization – its entire workforce – from the managing director to part-time cleaners. It is because each person who is employed by the company must perform specified functions which play their small parts in the overall success or failure of an organization.

Consequently, Human Resource Management (HRM) aims to hire capable, flexible and committed people as well as manage and reward their performance, so they can develop their key knowledge and skills to the benefit of the entire organization.

Roles of Human Resource Management (HRM)

The human resources, or people, who are employed by a business organization work to generate wealth through the production of goods the provision of services that are sold to customer.

Organization’s policies and strategies for managing its human resources in a way that will satisfy both the objectives of the organization and the objectives of the human resources must be devised and implemented appropriately.

Therefore, the Human Resource Management (HRM) department is likely to fulfill a number of different roles:

Executive role. Here, the Human Resource Management (HRM) department is seen as the ‘expert’ in matters relating to Human Resource Management (HRM) and makes decisions about what should be done in this area. For example, the Human Resource Management (HRM) department will ensure that organizational policies are developed in line with legal requirements, will decide to produce information booklets on training, etc.

Audit role. In this capacity, the Human Resource Management (HRM) department monitors organizational activities to ensure that Human Resource Management (HRM) policies are being properly implemented by all concerned.

Facilitator role. This role requires the Human Resource Management (HRM) department to facilitate the work of other managers in the organization and help them to acquire and use the skills, techniques and attitudes that they need to make sure that Human Resource Management (HRM) policies are implemented throughout the organization. For example, team leaders could be given training to help them respond to, and deal with, complex relationships between team members that may involve Human Resource Management (HRM) issues such as grievances, equal opportunities, human resource planning, etc.

Consultancy role. In this role, the Human Resource Management (HRM) department provides advice and guidance to managers at all levels on matters to do with the management of people.

Service role. This requires the Human Resource Management (HRM) department to be the provider of useful information on Human Resource Management (HRM) matters. This is most important in times of change when the organization needs to make sure that it is up to date with what is happening. For example, with changes in legislation on issues like equal opportunities, or with developments in Human Resource Management (HRM) practice or 360-degree feedback.

People are important to a business organization as they add value to its output. It is the responsibility of the Human Resource Management (HRM) department to take time and care to secure and retain the human resources that are required. So, productivity (output per worker) can be increased, quality can be improved, better customer service can be offered to enhance the overall purchasing experience of customers, new ideas can be generated for Research and Development (R&D), etc.

Functions of Human Resource Management (HRM)

Human Resource Management (HRM) covers a range of activities related to employees that are broader and more far-reaching in scope with a focus on interrelated roles, such as:

Workforce planning. Also known as human resource planning is about planning the future workforce needs and staffing requirements of the entire business.
Recruitment, selection and induction of new employees. Hiring appropriate employees and introducing new staff into the business.
Employment contracts. Deciding on employment contracts and preparing contracts of employment for all employees and deciding on how flexible these should be permanent or temporary, full-time or part-time.
Training employees. Developing workers at every stage of their careers by offering onsite and offsite training opportunities, so they can reach their best performance.
Performance management and staff appraisals. Measuring, monitoring and improving employee performance to conduct staff appraisals. Looking after the welfare and well-being of employees in order to maintain professional employee relations.
Incentive systems. Reviewing pay and remuneration packages to develop appropriate pay systems and other incentives for different categories of employees. Monitoring and improving employee morale and welfare including giving quick advice and providing extended guidance. Development and monitoring of policies and procedures relating to human resources. Administering appropriate disciplinary and grievance procedures in case of problems.
Ensuring HRM operates across the business. Involving all managers in the development of their employees emphasizing that this is not just a Human Resource Management (HRM) responsibility. Development and monitoring of policies and procedures relating to human resources, e.g. discipline, grievance, appraisal, health and safety, terms and conditions of employment. Implementing Human Resource Management (HRM) policy, e.g. equal opportunities. Line managers are expected to be aware of all legal requirements affecting Human Resource Management (HRM)).

In modern business management, an important function of the HR department’s is deciding on the most appropriate HR strategy towards employment.

Activities of Human Resource Management (HRM)

The range and nature of the skills and specializations available within the Human Resource Management (HRM) function of an organization depend on a number of factors such as size of the business, nature of the labor force employed, status of the Human Resource Management (HRM) department, value and expectations of senior management, etc.

While businesses have specialist Human Resource Management (HRM) department, the management of the human resources of the organization is not carried out solely by the Human Resource Management (HRM) department, but also by line managers. They undertake a range of Human Resource Management (HRM) activities having responsibility for the workforce as they work closely with them on a day-to-day basis.

Hence, the Human Resource Management (HRM) function can be seen operating at three different levels of management – strategic, tactical and operational. Let’s take a look at each of these levels in details:

1. Strategic activities. Strategic activities are concerned with long-term planning. In order to achieve corporate objectives it will be necessary to:

Formulate personnel policies that clearly state how things will be done across the organization as a whole.
Devise guidelines for the implementation of policy.
Ensure that the work of the Human Resource Management (HRM) department helps to achieve corporate goals, i.e. defining corporate culture, cultivating and communicating this culture to employees, etc.

2. Tactical activities. Tactical activities refer to the provision of attainable pathways which when followed will enable an organization to achieve its strategic objectives. Specifically, tactical activities include:

Human Resource (HR) planning.
Recruitment of particular groups of staff.
Staff training and development.
Promoting effective industrial relations.

3. Operational activities. Operational activities refer to the ways in which policy is implemented on a day-to-day basis. For example, in order to implement a tactical activity such as a program for staff training and development, it may be necessary to carry out the following operational activities:

Identify what the training needs are.
Invite employees to indicate their willingness to participate in training.
Select the most suitable applicants.
Arrange absence cover for trainees.
Develop training materials and deliver these.

Therefore, Human Resource Management (HRM) is a central component in the duties of all managers irrespective of their job title or functional responsibility. The extent of these varies between organizations, but examples of Human Resource Management (HRM) activities that line managers might undertake are fairly similar between different businesses.

Different types of Human Resource Management (HRM)

Some business analysts use these two terms to define two extreme types of Human Resource Management (HRM):

A. Hard Human Resource Management (HRM). This approach to managing workforce focuses on developing only core workers who are the key to the business’s future success. So, only they should be developed, trained and motivated in ways that will greatly increase the chances of them having high morale and a keen desire to stay with the business. Peripheral workers such as those with temporary and part-time employment contracts are viewed as less important; hence the business could be able to cope with losing. Peripheral workers are offered maximum flexibility, but with minimum training costs.

In fact, companies save money (cut costs) on peripheral workers in the short term. This seems unfair and unethical as workers are treated as ‘them and us’ possibly leading to demotivation caused by little job security, lower productivity, therefore profitability, as well as negative consumer and pressure group actions against the company. In the long-term, this could increase recruitment and induction training costs as temporary and part-time workers have to be frequently recruited.

Hard Human Resource Management (HRM) ignores the research findings of motivation theories as workers are not offered job security, esteem, self-actualization or job enrichment.

B. Soft Human Resource Management (HRM). This approach to managing workforce focuses on developing all employees who are the key to the business’s future success. So, they can reach their full potential, are motivated to work hard and reach self-fulfillment and will stay with the business for a long time. Both core workers and peripheral workers are viewed as equally important; hence the business could not be able to cope with losing.

Companies do not save money (cut costs) on either of their workers. This seems fair and ethical as workers are treated equally possibly leading to motivation caused by high job security, higher productivity, therefore profitability, as well as positive consumer and pressure group response towards the company. In the long-term, this could decrease recruitment and induction training costs as there are much less workers that need to be frequently recruited.

Soft Human Resource Management (SRM) considers the research findings of motivation theories as workers are offered job security, esteem, self-actualization or job enrichment.

Summary

Attitudes to managing people have greatly changed since the early years of the 20^th century when mass production was first introduced. Factories were hiring and firing workers on daily basis without providing any training or staff development. However, these days this kind of approach towards Human Resource Management (HRM) has changed.

Modern Human Resource Management (HRM) has been developed not just in response to increasing legal constraints on how workers are treated. But, also as a recognition that a truly successful and competitive business depends on the efficiency, flexibility and motivation of some of its most important assets – the workforce who are the people who work for a business.