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Definition of HRM
The initial definition of Human Resource Management is that it is the action of managing people in organisations in an organised and thorough manner. This covers the duties of hiring employees, performance management, change management retention of staff, pay and perks setting and management and taking care of departures from the business (Management study guide).
One may also define HRM as a tool which includes the management of people in organisations from a larger scaled perspective. In other words, this means the managing of people in the form of a direct correlation between management and employees. This approach focuses on the objectives and outcomes of the Human Resource Management obligation. It is fundamental that the human resource role in contemporary organisations is involved with the concept of employee facilitating, staff development and an emphasis on making the “employment relationship” acceptable for both the management and employees.
The key difference is HRM in recent times is about fulfilling management objectives of providing and employing people to help achieve the overall goal of the firm. There is a greater emphasis on planning, monitoring and control.
Human resource management, is the department of a business organisation that looks after the hiring, management and firing of staff. HRM focuses on the purpose of people within the business, ensuring best work practices are in place at all times.
Any large or mid-size business will have a human resource management department. When there is the need for employing more staff the HRM will source suitable applicants for the vacant position. If the business needs to reduce staff, the Human Resource Management will also conduct the redundancy process for the unwanted staff. The HRM also manages holiday time, sickness problems, bereavement absentee and other day to day staff problems without having to cause concern to senior management.
In the matter of a legal dispute with a member of staff, the Human Resource Management will deal with the issue. They will look after all aspects of the dispute and find in favour of one of the contributors involved. Where staff are in breach of their employment contract the HRM will get involved and handle a termination of the employee’s contract if necessary.
The HRM department ensures the efficient running of the staff within an organisation. This allows the management to focus on the running of the business, to achieve their own specific goals of the business and not get distracted by internal rows occupying employees.
In a smaller business, the HRM may be the responsibility of the manager. The work may take focus away from their daily job and in time, as the business grows, they may need to contemplate employing a HRM officer or else train an existing member of staff to take on the role.
Another job which is a part of the HRM role involves the training of staff in best operational practices but also in preparing staff for progressing within the organisation. This is a very important role. If the HRM was to fail by not retaining and continually training existing staff, an organisation may not grow according to what they wish to achieve. Experience is not easy to come by and having staff with the necessary skills already on board evades many problems in the future. It is economically more beneficial for a business to train existing staff rather than to source and train new members.
Human resource management also keep the business an enjoyable environment in which to work. Making staff and management conscious of employment law and good behaviour at work is part of every HRM department’s concern. They resolve disputes before they arise, remove staff that may not add to the overall morale of the organisation and facilitate between staff and management when problems do occur.
Since every organisation is made up of people, human resource management is all about obtaining services of people, motivating them to the optimum level, developing their skills and creating an atmosphere so that they continue to uphold their commitment towards the organisation.
In essence, HRM is involved employees from recruitment to retirement, in terms of management.
7 practices of HRM
The 7 Human Resource best practices presented below have been recommended by Jeffrey Pfeffer. Pfeffer wrote two books on this topic:
- Competitive Advantage through People (1994), and
- The Human Equation: Building Profits by Putting People First (1998)
In these books, he proposes a set of best procedures which can increase a company’s overall profit. When these best practices are merged, their impact on the business overall, is even more profound.
These best practices are:
- Employment security
- Selective hiring
- Self-managed and effective teams
- Contingent compensation
- Extensive training
- Reduction of status difference
- Information sharing
- Employment Security
The first best practice of human resource management, is employment security. There is a social contract amongst the organisation and its employees. The organisation asks employees to work, oblige to the organisation, and also to suggest their own personal ideas on behalf of the firm.
Employees will only act in this manner if they were to get something in return, for instance, employment security. It allows employees to go home and provide for themselves and their families, with a safe piece of mind that their job is secure. This concept of security is essential and reinforces almost everything HR does.
Job security is a guarantee to a member of staff that they will keep their job without the risk of becoming unemployed. They will have stability in employment and it may be from the terms of a contract of employment, collective bargaining agreement, or labour legislation that prevents suggestive termination.
Employment security is also beneficial for organisations because it helps them hold onto their employees. When staff are laid off, for example, it’s usually the organisation that pays the price of the dismissal. It is the business who are the ones who have invested in the selection, training, and development of these employees, whilst also taking time to accommodate this individual. This is a costly process. If the organisation doesn’t work on holding onto its people, they are more likely to leave the firm, and find work where they will be treated to their liking.
Employees who settle into a position are highly expected to achieve long-term career goals, better locate themselves financially, and gain much sought-after skills and experience, that appeal to future employers. All these elements provide necessary reminders about the worth of striving for job security.
2. Selective hiring
The second best practice of human resource management is selective hiring. This allows an organisation to bring in employees who compliment the organisation. You can’t just hire anybody; you want people who are suitable for the job. Companies try their utmost best to hire incomparable people because they add the most value to the business, while helping the corporation grow.
The selection is the method of choosing the most suitable candidate for the vacant position in the organisation. In other words, selection means clearing out unsuitable applicants and selecting those optimistic employees with the necessary qualifications and capabilities to fulfil the vacant jobs in the organisation.
Research shows that the difference in performance between an regular or normal performer and a superior performer can sometimes be as high as 400%! (drjohnsullivan.com). This evidently is true for different industries and occupations, including researchers, artists, and athletes. Bringing in the right people is, therefore, a key to building an advantage which will help the firm gain leverage over that of the competition.
Selective hiring helps prevent the pricey burden of the turnover of staff and increases the likeliness of high employee morale and efficiency. In order to evaluate the suitable candidate, it is important for managers to create a list of relevant principals for each position before beginning the recruitment and selection process.
In today’s digital world, there are numerous different instruments we can use to make the right selection and decision. More and more companies vigorously keep in pursuit of these recruitment metrics to see how well the employees are doing in this regard.
3. Self-managed and effective teams
Everybody knows that teamwork is crucial in achieving goals. High-performance teams are critical for any organisation when it comes to obtaining success.
A self-managed team is a group of employees that’s responsible and accountable for all or most aspects of producing a product or delivering a service (smallbusiness.chron.com). Management and technical responsibilities are typically rotated among the members of the made-up teams/groups.
Teams provide significant value because they consist of people who are and think differently but are working towards a common goal. They all have the same desired destination in mind, and as a result, work out a method on how to get the firm to this final objective. This means that numerous ideas are generated to help achieve the goal. These ideas are then processed and merged, resulting in the most suitable ones being selected.
The best teams are perceptively diverse and psychologically safe. This means that team members can produce ideas that are diverse while feeling comfortable bringing these up and conversing over them.
Creating and encouraging high-performance teams is one of human resources key responsibilities. Belbin’s Team Role Inventory is a tool used commonly for team creation and cooperation.
Individual personality appraisals are also often used as they help to understand how other team members think and perform. Obtaining a clear conception of these processes is one of the main responsibilities of a human resource manager. This is the reason why a lot of management courses pay close attention on it.
There are different tools that facilitate teamwork. Examples include communication software, feedback devices, project management tools, and other task and goal setting software. These can enable communication and help teams be more efficient.
4. Contingent Compensation
The fourth Human Resource best practice is contingent compensation. It involves everything to do with compensation and benefits within the organisation.
A contingent commission is a commission paid to an intermediary by an insurance or reinsurance company with a value dependent on the occurrence of an event (investopeida.com). The amount of a contingent commission may, for example, be subject to how profitable the policyholder is to the insurer or reinsurer. Contingent commissions are greater when the insurer or reinsurer doesn’t experience losses from claims, and they are lower when policyholders are more hazardous.
First of all, if you employ the right people, you want to compensate them above standardised methods. These are the people that will add significant value to your company so in essence, it is vital you retain them and pay them fairly. This shows an example of how different best practices work simultaneously to provide more value together rather than what they would alone. In this example, three practices have been illustrated; selective hiring, contingent compensation, and employment security.
Paying people above the average also has a number of potential disadvantages. For instance, it discourages inferior employees to leave. However, if you’re consistently hiring outstanding performers, an above average compensation is essential.
Insurance regulators have targeted contingent commissions for evaluation and possible elimination because it produces an incentive for an intermediary broker to push its clients to certain insurers or reinsurers, built on compensation. An insurance broker has a responsibility to the individual or business that is purchasing a policy. An incentive structure that pushes a broker to choose a policy that may not be in the greatest interest of the client initiates a conflict of interest. This can particularly be the case if the commission is depending on profitability, since the insurance broker has a financial incentive to discourage or disturb any claims that a client may desire to make. Preventing successful claims improves the broker’s compensation. This type of compensation has fallen out of favour for insurance agents.
An independent broker or sales agent of an insurance or reinsurance company represents the financial interests of the insurance company, which reduces the battle of interest that a contingent commission brings. This type of commission is still used as a compensation technique for individual insurance agents.
5. Extensive training
Training presents a primary opportunity to enlarge the knowledge base of all employees, but many employers find the development opportunities a burden on the pocket. Employees also miss out on work time while attending training stints, which may delay the completion of assignments. Despite the potential disadvantages, training and development provides both the organisation as a whole and the individual employees with benefits that make the cost and time a worthwhile venture.
Most employees will have some weaknesses in their workplace skills when they enter the organisation. By no means does an employee join the organisation as the finished article. There is always room for improvement or to grasp a new skill in your new place of work. A training program allows you to reinforce those skills that each employee needs to improve. A development program brings all employees to a more advanced level so they all have similar skills and knowledge to help achieve the goals of the firm. This also helps reduce any unconvincing employees within the company who rely heavily on others to complete routine work tasks. By providing the necessary training, there is an opportunity to create an overall knowledgeable staff, with employees who can take over for one another as needed. They may also be able to work on teams or work independently without continual help and supervision from others.
An employee who receives the required training is better able to perform their job. They become more aware of safety practices and correct procedures for basic tasks. This confidence may push the members of staff to perform at an even hgher and as a result think of new ideas that may help them excel within the organisation. Continuous training also keeps the employees up to date with the developments of the industry. Employees who are competent and on top of the changing industry standards helps the company hold a position as a leader and strong competitor within the industry and against opponents.
6. Reduction of status difference
This best practice in HR is rooted in the democratic practices of Japanese management. Although it has been pointed out in the previous points that some employees are more critical than others for the organisation’s success, this shouldn’t be portrayed in such a way. Every employee is a valuable member of the organisation and should be treated and respected as such.
In Japanese organisations, this is expressed with common canteens, standardised company uniforms, and similar sickness and holiday entitlement. Such an egalitarian culture shows that everyone deserves equal respect and could help in promoting the sharing of ideas. (plato.stanford.edu)
7. Sharing information
The sharing of information is essential. This area is where a lot of large organisations struggle. The questions these companies need to ask is; How do you keep track of who knows what, so you know where to go to with your questions?
According to Pfeffer, there are two main reasons why information sharing is so important.
Firstly, open communication about policy, financials, and operations creates a culture in which people feel they are trusted. It truly involves employees in the business. Furthermore, by feeling trusted the employees will respect the organisation more. It is possible that they may even act in an intrepreneurial manner to help efficiency of the firm. An intrepreneur is a person who behaves like an entrepreneur whilst being employed. Intrepreneurs are usually encouraged to develop their ideas in the workplace environment into a effective product by the companies they work for. Like an entrepreneur, an intrepreneur is motivated, creative, and able to think outside of the box. As an additional effect, it discourages rumours being started and negative informal chatter.
Being informed about the business is also something that employees often reference to as something they find fundamental in a morally high environment in attitude surveys, as well as having a chance to contribute to, influence and suggest decisions affecting their working life.
Recruitment & Selection
Recruitment is the process of captivating, screening, and selecting potential and qualified candidates based on objective criteria for a particular job (Keka.com). The ambition of this process is to appeal to the qualified applicants and to encourage the unqualified applicants to decide themselves to opt out.
Before starting the process of recruitment, the companies must implement proper staffing plans and should position the number of employees they are going to deem necessary. Forecasting of the employees should depend upon the yearly budget of the business and short-term and long-term goals of the organisation.
Recruitment and selection process is imperative to every organisation because it reduces the costs of mistakes such as engaging incompetent, unmotivated, and underqualified workers. Firing the unqualified candidate and hiring the new employee is again an expensive procedure.
Many organisations do not provide a thorough orientation to the new employees. This is the fundamental step to help a new employee to adjust within the organisation and with the employer in the new job. An employee orientation programme should include the objectives and goals of the organisation and how the employee can help to achieve the long-term and short-term goals of the organisation
Giving intensive orientation to the employee is one of the main functions of the human resource management. The programme should help the employee to know their assigned duties and their exact job description, job role, and the relationship of their personal position to that of other positions within the organisation. It gives clarification to the employee to take an active part in the organisation.
Maintaining Good Working Conditions
It is the responsibility of the human resource management to provide adequate working conditions to the employee so that they happily work within the workplace and with the work environment. It is the fundamental responsibility of the HR department to motivate the employees. Studies have shown that employees don’t contribute to the goals of the organisation as much as they can or should. This is purely down to the lack of motivation from the employees.
Human resource management within the organisation should come up with a system to provide financial and non-financial benefits to the employee from the various departments in the firm. Employee welfare is another part of the employee life within the business which should be managed by HR team. Good employee welfare has a direct correlation to job satisfaction.
Managing Employee Relations
Employees are the pillars which make up any organisation. Employee relationship is a very broad theory and it is one of the most fundamental functions of the human resource management. It also helps to nurture good employee relations. They hold the ability to be able to influence behaviours and work outputs of the employees.
Management should organise activities which will help to understand and appreciate an employee at both a personal and a professional level. Well-planned employee interactions will promote a healthy and balanced relationship between the employee and the employer. This is a key component in the organisation wishes to be successful.
History of HRM
Organisations have many operational functions as has been stated earlier in this assignment. In the early 70’s there was no division called as Human Resource department or division. During that time, there was only a division called ‘personnel’. Here, they engaged with the labour related within the organisation.
Personnel management was introduced at the end of 19th century. At that time, their focus was on the welfare of labours in the organisations. According to the tasks they completed, the officers at personnel department was called as “Welfare Officers”.
During the period of 1914-1939, many organisations showed there was a need for quick growth and quick changes in the needs and wants of the workers within the businesses. Therefore, the tasks done by women shifted to the men’s, because of the difficulties and the complications of the matters. Labour managers is the title they were given at that time.
After the Second World War, during the period 1945-1979, this has grown up and changed to “Personnel Management”, and Personnel Management was focus basically on employee administration and the legislation.
At late 70’s the economics of the world changed gradually and organisations started to consider labours work as an important resource. At the end of 80’s the concept of “Human Resource Management” was started. It then showed huge growth throughout the 90’s. Finally, the tasks and operations of personnel management was shifted to the Human Resource Management and it is functioning now in a comprehensive manner in the organisations. It has evolved over time to be one of the most fundamental sections of a business, and it is one which deserves time and effort at all time in order to run a successful company.
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