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Archive for March, 2010

Introduction

Human Resource Management, or HRM for short, is one of the most important factors in running a successful company, though it isn’t always treated 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 must 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 appropriate to accomplishing the aims and objectives of the organisation.

This effectively translates to “using individuals in the company in the best way possible” though that would be an over-simplified assertion that doesn’t reflect the real nature and scope of HRM. HRM describes all of the strategies and procedures that are involved in making certain that all members of staff in a business are pulling in the same direction, and more significantly, in the right direction.

At its core, HRM brings together three primary elements that are essential to the productive output of the staff. These factors include motivation, management and leadership, and organisational structures. As a result, HRM can be employed on all levels of management inside your business, not just the shop floor personnel, and it may even be used to alter the structure of those levels of management as well.

Why is it Necessary?

Put simply, businesses don’t work without employees. As a result, some level of human resource management is needed for any business to operate at all, let alone in an effective and profitable manner. Even if you don’t realise exactly how HRM affects the everyday running of your business you will surely be employing some kind of HRM in order to keep trading.

Human Resource Management has an effect on every level of your corporate activities with various degrees of visibility. The most obvious HRM tasks involve the hiring and firing of employees as well as monetary systems such as payroll. It may also impact on motivation and communication within your business, which are far more intangible factors but are important nonetheless. Inadequate HRM practice in these less visible arenas can have a negative impact on your organisation but go undetected for long periods of time.

It also goes without saying that each business is different and will have a specific set of challenges to face and opportunities to take advantage of. HRM can act as a flexible tool that translates workforce power into financial profits and can adapt to fully utilise the strengths of your firm.

We use Human Resource Management to make certain our own workforce provides offshore company formation economically for the highest level of income.

Impact on Business

While this all appears very interesting and important, how does it actually impact on the daily functions of your business, and more importantly, how will it help to enhance the performance and success of your firm?

Recruitment & Training

This is probably the part of a business that is most associated with human resources – recruitment. Nearly every company in the world, and especially businesses 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 jobs that need to be filled.

It’s 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 changes the market, there is an on-going need to keep your business up-to-date and ready to take advantage of any opportunity. There is an expression that states that “if you are not moving forward you are going backwards” which can be applied to business.

You may also discover that the costly practice of external recruitment can be averted if your organisation has adequate training facilities in place. It is much easier to train an existing employee to a higher level and then use outside recruitment to fill the gap left at the lower level than it is to recruit straight to a higher level. This strategy can be used at almost every single level of management inside your business.

Employee Relations

Once you have the suitable men and women working for you it is important to keep them doing work for you, and to make certain they are doing a decent job. This can be achieved by means of 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.

Finances

You can’t keep employees at your company by good motivational methods alone. They’ll 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 taken care of and updated when staff join, leave or change pay grade.

Industrial Relations

Many companies will have to work with trade union or other workers rights organisations which can be very forceful when protecting the interests of their members. When interacting with such bodies it is advantageous to have individuals within your company who can communicate effectively with them whilst keeping the interests of your own organisation in mind at the same time.

It should be clear that a offshore business cannot function efficiently without having motivated and capable staff.

Workforce Planning

We have seen the effect that human resource management can have on a company and on the whole it looks like good HRM will have a beneficial effect on any business. As a rule, this is the case, but effective HRM doesn’t just occur overnight. It should be planned according to the goals of the organisation and then performed thoroughly.

One way to apply HRM ideas to your company is via workforce planning – a process that has the aim of making sure your workforce can complete the upcoming tasks needed for your business to be successful.

Definition

Workforce planning is the process of anticipating in advance the human resource needs of any organisation, both in terms of the quantity of employees required and the appropriate skill mix. Recruitment and training policies are devised with a long term emphasis in order to ensure that the organisation is able to function without being limited by a shortage of appropriate labour. It is a bit of a balancing act, but when done properly can produce many benefits.

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 shifts in demand, such as in the tourism industry, or is prone to seasonal fluctuations in workforce then your workforce planning has to take these variables into consideration.

Recruitment

Whether you are recruiting externally or from within your existing workforce you still want 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 job that will be undertaken 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.

Selection

The selection process can be as involved or as simple as you deem necessary. Beyond regular job selection interviews there are numerous ways you can learn about about candidates for your jobs, including aptitude tests, group interviews or even psychometric testing.

Training & Development

The main goal of staff training and development is to develop a much better quality of worker within your company. Workforce planning can use training to fill upcoming gaps in the skill set of your staff which is generally faster and more cost effective than external recruitment. Training and development may also go some way toward motivating your employees.

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Workforce Motivation

It practically goes without saying that well motivated employees are going to produce a better standard of work and have a higher quantity of output than unhappy workers. This improved working rate will inevitably lead to a rise in the profitability of a business. Yet motivation remains 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 hit from a stick! It is a relatively old idea but the basic principle is still relevant to businesses today.

Whether you use the carrot approach 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 employ. Irrespective of your method, motivational factors can be separated into a further two groupings; financial and non-financial motivators.

Financial

The most typical financial motivators are payment schemes. You can pay workers in a number of 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 structure.

Another financial motivation technique involves what are known as incentive schemes, where additional financial rewards are given out for good 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 theorists have their own ideas about the other elements that motivate people to work, although these are often seen as an added bonus to an employee. It is widely acknowledged that money is the key motivational factor for the vast majority of people.

The Changing Face of HRM

As previously stated, HRM is a flexible tool that is there to match up the features of your staff to the goals of your organisation. As a result, 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 constantly evaluate your own HRM policies and not to rest on your laurels.

Maybe there is a new piece of government legislation that will have an effect of how your company can carry out its trading, or maybe a new manufacturing technology will come along that will revolutionise your industry. 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 world. After all, what may seem like a threat to many will often appear as an opportunity to a shrewd entrepreneur.