What is HR management in an organisation?

As a practice, businesses and organizations depend on three key resources: physical resources, such as materials and equipment; financial resources, including cash, credit, and debt; and people. There can be no doubt that people play a vital role in an organization or business as a resource.

Having a thorough strategy, a marketable product or service, and efficient processes are all important. But all of this depends on the ability of the people within the organization to execute strategies, plans, and processes to make a business successful.

Every part of the business boils down to people. And by managing people, organizations can be more profitable, lead more effectively, create brand loyalty and do better work.

The human resource function of every defines their success as an organization. An organisation’s HR function plays a major role in the growth of its bottom line and the success of its business strategy. The very nature of a company is in its people, and giving direction to people is what human resource management (HRM) is all about. HRM provides an organization with the best services and systems drive both profit and team synergy.

Let’s dig deep into this and understand – What is HRM?

What is HRM?

According to The Harvard Model of Human Resource Management, created by Michael Beer, Human Resource Management is a strategic approach to the employment, development and wellbeing of the people working in an organization. Human resources management involves all management decisions and actions that affect the relationship between the organization and its employees – in other words, its human resources.

HRM refers to the management of all decisions within an organization that are related to people.

It concentrates on making the most of the human resources that are at the disposal of the organization and enhances the performance of employees to achieve the organization’s objectives. HRM ensures the seamless and effective application of policies and processes in the business. HRM is there to keep the balance between employee needs and satisfaction and an organization’s profitability and capability to reach its objectives.

In practice, however, HRM is a tool used to try to make optimum use of human resources, to foster individual development, and to comply with government mandates. Larger organizations typically have an HRM department and its primary objective is making company goals compatible with employee goals. For a company to attain its goals, it must have employees who will help it attain them.

An efficiently functional HRM aids the workforce of an organization to contribute efficiently and effectively towards the overall achievement of an organization’s goals.

To understand HRM, the functions of HRM must be taken into consideration. The functions of HRM are managerial, operative and advisory.

Managerial functions include:

• Planning: The planning function of HRM ensures the best fit between employees and jobs while avoiding manpower shortages or surpluses for the organization. There are four key steps of the HRP process: Analysing present human resource supply, forecasting human resource demand, balancing projected the human resource demand with supply, and aligning the first three steps to the organizational goals.
• Organizing: Organizing is the function of HRM that involves developing an organizational structure to ensure the accomplishment of the organizational goals. The structure is usually represented by an organization chart, which provides a graphic representation of the chain of command within an organization.
• Directing: This includes activating employees at different levels and making them contribute maximum towards organizational goal. Tapping maximum potentialities of an employee via constant motivation and command is a prime focus for this function of HRM.
• Controlling: Post planning, organizing and directing, performance of an employee is to be evaluated, verified and compared with organizational goals. If performance is found to be deviating from the plan, control measures are to be taken.

Operative function Includes:

• Recruitment and Selection: Recruitment and selection creates a pool of prospective candidates and selects the right candidates from that pool. According to a study by the Allegis Group, 83% of organizations believe attracting and retaining talent is a growing challenge.
• Job Analysis & Design: This HRM function includes describing nature of the job, including the requisite qualifications, skills, and work experience for a specific position within an organisation. This function is crucial in helping to combining tasks, duties and responsibilities into a single work unit to achieve organizational goals.
• Performance management: Checking and analysing employee performance is another important function that HRM performs. According to Deloitte’s Global Human Capital Trends study, 79% of executives rate redesign of performance management system and practices to incorporate elements like continuous feedback, goal-setting, and employee-driven communication as a high priority.
• Learning & Development (L&D): This HRM function allows employees to acquire new skills and knowledge to perform their job effectively. L&D also prepares employees for taking up higher level of responsibilities. According to the Association for Talent Development (ATD), organizations that offer comprehensive training programs have 218% higher income per employee than organizations without formalized training.
• Compensation management: HRM also includes determining pays for different job types and compensations, incentives, bonuses and benefits related to a job function. According to Jobvite, most people (19%) left their jobs for compensation reasons.
• Policies: HRM functions by drafting, revising, publishing and implementing the organizational policies, which are essential for the fair treatment for all the employees.
• Employee Welfare: This function takes care of numerous services, benefits and facilities provided to an employee for their wellbeing. According to a study by MetLife, 51% of employers say using health and wellness benefits to maintain employee loyalty and retain talent will become even more important in the next 3 to 5 years.
• HRMS: This function involves recording, maintaining and retrieving employee related information including employment history, work hours, earning history etc.

Advisory function includes:

• Top Management Advice: One of the critical HRM functions is to advise the top management in formulating policies and procedures. The advisory function of HRM also advise the top management on appraisal of manpower. This function also involves advice regarding maintaining high-quality human relations and improving employee morale.
• Departmental Head advice: Under this HRM function, HRM advises the heads of various departments on policies related to job design, job description, recruitment, selection, appraisals.

What is the importance of HRM?

The following reasons highlight the importance of HRM.

Recognizing and valuing individuals: HRM acknowledges every employee’s worth within the organization, suggesting that the organization recognize and value individual contributions. The empathy monitor study by the Businessolver states that 93% of employees say they’re more likely to stay at an organization with an empathetic employer. Also, the happywork study by Ultimate Software says that 75% of employees would stay longer at an organization that listens to and addresses their concerns.

People bring ideas: HRM manages people, and people bring new new skills and ideas into the organization and fuel the growth of business.

Quality of work life: Quality of work life is a legitimate concern, and that employees have a right to safe, clean, and pleasant surroundings, which is one of the responsibilities of HRM. According to ‘Global Productivity Hinges on Human Capital Development’, a study by Gallup, 85% of employees worldwide feel disengaged at work and only 15% derive fulfillment from their work.

Upskilling is a long-term interest: HRM recognizes the need for continuous learning; talents and skills must be continually refined in the long-term interests of the organization.

Facilitate continual worker adaptation: Opportunities are constantly changing. Organizations need methods to facilitate continual worker adaptation and HRM provides the organization with those methods.

Employee satisfaction: People have a right to be satisfied by their work, and organizations have a responsibility, and a profit motivation, to try to match their skills with their job. According to DecisionWise via Human Resources Today, 64% of workers globally feel their job gives them a sense of meaning and purpose.

Beyond technical training: HRM has a much broader scope than technical training—employees need to know more than the requirements of a specific task in order to make their maximum contribution.

Benefits of HRM

HRM bridges the gap between the employees and the management of an organization. Operating a successful organization requires a good HRM which is dedicated to the progress and growth of the organization. A balanced HRM is critical to the productivity and synergy of the organization.

An effective HRM allows organizations to tackle human resource issues strategically. HRM supports in attracting and retaining competent employees, helps the organization’s leaders and employees in adapting to organizational change, and enables the adoption of technology. HRM play a critical role in managing employees, helping them to work effectively and creatively to help their organisation to attain a competitive advantage in their market.

The question ‘What is the importance of HRM?’ can be answered by considering all the ways that HRM helps organizations to meet their competitive challenges and create value. These facets of HRM include how an organization manages the human resource environment and acquires, trains, assesses, develops and compensates its employees.

The importance of HRM goes unnoticed in the organization with the routine hustle and bustle in the workplace, but without the effective HRM contributions, the organization might not be able to achieve its fullest potential and expand its horizons.

Here are the benefits of HRM:

• Strategic Management: HRM enhances the company’s bottom-line by triggering positive output, leading to organizational success. Leaders with expertise in HRM participate in corporate decision-making that underlies human resource decisions.
• Mission, vision, values, and goals: HRM when handled strategically contributes to an organization’s mission, vision, values, and goals. This, in turn, enables employees to see where they fit within the organization and helps to shape and define their roles.
• Branding internally: Creating a positive brand about the organization for its employees and internal stakeholders is an important responsibility of HRM. According to a study by CultureIQ, Building an employer brand and company culture helps companies increase qualified candidates (49%), increase diverse candidates (32%), increase employee referrals (41%), and hire the right people (55%).
• Creating awareness for employees: HRM builds workplace awareness by providing complete information to employees of their functioning and governance.
• Maintaining a conducive work environment: A favourable work environment within the organization where the employees can have both hygiene factors and motivators is taken care of by HRM. One of the top employer attributes that jobseekers value most is a pleasant working atmosphere, according to a study by Ranstand.
• Talent management: This is one of the important responsibilities of HRM. HRM remains committed to recruitment and selection, on-boarding, training, management development, performance management, succession planning, career paths, and other aspects of talent management.
• Organizational culture: HRM impacts the culture of the organization and has a key role to play in ensuring that an organization’s culture continues to be supportive and effective. The culture of an organization never solidifies — it changes with changing demographics, workplace norms, industry forces and other factors. HRM moulds the organization’s culture, and the organization’s culture is reflected in the HRM – so they are interlinked. According to another study by CultureIQ, 73% of employers believe a great corporate culture gives their organizations a competitive edge.
• Conflict management: Conflicts are part of any healthy and robust organization. Not everyone always feels the same way, but they need to develop effective working relationships for contributions and productivity. HRM helps by knowing the personalities of each of the employees and taking on the necessary role of advocate, coach or mediator.

HRD Connect Curators of the New Business Landscape. HRD Connect produces industry-recognized content for senior HR leaders. Through articles, case studies, Q&As, podcasts, events, and more, we offer truly progressive and cutting-edge insights designed to help people leaders address core HR challenges and add greater value to their business.

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