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Human Resource Management

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Human Resource Management

I am convinced that nothing we do is more important than hiring and developing people. At the end of the day, you bet on people, not on strategies."

- Lawrence Bossidy

Human resource management (HRM) makes sure that the organisation functions smoothly. The process begins with the formulation of correct policies for job postings and finishes with a successful growth for the organisation. Hence, HRM is an imperceptible agent that joins all the aspects of the organisation ensuring smooth growth.

Human Resource Management Meaning

Human resource management (HRM) is the strategic management of people and processes within an organization.

HRM was initially recognized as people’s management. Previously, its role was confined, however, over time it has become a primary part of organisational management. The key responsibilities of this department are recruitment, procurement assessment, integration, training and development, and compensation of the workforce. The human resource department takes care of any issues faced by the employees in their working capacity in the company. Human resource is related to particular work practices and how they impact a company’s performance.

The following represent the principles of HRM:

  • HRM deals with the management functions and principles such as selection, development and maintenance, and provision of remuneration to the employees of the company.

  • Human resource decisions impact the effectiveness of the company. The effectiveness of a company will lead to better service to the customers with high-quality products at affordable prices.

  • HRM functions are not relevant just for business organisations but also for education, healthcare, etc.

Role of Human Resource Management

Let's take a look at what some of the main roles of HRM.

Staffing

A business needs people to accomplish certain tasks even when there are high-tech machines present. Due to this, one of the key tasks of HRM is staffing. This comprises the hiring process from a job post to the negotiation of a salary package.

Creation of policies

Each company has policies that ensure fairness and steadiness. Therefore, one of the roles of HRM is to create such policies. In the creation of policies, HRM, management, and executives are included in the process.

Some of the policies are:

  • Ethics policy

  • Holidays policy

  • Discipline process policy

  • Dress code

Compensation

HR managers should define if compensation is fair, matches market standards, and is high enough to attract individuals to work for a company. Compensation comprises anything the employee gets as an exchange for their work. HRM managers should ensure that the pay is equivalent to what other companies are paying their employees for similar jobs.

Some of the compensation examples include the following:

  • Salary

  • Sick leave

  • Health benefits

  • Holidays

  • Bonus

Retention

This includes keeping and encouraging employees to continue with the company. One key contributor of retention is compensation, however, there may be other elements as well such as organisational culture or work flexibility.

Training and development

Training ensures that employees are not just trained to perform their job but also persistently progress and develop new skills, hence resulting in higher productivity, employee motivation, and employee retention.

Strategic human resource management

Strategic human resource management is the connection between a business’s human resources and its overall strategies, aims, and objectives.

The Goal of Strategic Human Resource Management

The goal of strategic HRM is to:

1. Enhance business performance,

2. Create a fit for organisational culture

3. Enhancement of flexibility innovation

4. Develop a competitive edge

For strategic HRM to be efficient and effective, human resources should play an essential part as a strategic partner when an organisation’s policies are developed and employed. Strategic HR can be exhibited via diverse activities including recruiting, training, and rewarding. It involves searching for methods in which human resources can make a direct influence on the organization’s growth. Human resource managers should embrace a strategic approach to develop and retain employees to achieve the organisation’s long-term objectives.

Organisations will succeed when all the teams are performing for a similar goal. Strategic HR conducts an analysis of employees and establishes the actions needed to amplify their value to the organization. The outcome of this analysis can be used to create human resource approaches to tackle employee weaknesses.

The benefits of strategic HRM are as follows:

  • It increases job satisfaction

  • Improved work culture

  • Enhances rates of satisfied customers

  • Efficient and effective resource management

  • Increases productivity

  • A proactive approach to managing employees

Human Resource Management System

HRM systems (HRMS) are software applications employed to manage HR and processes linked to the lifecycle of employees.

HRMS allows an organization to completely understand its workforce whilst conforming to the varying tax laws and labor regulations.

Functions of Human Resource Management

The functions of HRMS include:

Candidate Management

It associates employment offers to candidates and promotes positions both internally to the present employees who might want to apply for internal positions and externally to the world. It is crucial for organisations for which the experience of the participants is their main concern.

Employee Management

This function is often considered the main human resource function. It delivers a primary portal for supporting analysis, reporting, and fulfilling processes. This is where the workforce is structured into units such as departments/locations, it outlines reporting relationships among the managers and the employees, and personal information is stored.

Payroll

This is a main function of HRMS, calculation of earnings from gross to net, holding back employee deductions, and giving out payments are routine tasks.

Some of the benefits of HRMS include the following:

  • It provides enhanced employee engagement as with HRMS, HR managers can develop training schedules, customize learning plans and career paths.

  • It provides enhanced and deep insights as all the data is in a single bucket, therefore, enabling quicker decision-making.

  • Allows for rapid recruitment as HRMS connects the recruiters and candidates electronically via job boards.

Human Resource Management - Key Takeaways

  • Human resource management (HRM) is the strategic management of people and processes within an organisation.

  • HRM was initially recognized as people’s management.

  • The key responsibilities of HRM are recruitment, procurement assessment, integration, training and development, and compensation of the workforce.

  • HRM deals with the management functions and principles, and decisions made about employees are integrated.

  • The role of HRM includes staffing, creation of policies, compensation, retention, and training and development.

  • Strategic human resource management is the connection between a business’s human resources and its strategies, aims and objectives.

  • The goal of strategic HRM is to enhance business performance, create a fit for organisational culture, enhancement of flexibility innovation, and develop a competitive edge.

  • Strategic HRM benefits are increased job satisfaction, improved work culture, enhanced rates of satisfied customers, efficient and effective resource management, increased productivity.

  • HRM systems are software applications employed to manage human resources and processes linked to the lifecycle of employees.

  • Some of the functions of HRMS include candidate management, employee management, and payroll.

Frequently Asked Questions about Human Resource Management

Human resource management (HRM) is the strategic management of people and processes within an organization.  

Better hiring practices, comprehensive onboarding, tracking employee performance, and promptly responding to employee feedback are the techniques for improving human resources management. 

The best fit in human resource management is an approach that advocates that HRM practices must be aligned with the organisation's culture. 

Candidate management, employee management, and payroll are HRM functions.  

Talent management in human resource management is a practice that focuses on hiring, developing, motivating, and retaining top-performing employees. 

Final Human Resource Management Quiz

Question

What is labour turnover in simple terms? 

Show answer

Answer

Labour turnover is the rate at which employees leave an organization. 

Show question

Question

What is not an avoidable cause of high labour turnover? 

Show answer

Answer

Lack of job security

Show question

Question

What are two types of causes of labour turnover?

Show answer

Answer

Avoidable Causes & Unavoidable Causes

Show question

Question

Name some unavoiable causes for employee turnover

Show answer

Answer

  • illness,

  • accident

  • retired,

  • death

  • domestic issues,

  • community issues,

  • Misconduct of workers.

Show question

Question

What is not an unavoidable cause for labour turnover?

Show answer

Answer

Illness

Show question

Question

What are some positive effects of labour turnover? 

Show answer

Answer

Opportunity to develop company culture

Show question

Question

What are the consequences for labour turnover? (You can choose more than one)

Show answer

Answer

Decline in morale

Show question

Question

What are two main types of labour turnover?

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Answer

Voluntary and involuntary

Show question

Question

What does voluntary labour turnover mean? 

Show answer

Answer

A staff member is leaving at will. 

Show question

Question

What does involuntary labour turnover mean?

Show answer

Answer

The management dismisses the employee due to reasons like not complying with the company. 

Show question

Question

What is an example of voluntary labour turnover?  (You can choose more than one)

Show answer

Answer

Employee find a better opportunity elsewhere and decide to leave

Show question

Question

How to reduce labour turnover?

Show answer

Answer

Monitor and benchmark labour turnover

Show question

Question

How conducting exit interview can reduce labour turnover? 

Show answer

Answer

You can find out the underlying cause of the employee's resignment and resolve the issue or pass on the information to HR team. 

Show question

Question

What does benchmarking labour turnover mean? 

Show answer

Answer

Benchmarking means to set a specific standard of labour turnover goals and assess they are performing compared to the standard. 

Show question

Question

What is the reason for onboarding and training new employees? 

Show answer

Answer

Help employee understand the process of the company

Show question

Question

What is labour productivity? 

Show answer

Answer

Labour productivity is the amount of output each employee in a business produces.

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Question

Why is labour productivity so important? 

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Answer

Because labour is one of the firm's most considerable costs, firms want to ensure they're gaining as much work and productivity from the labour cost as they can. 

Show question

Question

Does new technology have an impact on labour productivity? 

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Answer

Yes, new technology can make the production process more efficient and increase labour productivity. 

Show question

Question

Suppose labour productivity increases, would the firm need more or fewer employees to produce the same level of output? 

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Answer

Fewer employees as people are working more efficiently. 

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Question

What is labour cost per unit? 

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Answer

Labour cost per unit is the average cost of labour per unit of output produced. 

Show question

Question

How does labour cost per unit linked to labour productivity? 

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Answer

As labour productivity increases, the labour cost per unit decreases. Alternatively, the decrease in the labour cost per unit will lead to an increase in labour productivity. Either way, your organization will benefit from lower costs and more competitive prices on the market.

Show question

Question

Why do we need to reduce labour costs? 

Show answer

Answer

Increase labour productivity 

Show question

Question

How to reduce labour costs and increase productivity?  (Choose the wrong answer)

Show answer

Answer

Make sure employees are sufficiently trained

Show question

Question

What aspect of a business that labour productivity has the most impact on? 

Show answer

Answer

Profitability and efficiency 

Show question

Question

What problems can arise when the company tries to increase labour productivity?

Show answer

Answer

Resistance from employees due to change and fear of automation replacing their jobs.  

Show question

Question

What happens to labour productivity if the labour cost per unit decreases? 

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Answer

The labour productivity will increase if the labour cost per unit decreases. 

Show question

Question

What is the unit for labour productivity? 

Show answer

Answer

units/employee

Show question

Question

What is the employee retention rate? 

Show answer

Answer

The rate of staff that stays with the company during a period of time. 

Show question

Question

What is the opposite of employee retention? 

Show answer

Answer

employee turnover: the rate of employees who leave the company

Show question

Question

Why is employee retention important? 

Show answer

Answer

More engaged workforce

Show question

Question

What are the problems with too low a retention rate? (You can choose more than one answer)

Show answer

Answer

High recruitment and selection costs

Show question

Question

What is a cause of low retention rate? 

Show answer

Answer

Lack of recognition 

Show question

Question

How does poor management decrease the retention rate? 

Show answer

Answer

Leaders play an important role in keeping people's morale. Poor management such as favouritism, inconsistent policies and lack of recognition for the employee's effort can put employees off and decrease the retention rate. 

Show question

Question

How to improve employee retention rate? 

Show answer

Answer

Build a value-based company culture 

Show question

Question

Why money is not always an answer to retention problems? 

Show answer

Answer

Money is not always the answer because in many cases staff only wants to know if the company appreciates what they do or whether their job contributes positively to the society. 

Show question

Question

What is the benefit of employee engagement and involvement? (Choose the wrong answer)

Show answer

Answer

Increase productivity

Show question

Question

Why is it important to reward employees for their hard work/achievements?

Show answer

Answer

The reason for rewarding employees is to make them feel appreciated, which can boost their morale and performance. 

Show question

Question

What do talent development tasks include? 

Show answer

Answer

Develop, manage and retain employees

Show question

Question

What kinds of costs are associated with low retention rates?

Show answer

Answer

  • recruitment and selection costs
  • induction and training costs

Show question

Question

How can a high retention rate help to save the company time and money? 

Show answer

Answer

If the company can get and keep its retention rate high, it allows the organization to focus on its goals and critical path, instead of having to constantly find new staff and train them. This will save the company time and money.

Show question

Question

What does the retention rate indicate in general? 

Show answer

Answer

The retention rate can indicate how content the workforce is in a firm. 

Show question

Question

What are important factors influencing labour productivity? 

Show answer

Answer

Employee motivation 

Show question

Question

What is labour productivity? 

Show answer

Answer

Labour productivity can be defined as the amount of output each employee in a business produces. 

Show question

Question

How is labour cost linked to labour productivity? 

Show answer

Answer

As labour productivity increases, the labour cost per unit decreases. Alternatively, the decrease in the labour cost per unit will lead to an increase in labour productivity. Either way, your organization will benefit from lower costs and more competitive prices on the market. 

Show question

Question

What is labour cost? 

Show answer

Answer

Labour cost can be defined as the total costs incurred by an organisation for employing its employees. It includes their wages, payroll taxes, employee benefits, etc.

Show question

Question

What is employee cost as a percentage of turnover? 

Show answer

Answer

Employee cost as a percentage of turnover consists of measuring the percentage of turnover needed to cover labour costs.

Show question

Question

What is a benchmark? 

Show answer

Answer

benchmark is a point of reference and comparison for the organisation.

Show question

Question

What are the two main benefits of measuring employee costs as a percentage of turnover? 

Show answer

Answer

  • Know if you've hired the right number of employees

  • Ensure the number of workers hired doesn't eat up too much of your earnings. 

Show question

Question

What would you do if employee cost is too high but profit is relatively low? 

Show answer

Answer

Increase labour productivity and reduce labour costs. 

Show question

Question

What does the low rate of employee costs against turnover indicate? 

Show answer

Answer

Your employees are being underpaid or the company experience a shortage of qualified workers. 

Show question

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