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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?
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Answer
Labour turnover is the rate at which employees leave an organization.
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Question
What is not an avoidable cause of high labour turnover?
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What are two types of causes of labour turnover?
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Avoidable Causes & Unavoidable Causes
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Question
Name some unavoiable causes for employee turnover
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Answer
illness,
accident
retired,
death
domestic issues,
community issues,
Misconduct of workers.
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Question
What is not an unavoidable cause for labour turnover?
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What are some positive effects of labour turnover?
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Answer
Opportunity to develop company culture
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What are the consequences for labour turnover? (You can choose more than one)
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What are two main types of labour turnover?
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Voluntary and involuntary
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What does voluntary labour turnover mean?
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A staff member is leaving at will.
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What does involuntary labour turnover mean?
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The management dismisses the employee due to reasons like not complying with the company.
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What is an example of voluntary labour turnover? (You can choose more than one)
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Employee find a better opportunity elsewhere and decide to leave
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How to reduce labour turnover?
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Answer
Monitor and benchmark labour turnover
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How conducting exit interview can reduce labour turnover?
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You can find out the underlying cause of the employee's resignment and resolve the issue or pass on the information to HR team.
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What does benchmarking labour turnover mean?
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Benchmarking means to set a specific standard of labour turnover goals and assess they are performing compared to the standard.
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What is the reason for onboarding and training new employees?
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Help employee understand the process of the company
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What is labour productivity?
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Labour productivity is the amount of output each employee in a business produces.
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Why is labour productivity so important?
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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.
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Does new technology have an impact on labour productivity?
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Yes, new technology can make the production process more efficient and increase labour productivity.
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Suppose labour productivity increases, would the firm need more or fewer employees to produce the same level of output?
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Fewer employees as people are working more efficiently.
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What is labour cost per unit?
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Labour cost per unit is the average cost of labour per unit of output produced.
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How does labour cost per unit linked to labour productivity?
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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.
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Why do we need to reduce labour costs?
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Increase labour productivity
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How to reduce labour costs and increase productivity? (Choose the wrong answer)
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Make sure employees are sufficiently trained
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What aspect of a business that labour productivity has the most impact on?
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Profitability and efficiency
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What problems can arise when the company tries to increase labour productivity?
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Resistance from employees due to change and fear of automation replacing their jobs.
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What happens to labour productivity if the labour cost per unit decreases?
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The labour productivity will increase if the labour cost per unit decreases.
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What is the unit for labour productivity?
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What is the employee retention rate?
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The rate of staff that stays with the company during a period of time.
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What is the opposite of employee retention?
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employee turnover: the rate of employees who leave the company
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Why is employee retention important?
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What are the problems with too low a retention rate? (You can choose more than one answer)
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High recruitment and selection costs
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What is a cause of low retention rate?
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How does poor management decrease the retention rate?
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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.
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How to improve employee retention rate?
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Build a value-based company culture
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Why money is not always an answer to retention problems?
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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.
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What is the benefit of employee engagement and involvement? (Choose the wrong answer)
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Why is it important to reward employees for their hard work/achievements?
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The reason for rewarding employees is to make them feel appreciated, which can boost their morale and performance.
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What do talent development tasks include?
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Develop, manage and retain employees
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What kinds of costs are associated with low retention rates?
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- recruitment and selection costs
- induction and training costs
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How can a high retention rate help to save the company time and money?
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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.
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What does the retention rate indicate in general?
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The retention rate can indicate how content the workforce is in a firm.
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Question
What are important factors influencing labour productivity?
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What is labour productivity?
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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.
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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.
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What is employee cost as a percentage of turnover?
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Employee cost as a percentage of turnover consists of measuring the percentage of turnover needed to cover labour costs.
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A benchmark is a point of reference and comparison for the organisation.
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What are the two main benefits of measuring employee costs as a percentage of turnover?
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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.
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What would you do if employee cost is too high but profit is relatively low?
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Increase labour productivity and reduce labour costs.
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What does the low rate of employee costs against turnover indicate?
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Your employees are being underpaid or the company experience a shortage of qualified workers.
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