7 Fundamentals of Human Resource Management
Human resources are vital to any company's success. Employees and their performance can either be a liability to the company or an asset. Your company's success will depend on your ability to be a good HR professional. Good Human Resource Management (HRM) is vital for all businesses, regardless of size. This article will explain the basics of Human Resource Management.
What's Human Resource Management?
Let's begin with a short definition, Human Resource Management (or HRM) refers to the management of people to improve performance.
If you want to hire people in a company, look for people who are comfortable with the culture, as they will be happier, more productive, and last longer than those who don't.
Engagement is another example. Engaged employees produce more quality work, are more productive and make customers happier. If we help our employees to be more engaged, we are indirectly helping the company itself.
The HR department is essential to a company's success, as it provides legal advice, knowledge, training, administration and talent management.
Human Resource Management Brisbane is a way to optimise company performance by better managing human resources. Next, ask yourself who these Human Resources are.
What's a Human Resource?
It might seem strange to refer to people in this way. Human resources are the people who contribute to or work for an organisation in some capacity.
These people are a company's workforce and can be employees or contractors. With the rise of the gig economy, more people are working on a contract basis for organisations without a traditional labour contract.
This includes independent contractors, contract workers, and on-call workers.
Independent contractors can stay with the same company for years, while agency workers can work at as many as 20 companies in a year. These people have different roles in the company, so it is important to be unique in how they are managed and included.
There are also more non-human employees at the company.
We are referring to the rise in robotisation. Robots are becoming more involved in the day-to-day operations of organisations, and the interaction between man and machine is essential for its success. These machines are not considered "human resources", but there are arguments to support their inclusion of them in some capacity as part of the workforce.
The 7 HR fundamentals
When discussing Human Resource Management, several elements can be considered fundamentals of effective HRM policies. These fundamentals are:
Recruitment & selection
Performance management
Learning & development
Succession planning
Compensation and Benefits
Human Resources Information Systems
Analytics and HR data
We will be covering these HR basics in the next section.
Recruitment & selection
Selection and recruitment are two of the most prominent elements in HR. You remember your first interview, right?
It is a crucial HR responsibility to recruit and select the best candidates for the company. Finding the right person for the job is key to the success of an organisation.
The process of seeking new employees usually begins when a new job is created or an opening becomes available. The job description is then sent to HR by the direct manager, who then starts recruiting candidates. HR may use different tools to select the right person for the job, including interviews, assessments, reference checks, or other methods for recruiting.
HR might use pre-selection tools when there are many candidates, which are used to help separate the wheat from the chaff when it is time to select suitable candidates. The candidates selected for the next round will be interviewed and given a deeper assessment.
Performance management
Once employees have joined the company, it is time to manage their performance. This is the second basic Human resource strategy, and it involves helping employees to be their best at work, thereby boosting the bottom line.
Employees are usually assigned a set of responsibilities that they must fulfil. Employees can get feedback about their performance and be able to achieve their highest performance.
Examples include formal one-on-one performance reviews, 360-degree feedback instruments, and informal feedback. These tools can also evaluate peers, clients, or other relationships.
Companies usually have an annual performance management cycle. This involves planning, monitoring, reviewing and rewarding employee performance. This allows employees to be classified into high potentials vs low performers.
Performance management should be a joint responsibility of HR and management. The direct manager usually leads, and HR supports. It is important to have good performance management. Employees who feel empowered can improve the business's sustainability, efficiency, and profit margin. People who consistently fail to perform may not be the right fit for their job or company culture.
This is also a primary responsibility of HR.
Learning & development
Life experiences, cultural influences, and the country or era in which they were raised are all factors that make up the person. Learning and development in HR ensure that employees can adapt to changes in process, technology, societal and legal shifts.
Employees can learn and develop by reskilling and upskilling. Learning and Development (L&D), led by HR, can help the organisation reach its long-term goals.
Many companies have pre-determined budgets for L&D. The budget is divided among employees, with future leaders, trainees and other high-potentials receiving more training opportunities than others. L&D allows employees to develop their leadership skills and bridge knowledge gaps. The 9-Box grid is a well-known framework that links performance management and L&D activities. The HR department and managers can formulate different development plans based on performance and potential ratings.
Succession planning
Planning for succession is preparing for contingencies if key employees leave the company. A replacement can be prepared if a senior manager leaves the company, ensuring continuity and saving money.
Performance ratings and L&D efforts are often used to guide succession planning. This creates a talent pool of qualified candidates who can fill senior positions in the event of a resignation, which is the key to effective people management.
Benefits and compensation
Compensation and benefits are other important aspects of HR. A fair compensation system is essential for motivating and keeping employees, and fairness and equity are two of the most important aspects of human resource management.
The key to attracting top talent is choosing the right salary offer. The company's budget and profit margins must be balanced. HR should keep an eye on pay increases and establish standards for merit, and HR might also conduct a pay audit at times.
Primary compensation is different from secondary compensation. Primary compensation is money directly paid for work, and it can be a monthly salary or performance-based pay.
All secondary benefits are non-monetary. These benefits include additional holidays, flexible work hours, daycare, pensions and a company car.
This is a way to motivate people and also result in workplace dispute resolution.
Human Resource Information System
The last two HR fundamentals aren't HR practices but tools to improve HR. The Human Resource Information System (or HRIS) is the first. An HRIS supports all the foundations discussed above. An Applicant Tracking System (ATS) is a tool HR professionals use to track applicants and hires.
A performance management system keeps track of individual goals and assigns performance ratings.
L&D uses a Learning Management System (LMS), which is used to distribute content internally, and other HR systems are used for tracking budgets and training approvals.
Many compensation specialists use a payroll system. There are also digital tools that allow for effective succession planning.
Often, all these functions can be managed in one system - the HRIS. However, sometimes, these functionalities are divided into separate HR systems.
Let's just say that working in HR has a significant digital component. This is why the HRIS comes last when we discuss the basics of HR.
HR Data and Analytics
Data and analytics are the last of the HR fundamentals. The last half-decade has seen HR take a significant leap in becoming more data-driven.
The Human Resource Information Systems we just discussed is a data-entry and management system. These systems allow you to make more informed and better decisions.
It is easy to track critical data using HR metrics and KPIs. These are the specific measures that show how a company is performing on a particular measurement. This is known as HR reporting.
This report focuses on the organisation's current and historical state. The HR department can also make predictions using HR analytics. You can use this information to predict your workforce, employee turnover intention, customer satisfaction and the impact of (recruitment candidate) experience on your workforce.
HR can make better data-driven decisions by actively measuring and looking at the data. These decisions are more objective and can be easier to get management support.
Conclusion
Now you are familiar with the 7 fundamentals of Human Resource Management. These HR fundamentals are not isolated; they all interact with each other. These 7 fundamentals can be thought of as building blocks and strong management of each element that contributes to the strength and stability of the others. These HR fundamentals allow a workforce to perform better and to its best.
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