Human Resource Management: A Comprehensive Look
Human Resource (HR) refers to all the people that work for or contribute to an organization. In addition to the regular employees of an organization working on a traditional labor contract, this term also applies to independent workers who work for the organization on a temporary basis, workers of subcontractors, freelancers and other types of people who provide services based on short-term contracts. Human Resource Management (HRM), on the other hand, is the effective and efficient management of these people in a way that gives their organization or company a competitive advantage.
Human Resource Management started as a one-to-one relationship between the employer and employee on issues like payment and leave at the beginning of the twentieth century. It turned into a professional and academic discipline as corporate giants employing thousands of people came to recognize the value they could further extract from their workforce with the help of a strategic management approach. Today, Human Resource Management has to be on the agenda of every organization whether it is a startup, an SMB or a global conglomerate, if they are to gain and maintain a competitive advantage over rivals.
Human Resource Management covers a host of functions that start from the day the need for hiring new people is recognized to the day the employee leaves the organization and even after. Here is a quick look at the main functions that together make up Human Resource Management.
Key tasks that make up Human Resource Management
1 - Recruitment
One of the most critical functions of the whole Human Resource Management process, recruitment is the way for a company to bring in new talent to sustain its value creation activity and expand its operations. It starts with the recognition that the company needs to hire new people because there is a new job created within the organization or a position has opened up. After the identification of the need, the immediate line manager works with the Human Resources department to determine the job specifications. If the internal talent pool within the company fails to produce a suitable candidate for the open position, the company will be tapping into the wider labor market to reach out to possible candidates, screen them and interview the best among them.
When the interviewers decide to hire a candidate, an offer will be prepared, followed by a contract. The new employee will then go through an onboarding process. Onboarding is a form of organizational socialization where the new recruit hands in necessary documents and gets acquainted with skills, values and day-to-day requirements associated with the job.
All in all, recruitment might easily be the most consequential phase of the Human Resource Management process. A new employee may contribute to and enrich the existing work environment, bringing in a set of skills that makes significant contribution to the company, or undermine cohesion among the employees and cause problems that might hold the company back. Human Resource Management is definitely an area where the company cannot risk taking chances.
2 - Performance management
Performance management concept is actually an evolution of the performance reviews of the past. While performance reviews were mostly an annual evaluation of an employee’s performance during the year prior, performance management takes a more dynamic approach, providing feedback on the employee’s performance supplied by different stakeholders like clients, vendors and colleagues more frequently throughout the year. Compared to a simple review, performance management is more in the mold of mentoring, with a view to improve the employee’s performance and bring it in line with the company’s goals.
3 - Training and development
A significant part of modern Human Resource Management practices is based on investing in your employees so that they can reskill and upskill. This contributes to the overall satisfaction employees derive from their work while at the same time turning them into more versatile team members. Having more versatile people on your payroll in turn helps increase the the productivity of your company and its resilience in the face of adverse situations like the global pandemic we have been fighting through.
The ongoing digital transformation and automation have made it necessary for companies to invest billions of dollars in upskilling training for their employees since they aim to achieve flexibility in an increasingly volatile business environment. Members of the Gen Z are known to value career growth and mobility. Therefore, as they enter the workforce in greater numbers, it is safe to assume that they will show more interest in joining companies willing to invest in their employees. Companies that don’t offer reskilling and upskilling opportunities won’t stand much chance in hiring talented young people.
4 - Establishing a talent pipeline
Companies should think long-term and make preparations for potential crises. One of the decision-makers occupying a key position may decide to quit, retire or switch to another organization. A company cannot afford to become paralyzed and lose precious time in such a situation. The wise thing to do would be to set up a pipeline and groom certain employees in the organizations for certain vacancies that can open up in the future. The pipeline can even be extended to college students by way of internships. By doing this, the company can start vetting promising talent and instilling in them its values long before these people graduate from school and join the professional life.
5 - Compensation
Both monetary and non-monetary compensation play a big role in attracting and retraining talented people. It is the responsibility of Human Resources department to make sure that pay is fair with respect to the market average and the finances of the company. The global pandemic has shown that perks such as offering flexible or remote work arrangements, fitness and wellness memberships and child care could go a long way towards making a company stand out among other recruiters and attract talent who are no longer solely motivated by higher salaries.
6 - Termination
Nothing lasts forever and there are many scenarios where the relationship between the employer and employee comes to end in one form or another:
- The employee might quit and look for other job opportunities in the market
- He might be fired on the grounds of low performance or problems he might be causing for the company
- The employee might be laid off as a result of measures to cope with a downturn in economy
- The employee might decide to retire
All of these scenarios come with different legal ramifications a company should consider. If the parties part ways on bad terms, the situation can pose significant risks for the employer. In addition to possible legal issues, the employee's access to databases, certain passwords and intellectual property could put the company at risk. Therefore, just like a company stands to benefit from frictionless onboarding of an employee, it also has a stake in frictionless termination of a contract with an employee.
What does a Human Resource Management software do?
A Human Resource Management software automates many tasks from among the plethora of ones Human Resource people have to tend to:
- It can offer templates that expedite job posting, screen the candidates, schedule interviews in a way that best leverages empty time slots, produce offers and contracts, and facilitats the onboarding process for a newcomer by sending automated emails and offering guidance. An HRM software can also keep a detailed record of employee skills and support the talent pipeline by highlighting the suitable candidates for a job opening.
- An HRM software makes performance evaluation easier. It can use data analytics to analyze the key performance metrics, report its findings and make recommendations on how to improve the performance.
- A good HRM software can help with talent management at a company. It analyzes the skills of the workforce, the skills they can work to improve, and provide a roadmap for reskilling and upskilling initiatives.
- An HRM software can streamline payroll management tasks. It can help professionals monitor promotions and terminations, manage insurance plans for employees and put an end to miscalculations regarding the overtime work.
- An HRM software can help HR professionals manage the onboarding and contract termination phases. Automating such well-defined processes not only increases efficiency but also limits the margin for error and prevents costly mistakes.
What are the benefits a company can expect to derive from using an HRM software?
- A company starts reaping the benefits of using an HRM right from the onboarding stage onwards. The frictionless onboarding eases the strain of the first few days at work for a new recruit and boosts employee morale.
- Automating certain tasks reduces the paperwork and this in turn saves time and money for the company. Automation can help reduce the HR payroll and allows HR professionals to focus on tasks where their expertise would be better employed.
- Companies can better organize their training and development needs with the help of an HRM software. The software makes it easy for the management to keep an inventory of employee skills, and invest in and develop them in a way that will contribute to the strategic goals of the company.
- Companies using HRM software can trust that there will be fewer errors during data input and reporting.
- Ensuring that a company complies with the body of rules and regulations is a difficult task that takes a full-time employee or even a team to oversee. Fortunately, legal compliance is built into HRM, which stamps out issues before they even show up.
- HRM software scales up as the company grows and eliminates the need to introduce new practices and applications just because the company grew in size.
HRM software has to be an integral part of how companies big or small operate today. In the second post of this mini series, we will be looking at what startups in particular stand to gain from using a capable HRM platform and the best options available to them.