9. Human Resources Management
Learning Outcomes from this chapter
On completion, you should be able to:
- Explain the key functions of human resource management
- Understand the central role of human resources in management
- Understand how a business decides to hire new staff
- Explain the steps involved in recruiting and selecting new staff
- Distinguish between different types of training for staff
- Illustrate different types of rewards that motivate employees
- Discuss the reasons and benefits for carrying out performance appraisal
- Explain the importance of creating good employer-employee relations
Human Resource Management
Human resource management deals with issues related to employees in a workplace, such as recruiting, training, developing, rewarding, motivating and communicating
Functions of the HRM
- Manpower planning
- Recruitment and selection
- Training and development
- Pay and rewards
- Performance appraisal
- Employer-employee relations
1. Manpower Planning
Having the right people with the right skills in the right place at the right time throughout the business
- Steps - Carry out a human resource audit, estimate future staff needs, reduce staff through redundancies or increase staff through recruitment
- Implications of being understaffed - Quality/standard may fall, not enough output to meet demand (loss of sales and customer loyalty to competitors)
- Implications of being overstaffed - Workers may become bored and unchallenged; higher wage costs than are necessary for the business
2. Recruitment and selection
Create job description and person specification, advertise and attract suitable candidates, screen applicants, interview and test, prepare contract, offer job
- Job description - Outlines the job - title, hours, responsibilities, salary, expectations
- Person specification - Outlines ideal potential candidate - the qualifications, experience, skills and characteristics the business would like a candidate to have
- Internal vs external
- Internal: Knows organisational culture, no training, promotional path
- External: Wider pool, fresh outlook, new skills, can headhunt talent
- Panel interview - Group interview reduces bias, spreads questions and judgement
3. Training and development
Training concerned with improving the employees’ ability to perform their job in an effective manner (improving skills through courses)
Development is a long-term approach taken with existing employees to encourage them to take on new challenges and to realise their full potential
- Induction - For new employees: teach culture, systems, rules, policies of business
- On-the-job - Employees trained internally (e.g. HRM training on teamwork)
- Off-the-job - Employees trained externally (e.g. attend a course to upskill)
- Benefits - Higher skills, more productive, lower labour turnover, staff feel more valued and are more adaptable to change
4. Pay and rewards
HRM organises compensation/pay due to each employee for work done, using monetary and non-monetary rewards and agreeing their terms in their contract
- Monetary - Wages, salaries, bonuses, benefit-in-kind (taxable), share options, pension plans
- Non-monetary - Benefits-in-kind (non-monetary payments/perks), job satisfaction, job enrichment, job enlargement, flexi-time, job sharing
5. Performance appraisal
Regular meetings with employees to review their progress and set targets for the future
- Benefits to employee - Job satisfaction, bonuses, feedback, training, feeling valued
- Benefits to employer - Improves industrial relations, highlights training, recognition
6. Employer-employee relations
HRM will try to improve the harmony between employees and management, using activities such as sports and social clubs within the business. This helps staff and management to mix socially and build better relationships
Benefits - Staff are happier, more motivated and adaptable, clear goals, fewer disputes
How can HRM improve relations?
- Clear grievance procedures
- Feedback from staff
- Recognition for good work
- Team-building exercises