HUMAN RESOURCES MANAGEMENT

 

What is the importance of Human resource?

Behind production of every product or service there is an human mind, effort and man hours (working hours). No product or service can be produced without help of human being. Human being is fundamental resource for making or construction of anything. Every organisation desire is to have skilled and competent people to make their organisation competent and best.

Among the five Ms of management, i.e., men, money, machines, materials, and methods, HRM deals about the first M, which is men. It is believed that in the five Ms, "men" is  not so easy to manage. "every man is different from other" and they are totally different from the other Ms in the sense that men possess the power to manipulate the other Ms. Whereas, the other Ms are either lifeless or abstract and as such, do not have the power to think and decide what is good for them.

Why Is Human Resource Management Important to All Managers?

Why are these concepts and techniques important to all managers? ' Perhaps it's easier to answer this by listing some of the personnel mistakes you don't want to make while managing. For example, you don't want to:

1. Hire the wrong person for the job.
2. Experience high turnover
3. Have your people not doing their best
4. Waste time with useless interviews
5. Have your company taken to court because of discriminatory actions
6. Have your company cited under federal occupational safety laws for unsafe practices
7. Have some employees think their salaries are unfair and inequitable relative to others in the organization
8. Allow a lack of training to undermine your department's effectiveness
9. Commit any unfair labor practices

5 basic (Managerial) function of Human Resource Management

PLANNING - HR

Planning is the first and basic function of the management and  everything depends upon planning as it is a process of thinking about things before they happen and to make preparations in-advance to deal with them. Poor planning results in failure and effects overall system. Therefore HR Mangers should be aware of when is right time to do things, when things should be done and when things should not be done in order to achieve goals and objectives of the organization.

• Establishing goals and objectives to be achieved  through the employees so as to achieve the organizational mission set by the top-level management.

• Developing rules and procedures which has to be followed by the employees in order to avoid any sort of discrimination among the employees in any of their functions, to enable fair and transparent treatment among employees, to avoid conflict starting from recruitment to the separation of employees, inculcate discipline among the employees, to drive performance of employees and ultimately to avoid conflict and contravenes with statutes and employment laws of the land, ultimately for smooth running of the organization.

• Determining plans and forecasting techniques as a part of Human resource planning to avoid any shortfall of workforce so as to avoid impact on the output of the organisation, to draw the estimation of workforce exactly needed for the organisation and to plan for attracting talented candidates.

• HR outsourcing: as that of make or buy decision in operations management, human resource manager should be able to make decisions with regard to HR activities which are to be executed by the management itself or to be outsourced when there is advantage of expertise to bring in and cost-saving for organization. The following are the most outsourced HR activities; legal advice and support, employee payroll, pensions, training and development, recruitment, employee assistance, compensation and benefits, outplacement is, human resource information systems, employee relations, policy-making, strategic partnerships, appraisal of employees and resource planning.
  

Most small to medium-sized business owners know the frustration of spending more time than they want on non-revenue generating activities from payroll to human resource management to benefits and compensation.The answer for many businesses maybe to outsource part of their HR functions to third party providers so that they can focus on their core business and also has following benefits-

1. Save money and reduce operating costs
2. Allow the company to focus on its core business
3. Reduce the number of HR staff and related staff expenses
4. Allow HR staff to focus more on strategy
5. Avoid the costs of major investment in technology
6. Improve metrics/measurement

ORGANIZING - HR

HR managers should be well aware of organizing everything related to human resource and organisation as organizing is the process of making and arranging everything in the proper manner in order to avoid any confusion and conflicts.

• Giving each member a specific tasks to finish overall objectives of the job given to an employee is the duty of the Human Resource Manager, besides it also to the duty of Human resource manager to define task clearly before entrusting job to an employee. HR managers should keep in mind that task entrusted to employees should be matched with their skill set and abilities and It is also lookout of HR managers to give training to employees in the area or subject which is going to be entrusted to employees, otherwise the task entrusted to employees gets failed and defeated.
  

• Establishing departments and divisions according to the nature of jobs and works in order to improve the efficiency, expertise and speedup the work. Establishment of separate divisions and departments would give easy and effective control over employees by the management which would give better results and improve overall performance of the organisation.

• Delegating authority to the members for a good cause and to make employees more responsible towards their job and organisation is a part of employee development. Delegating authority to employees makes them to be more responsible towards organisation as there is a principle called authority equals to responsibility,vice versa when you load an employee with responsibilities, he should be given authority so as to fulfill the responsibilities casted upon employee. Authority without responsibility and responsibility without authority defeats its purpose. Therefore when employees feels responsible and accepts responsibilities, it is a good sign as it makes employees to be engaged in the job.
  

• Establishing channels of authority and communication is the primary responsibility of any human resource manager which would enable managers to effectively communicate desired goals and objectives of the organisation. Having effective communication will avoid conflicts, make staff to understand what exactly they are expected to and also enable the manager to get the things done in time.

• Creating a system to coordinate the works of the members so as to make the employees to work properly and not to cause any conflict in the allocation of the work to the employees. Improper and discriminating allotment of the work we will make one or the other employee feel overburden, burnout and can create conflicts among employees among members which is not good for the organisational health.and building teams will create teamwork which creates synergy among team that will bring out the best out of them.
  

STAFFING - HR

Staffing is one of the key functions of human resource management as staffing is the process of employing right people, providing suitable training and placing them in the right job by paying them accordingly and satisfactorily.

• Determining the type of people to be hired should be emphasised as they are the fundamental resource and investment for any organisation. Every organisation wants right people with them but they come at a price. Employee compensation is a key factor in primary motivating factor to attract talented and retain them in the organisation for a long period of time.

• Compensating the employees is one of the core functions of the human resource management. Among all the motivating factors money is the very important primary motivating factor for any employee. Providing right compensation for the work done by the employee will not only make  employee feel happy, it will also make the organisation in complaisance with employment laws of the land, if not it is unjustified and amounts to exploitation of employees which is against law.

• Setting performance standards, measuring and evaluating the employees: A performance appraisal is meant to help employees realise their strengths and shortcomings and receive a compensation accordingly. The very purpose of appraising the performance of employees is to evaluate and compensate accordingly. Unless organisation sets performance standards to its employees, it cannot compare and measure employees actual performance with the standard performance. HR managers take performance gaps of employees for making decisions on employees with regard to rewarding them with bonus, profit-sharing, stock options and payment of incentives or not. These employee performance gaps will not only be considered for making decisions with regard to compensation but it is also considered for making decisions with regard to initiate corrective actions on said employees, promoting them to higher levels and if any employees performance gaps are high, such employees will be demoted, suspended or sometimes may be discharges from job.
  

• Counselling the employees as a Human Resource manager, for understanding and helping people who have technical, personal and emotional or adjustment problems with an objective to reduce them, so that performance of employees are maintained at expected level or even improved upon.
  

• Recruiting prospective employees and selecting the best ones from them is one of the primary functions of human resource management. Recruiting is the process of inviting the people who were willing to join the organisation and selecting best out of them is the crucial process in which various selection tests are conducted. Having best people in the organisation will make that organisation is best in all the ways which would create employer brand that will help to attract talented people and also make them to retain in the organisation long period of time.

• HR Metrics: Application of formulas for measuring and calculating core HR issues so as to draw exact HR results and current scenario of organisation. The very purpose of HR metrics is to indicate current position and performance of the organisation.

Core HR issues where HR metrics can be applied are Time to fill an employee, Cost per hire of an employee, Employee absenteeism rate, Employee training others, Turnover cost, Turnover rate, annual Turnover of an employee, Workers compensation cost for an employee, Revenue per employee, Return on Investment (ROI) and Yield ratio.

Annual employee turnover rate       =                         No of employees left                          X 100

                                                                                       beginning + ending No of employee in a year / 2

Absence Rate

[(Number of days absent in month) ÷ (Average number of employees during mo.) × (number of workdays)] × 100

Cost per Hire

(Advertising + Agency Fees + Employee Referrals + Travel cost of applicants and staff + Relocation costs + Recruiter pay and benefits) ÷ Number of Hires

Health Care Costs per Employee

Total cost of health care ÷ Total Employees

HR Expense Factor

HR expense ÷ Total operating expense

Human Capital ROI

Revenue − (Operating Expense − [Compensation cost + Benefit cost]) ÷ (Compensation cost + Benefit cost)

Human Capital Value Added

Revenue − (Operating Expense − ([Compensation cost + Benefit Cost]) ÷ Total Number of FTE

Revenue Factor

Revenue ÷ Total Number of FTE

Time to fill

Total days elapsed to fill requisitions ÷ Number hired

Training Investment Factor

Total training cost ÷ Headcount

Turnover Costs

Cost to terminate + Cost per hire + Vacancy Cost + Learning curve loss

Turnover Rate

[Number of separations during month ÷ Average number of employees during month] × 100

Workers’ Compensation Cost per Employee

Total WC cost for Year ÷ Average number of employees

DIRECTING - HR

Directing is a knowledge, discipline and formal way of communicating to others that what you are expecting from them to do for you or to an organization. Unless a HR manager has capability of directing, he / she can't be said as full-fledged HR manager. when a HR manager has right directing capabilities, it is gives clarity for employees what they are expected to perform, removes confusion in employees and gives clarity of what results are expected by the management from employees.

• Getting work done through subordinates so as to meet the organisation's goals and objectives. Indeed getting work done to others is an art which every Human resource manager should possess, for which employee motivation by the Human Resource Management influences and matters a lot.

• Ensuring effective two-way communication for the exchange of information with the subordinates in order to effectively communicate the goals and objectives of the organisation as it plays key role in understanding what the Human Resource manager or organisation is expecting from employees to perform. Miscommunication between employees block the progress and even would lead to conflicts which eventually affects the overall performance of the organisation.

• Motivating subordinates to strive for better performance by way of providing employee recognition, rewards, intrinsic benefits, paid vacations, increments in salary, gifts, any social security benefits to employees and their family members is one of the functions of Human Resource Management.

• Maintaining the group morale by way of fair treatment among employees, being ethical and generous towards employees, management being loyal to its employees and giving priority to employee concerns. It is the responsibility of human Resource Manager to guide always to its employees, otherwise lack of guidance often kills the morale of employees. Training and development programmers not only improve the skills of employees but also boost their morale, thereby making them happy and leading to longer tenures. Apart from breaking the monotony in the workplace, training programmers offer employees a learning platform where they are able to master new skills and become more marketable.
  

CONTROLLING - HR

HR managers should have the knowledge of controlling all HR related matters, as they should be able to think and decide what should be done and what should not be done and which should be done and which should not be done while dealing with employees.

• Establishment of standard performance so as to measure the actual performance of the employees by conducting performance evaluation for appraisals

• Measurement of actual performance with the established performance standards of employees for finding out gaps in employee performance.

• Comparison of actual performance with the standard one to find the deviation for initiation of corrective actions, if there are any deviations. Corrective actions include giving proper and suitable training to such employees or withholding of increments in payments until performance gaps are none. Demotion of employee, suspension and discharge from job is initiated when serious deviations are identified. 

HUMAN RESOURCES MANAGEMENT NOTES PDF