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Human Resource Management, or HRM for short, is one of the most important factors in running a prosperous business, though it isn’t always handled with the time and emphasis that it deserves. To fully understand what HRM is and its impact on the success or failing of a company, we first need to know what it means. The following is a good definition:

The function of Human Resource Management is to recruit, develop and utilise the personnel within an organisation in the manner in which is most suitable to achieving the aims and objectives of the enterprise.

This essentially translates to “using individuals in the business in the best way possible” though that would be an over-simplified statement that does not echo the true nature and range of HRM. HRM describes all of the methods and procedures that are involved in ensuring that all members of staff within a business are pulling in the same direction, and more significantly, in the right direction. Without having good human resource management a business will be spending effort on jobs that it may not directly benefit from.

At its center, HRM combines three primary elements that are fundamental to the productive output of the workforce. These elements include motivation, management and leadership, and organisational structures. As a result, HRM can be employed on all levels of management in your business, not just the shop floor personnel, and it may even be used to alter the framework of those levels of management as well. It is a broad subject that is explored in greater detail in this article.

Why is it Necessary?

Put simply, businesses don’t operate without workers. As a result, some level of human resource management is required for any business to operate at all, let alone in an effective and prosperous manner.

Human Resource Management has an effect on every level of your business activities with varying degrees of visibility. The most evident HRM tasks involve the hiring and firing of employees as well as monetary systems such as payroll. It may also impact on motivation and communication within your business, which are far more intangible aspects but are crucial nonetheless. Bad HRM practice in these less visible arenas can have a negative impact on your organisation but go unnoticed for long periods of time.

It also goes without saying that every company is unique and will have a specific set of challenges to face and opportunities to take advantage of. HRM can work as a versatile tool that translates workforce potential into financial gains and can adjust to fully utilise the strengths of your firm. Without it, your rivals could be afforded the chance to prosper where you missed out.

We employ Human Resource Management to make sure our staff delivers IBC formation efficiently for optimum income.

Impact on Business

Whilst this all appears very interesting and important, how does it actually influence the daily functions of your business, and more importantly, how will it help to improve the performance and success of your firm? The impact of HRM can be broken down into the following areas.

Recruitment & Training

This is probably the area of a company that is most affiliated with human resources – recruitment. Nearly every business in the world, and particularly businesses that are expanding, must recruit people to work for them. Either existing employees have left, or new possibilities have arisen which mean there are jobs that need to be filled. HRM can ensure your recruitment system gets the appropriate people into the right jobs at a cost-effective price.

It’s also important to keep your staff training procedures up-to-date to make certain that your staff is fully capable of doing the job they are there to do. Whether it is a fresh piece of legislation or a new piece of technology that changes the marketplace, there is an on-going need to keep your business up-to-date and prepared to take advantage of any opportunity.

You may also discover that the costly practice of external recruitment can be averted if your organisation has adequate training facilities in place. It is far easier to teach an existing staff member to a higher level and then use outside recruitment to fill the gap remaining at the lower level than it is to recruit directly to a higher level.

Employee Relations

Once you have the right men and women working for you it is important to keep them doing work for you, and to ensure they are doing a decent job. This can be accomplished by means of good employee relations. The most obvious employee relations practice is the art of motivation – a wide topic by itself – but other worker relations issues may include disciplinary and grievance management. All of these things are an important part of the overall HRM strategy.


You can’t keep employees at your company by good motivational methods alone. They’ll want to be paid a fair amount and on time. Payroll should be one of the very first systems that is created when you start a company, but they still need to be maintained and updated when staff join, leave or change pay grade. Poor management of your payroll program can quickly lead to disaster in terms of your workforce.

Industrial Relations

Many firms will have to deal with trade union or other workers rights establishments which can be very forceful when defending the interests of their own members. When interacting with such bodies it is advantageous to have individuals within your organisation who can communicate effectively with them whilst keeping the interests of your own business in mind as well. The demand for good industrial relations is far more prevalent in public sector organisations.

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Workforce Planning

We have seen the effect that human resource management can have on a company and overall it looks like good HRM will have a beneficial effect on any business. As a rule, this is the case, but effective HRM doesn’t just happen overnight.

One way to apply HRM concepts to your company is via workforce planning – a system that has the aim of making sure your staff can complete the upcoming tasks needed for your company to be successful. It can be defined as:


Workforce planning is the method of anticipating ahead of time the human resource requirements of any organisation, both in terms of the number of employees required and the appropriate skill mix. Recruitment and training policies are designed with a long term focus in order to make sure that the organisation is able to operate without being limited by a lack of appropriate labour.


Evaluating your workforce demands is vital to the proper planning of your staff in the short-term and long-term future. If your company is subject to seasonal shifts in demand, for example in the tourism industry, or suffers from seasonal fluctuations in workforce then your workforce planning needs to take these variables into consideration.


Whether you are recruiting externally or from within your existing workforce you still want to find the correct individual to fill the position. As part of your workforce planning you should draw up a job description that describes the function that will be undertaken as well as a person specification which will give an indication of the sort of individual that would be a perfect fit for the job and your company.


The selection process can be as involved or as easy as you deem necessary. Beyond standard job selection interviews there are several ways you can learn about candidates for your jobs, including aptitude tests, group interviews and even psychometric testing.

Training & Development

The main goal of staff training and development is to develop a much better standard of worker in your organisation. Workforce planning can use training to plug upcoming gaps in the skill set of your workforce and is usually faster and more cost effective than external recruitment. Training and development can also go some way toward motivating your employees.

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Workforce Motivation

It practically goes without saying that well motivated employees are going to deliver a better standard of output and have a greater quantity of production than unhappy workers. This improved work rate will inevitably lead to a rise in the profitability of a business.

Essentially, all motivational tactics can be separated into two sets that are often referred to as the “carrot and stick” approach to motivation. The analogy relates to the two ways to make a donkey carry your belongings, either by tempting it with a carrot, or threatening it with a hit from a stick!

Whether you use the carrot approach or the stick strategy will generally depend on your own management approach, as well as the business you work in and the type of individuals that you hire.


The most common financial motivators are payment plans. You can pay workers in numerous different ways, either a set amount for a fixed service, by an hourly or daily rate, or a rate linked to production, such as a commission structure.

Another financial motivation method involves what are called incentive schemes, where by additional financial rewards are given out for good performance. This may include commission above a fixed salary, performance-related pay levels or even providing a share of company profits. Again, the motivating aspect here is the money alone.


Several human resource theorists have their own ideas about the other elements that motivate people to work, although these are often seen as a bonus to a worker. It is widely acknowledged that money is the main motivational factor for the great majority of people. If you would like to learn more about these theories I would recommend looking up the work of Elton Mayo, Abraham Maslow and Fredrick Herzberg.

The Changing Face of HRM

As previously mentioned, HRM is a flexible application that is there to match the features of your workforce to the objectives of your organisation. As a result, it has had to keep changing to a business climate that is constantly changing for one reason or another. Furthermore, it is a good idea to constantly evaluate your own HRM policies and not to rest on your laurels.

Perhaps there is a new piece of government law that will have an impact of how your business can carry out its operations, or maybe a fresh manufacturing technology will come along that will revolutionise your industry. Either way, if you want to ensure that your staff is performing to its highest level then your HRM strategy should be adaptive enough to cope with an ever-changing world. After all, what might seem like a danger to many will often appear as an opportunity to a shrewd entrepreneur.

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