Importance of Human Resource Management (HRM)
According to a study, an organization should have an average HR-to-staff ratio of 1:4. This ratio may differ depending on the size of an organization but a balanced ratio ensures enough personnel for efficient management. Human resource management is a practice that involves key components like recruitment, training, development, talent management, labor relations, and compliance. This blog will help you understand the importance of human resource management, its functions, and how it is different from human resource development.
What is Human Resource Management?
HRM is the process of training, recruiting, developing, and managing the talent pool. Effective human resource management fills the gap between the company’s business goal and employees’ success. It also helps support employees in improving their performance and assists every department of an organization in achieving its long-term goals.
Also Read: Objectives of HRM
Importance of Human Resource Management (HRM)
An excellent firm or organization cannot be built without a good team. The success story of any organization depends on its employees and work culture. The following are the reasons why human resource management is important.
1. Promotes Good Working Relationships and Environment
Building a productive workplace culture is key for employees and organizations alike. It comprises creating an environment in which employees feel respected and safe. Here, HR professionals play an integral role by encouraging clear organizational communication.
2. Helps in Assisting Budget Control
HRM helps ensure budget control by creating a structured financial compensation plan designed to reflect the value of each job role within an organization. This could be done through providing monetary rewards, such as salaries, wages, and bonuses, or offering non-monetary benefits, like healthcare coverage, vacation time, or insurance packages.
Establishing clear pay structures based on market rates for comparable positions also makes comparing costs between businesses in similar industries easier, providing further assurance that resources are used efficiently.
3. Establishes Corporate Reputation
Having a well-maintained corporate reputation benefits any organization. The human resources manager plays an important role in upholding the company’s positive image among its external and internal stakeholders – customers, suppliers, employees, etc. This contributes to driving success by enticing talented individuals to join the firm. Therefore it’s vital that HRM takes proactive measures to build and maintain this goodwill over time.
4. Works on the Training and Development of Employees
Investing in HRM provides many benefits, such as improved employee engagement, knowledge sharing, and organizational growth. Training sessions allow employees to develop their skills related to their job roles while development programs assist them in building life skills like communication, decision-making, leadership qualities, etc. Orientation activities are also necessary when welcoming new members into an organization to familiarize them quickly with its workings.
5. Closes the Gap Between Human Resource Supply and Demand
HRM is the practice of managing and directing employees toward a successful operation within an organization. It includes a wide range of activities, such as employee recruitment and selection, training and professional development, overseeing performance management systems, and developing workplace policies to ensure compliance with relevant laws or regulations. It also includes addressing grievances and administering benefits programs like retirement plans and health insurance schemes.
6. Profit and Productivity Management
HRM helps maintain and manage a qualified workforce to ensure organizational profit. It also involves creating suitable opportunities for the existing employees to develop their skills. This reduces turnover rate as well as improves overall performance.
By retaining key organizational personnel, HRM facilitates sustained growth, leading to success. This also minimizes training costs associated with hiring new staff.
7. Helps with Employee Motivation and Retention
Employees need to feel appreciated and rewarded to be fully motivated. HR departments ensure that employees receive recognition and applause whenever they reach their goals or put forth extra effort. Monetary benefits, such as rewards, compensations, and fringe benefits, can also help with employee motivation.
8. Aids in Providing Quality Work Life
HR professionals ensure optimal productivity for employees by managing workplace stress; providing financial reimbursement and recognition; granting autonomy in their roles; and fostering a sense of belonging among workers.
By establishing these guiding principles, under which employees can perform at maximum potential, HR teams contribute to successful business operations. This way, they make invaluable contributions toward improving the quality of life within an organization.
To learn more about the importance of HRM, you can opt for an in-depth HR course.
HRM Functions
HRM functions work in numerous industries and sectors, helping with problems related to motivation, hiring, training, and development. The primary functions of HRM are given below.
1. Planning
For meeting the goal and developing strategies, planning is an important function. It helps forecast demands, ease the selection process, and analyze the workforce. It is important in implementing human and non-human resources and helps in evading risks, uncertainties, and confusion.
2. Directing
It is a part of managerial functions, which helps in communication, supervision, leadership, and motivation. It is also known as the relational features of the management and spark of the project or business.
3. Controlling
It is a process of fixing performance and checking progress towards the target goal. Controlling can be done by building standard performance, comparing the current performance with the targets, and finding the variance.
4. Organizing
It is a combination of identification, classification, and coordination. For organizing a business, or a firm, you need to identify the tasks and activities required to achieve the goals. This function in HRM helps classify these activities based on their functions and departments to the appropriate individuals or teams. It also coordinates with their efforts to ensure efficient and effective implementation of the plan.
5. Recruitment
One of the essential functions of HR management is the recruitment and onboarding of suitable candidates. It works towards attracting and selecting the right talent according to the organization’s requirements.
6. Performance Management
It is a function where HR provides the employees with a working environment focused on promoting productivity and efficiency. Performance management creates communication between the employees and the managers and streamlines the employee performance and efforts essential to achieve the organizational goals.
7. Rewards and Recognition
HRM utilizes reward and recognition programs to ensure the commitment of the employees toward producing high-quality work. When employees are rewarded and recognized for their work, they are motivated to perform better and yield higher results for the organization.
8. Compensation and Benefits
Another HRM function that helps in attracting and retaining employees in an organization is providing compensation and benefits. These include monetary compensation, food, healthcare benefits, gym memberships, bonuses, casual dress codes, flexible work schedules, etc. Employees feel motivated to work when compensated well at work. Further, job seekers are more likely to apply to organizations that offer benefits over and above the basic salary.
9. Health and Safety
HRM involves implementing occupational health and safety programs to foster safe workplaces. This includes identifying risky situations, creating mitigation plans, assessing the working of the safety programs, legal compliance, and promoting a safety culture.
10. Administrative Function & Compliance
This includes handling responsibilities like training, transfers, promotions, leave records, preparation of contracts, etc. Further, HRM ensures adherence to industry standards and compliance with legal requirements and guarantees that employees receive their contractual workplace entitlements like compensation and benefits.
Want to work as a dynamic HR professional? Enroll in this industry-oriented HRM placement guarantee course and explore top career options like HR Recruiter, HR Associate, HR Analyst, and more.
Human Resource Management vs Human Resource Development
The HR department can be divided into two distinct areas: human resource development and human resource management. Both HRM and HRD are important for an organization to function efficiently. The following are the key differences between HRM and HRD.
| Human Resource Management (HRM) | Human Resource Development (HRD) |
|---|---|
| It is a management function. | It is a part of HRM. |
| It helps enhance the productivity of the employees. | It helps in improving the skills, aptitude, and ability of employees. |
| Its functions are reactive, meaning they respond to and address issues and challenges as they arise. | It is proactive, meaning it takes a forward-thinking and preventive approach. |
| It focuses on people management and principles. | It focuses on the development and enhancement areas of the entire firm. |
| It secures legal allowance. | It contributes to long-term growth through development. |
HRM Functions
HRM functions work in numerous industries and sectors, helping with problems related to motivation, hiring, training, and development. The primary functions of HRM are given below.
Planning
For meeting the goal and developing strategies, planning is an important function. It helps forecast demands, ease the selection process, and analyze the workforce. It is important in implementing human and non-human resources and helps in evading risks, uncertainties, and confusion.
Directing
It is a part of managerial functions, which helps in communication, supervision, leadership, and motivation. It is also known as the relational features of the management and spark of the project or business.
Controlling
It is a process of fixing performance and checking progress towards the target goal. Controlling can be done by building standard performance, comparing the current performance with the targets, and finding the variance.
Organizing
It is a combination of identification, classification, and coordination. For organizing a business, or a firm, you need to identify the tasks and activities required to achieve the goals. This function in HRM helps classify these activities based on their functions and departments to the appropriate individuals or teams. It also coordinates with their efforts to ensure efficient and effective implementation of the plan.
Recruitment
One of the essential functions of HR management is the recruitment and onboarding of suitable candidates. It works towards attracting and selecting the right talent according to the organization’s requirements.
Performance Management
It is a function where HR provides the employees with a working environment focused on promoting productivity and efficiency. Performance management creates communication between the employees and the managers and streamlines the employee performance and efforts essential to achieve the organizational goals.
Rewards and Recognition
HRM utilizes reward and recognition programs to ensure the commitment of the employees toward producing high-quality work. When employees are rewarded and recognized for their work, they are motivated to perform better and yield higher results for the organization.
Compensation and Benefits
Another HRM function that helps in attracting and retaining employees in an organization is providing compensation and benefits. These include monetary compensation, food, healthcare benefits, gym memberships, bonuses, casual dress codes, flexible work schedules, etc. Employees feel motivated to work when compensated well at work. Further, job seekers are more likely to apply to organizations that offer benefits over and above the basic salary.
Health and Safety
HRM involves implementing occupational health and safety programs to foster safe workplaces. This includes identifying risky situations, creating mitigation plans, assessing the working of the safety programs, legal compliance, and promoting a safety culture.
Administrative Function & Compliance
This includes handling responsibilities like training, transfers, promotions, leave records, preparation of contracts, etc. Further, HRM ensures adherence to industry standards and compliance with legal requirements and guarantees that employees receive their contractual workplace entitlements like compensation and benefits.
Conclusion
Human resource management is a crucial part of every organization. It is vital to understand the importance of HRM (Human Resource Management) as it helps in completing targets and improving employee performance by assisting and enhancing their work. The human resource department has been advancing worldwide and has become an indispensable part of every successful organization.
FAQs
Building and maintaining effective working relationships with employees is the most important part of human resource management (HRM).
The scope of HRM encompasses all areas related to managing an organization’s human resources, such as recruitment, staffing, training, employee relations, and retention.
Strategic human resource management is important because it helps align an organization’s goals and objectives with those of its employees.
Yes, training and development is a key component of human resource management.
