Human Resource Management (HRM, HR) is the management of an organization’s employees. While human resource management is sometimes refereed to as a “soft” management skill, effective practice within an organisation requires a strategic focus to ensure that people resources can facilitate the achievement of organisational goals. Effective human resource management also contains an element of risk management for an organisation which, as a minimum, ensures legislative compliance.
Origins
Human resource management is sometimes referred to as:
- Organisational Management
- Personnel Administration
- Manpower Management
- Human Capital Management
- Industrial Management
But these traditional expressions are becoming less common for the theoretical discipline. Sometimes even employee and industrial relations are confusingly listed as synonyms, although these more accurately relate to employment conditions and often have a legislative focus.
At a very basic level, the theoretical discipline of human resource management is based primarily on the assumption that employees are individuals with varying goals and needs, and as such should not be thought of as basic business resources, such as trucks and filing cabinets.
Human Resource Management(HRM) is seen by practitioners in the field as a more innovative view of workplace management than the traditional approach. Its techniques force the managers of an enterprise to express their goals with specificity so that they can be understood and undertaken by the workforce, and to provide the resources needed for them to successfully accomplish their assignments. As such, HRM techniques, when properly practiced, are expressive of the goals and operating practices of the enterprise overall. HRM is also seen by many to have a key role in risk reduction within organisations.
Synonyms such as personnel management are often used in a more restricted sense to describe activities that are necessary in the recruiting of a workforce, providing its members with payroll and benefits, and administrating their work-life needs. Torrington and Hall (1987) define personnel management as being:
“a series of activities which: first enable working people and their employing organisations to agree about the objectives and nature of their working relationship and, secondly, ensures that the agreement is fulfilled” (p. 49).
While Miller (1987) suggests that HRM relates to:
“…….those decisions and actions which concern the management of employees at all levels in the business and which are related to the implementation of strategies directed towards creating and sustaining competitive advantage” (p. 352).
Academic theory
Research in the area of HRM has much to contribute to the organizational practice of HRM. For the last 20 years, empirical work has paid particular attention to the link between the practice of HRM and organizational performance, evident in improved employee commitment, lower levels of absenteeism and turnover, higher levels of skills and therefore higher productivity, enhanced quality and efficiency. This area of work is sometimes referred to as ‘Strategic HRM’ or SHRM.
Within SHRM three strands of work can be observed: Best practice, Best Fit and the Resource Based View (RBV).
The notion of best practice – sometimes called ‘high commitment’ HRM – proposes that the adoption of certain best practices in HRM will result in better organizational performance. Perhaps the most popular work in this area is that of Pfeffer who argued that there were seven best practices for achieving competitive advantage through people and ‘building profits by putting people first’. These practices included: providing employment security, selective hiring, extensive training, sharing information, self-managed teams, high pay based on company performance and the reduction of status differentials. However, there is a huge number of studies which provide evidence of best practices, usually implemented in coherent bundles, and therefore it is difficult to draw generalized conclusions about which is the ‘best’ way (For a comparison of different sets of best practices see Becker and Gerhart, 1996
Best fit, or the contingency approach to HRM, argues that HRM improves performance where there is a close vertical fit between the HRM practices and the company’s strategy. This link ensures close coherence between the HR people processes and policies and the external market or business strategy. There are a range of theories about the nature of this vertical integration. For example, a set of ‘life cycle’ models argue that HR policies and practices can be mapped onto the stage of an organization’s development or life cycle. Competitive advantage models take Porter’s (1985) ideas about strategic choice and map a range of HR practices onto the organization’s choice of competitive strategy. Finally ‘configuration models’ provide a more sophisticated approach which advocates a close examination of the organisation’s strategy in order to determine the appropriate HR policies and practices. However, this approach assumes that the strategy of the organisation can be identified – many organisations exist in a state of flux and development.
The Resource Based View (RBV), argued by some to be at the foundation of modern HRM, focusses on the internal resources of the organisation and how they contribute to competitive advantage. The uniqueness of these resources is preferred to homogeneity and HRM has a central role in developing human resources that are valuable, rare, difficult to copy or substitute and that are effectively organized.
Overall, the theory of HRM argues that the goal of human resource management is to help an organization to meet strategic goals by attracting, and maintaining employees and also to manage them effectively. The key word here perhaps is “fit”, i.e. a HRM approach seeks to ensure a fit between the management of an organization’s employees, and the overall strategic direction of the company (Miller, 1989).
The basic premise of the academic theory of HRM is that humans are not machines, therefore we need to have an interdisciplinary examination of people in the workplace. Fields such as psychology, industrial relations, industrial engineering, sociology, economics, and critical theories: postmodernism, post-structuralism play a major role. Many colleges and universities offer bachelor and master degrees in Human Resources Management or in Human Resources and Industrial Relations.
One widely used scheme to describe the role of HRM, developed by Dave Ulrich, defines 4 fields for the HRM function:
- Strategic business partner
- Change Agent
- Employee champion
- Administration Expert
Business practice
Human resources management involves several processes. Together they are supposed to achieve the above mentioned goal. These processes can be performed in an HR department, but some tasks can also be outsourced or performed by line-managers or other departments. When effectively integrated they provide significant economic benefit to the company.
- Workforce planning
- Recruitment (sometimes separated into attraction and selection)
- Induction, Orientation and Onboarding
- Skills management
- Training and development
- Personnel administration
- Compensation in wage or salary
- Time management
- Travel management (sometimes assigned to accounting rather than HRM)
- Payroll (sometimes assigned to accounting rather than HRM)
- Employee benefits administration
- Personnel cost planning
- Performance appraisal
- Labor relations
HRM strategy
An HRM strategy pertains to the means as to how to implement the specific functions of Human Resource Management. An organization’s HR function may possess recruitment and selection policies, disciplinary procedures, reward/recognition policies, an HR plan, or learning and development policies, however all of these functional areas of HRM need to be aligned and correlated, in order to correspond with the overall business strategy. An HRM strategy thus is an overall plan, concerning the implementation of specific HRM functional areas.
An HRM strategy typically consists of the following factors:-
“Best fit” and “best practice” – meaning that there is correlation between the HRM strategy and the overall corporate strategy. As HRM as a field seeks to manage human resources in order to achieve properly organizational goals, an organization’s HRM strategy seeks to accomplish such management by applying a firm’s personnel needs with the goals/objectives of the organisation. As an example, a firm selling cars could have a corporate strategy of increasing car sales by 10% over a five year period. Accordingly, the HRM strategy would seek to facilitate how exactly to manage personnel in order to achieve the 10% figure. Specific HRM functions, such as recruitment and selection, reward/recognition, an HR plan, or learning and development policies, would be tailored to achieve the corporate objectives.
Close co-operation (at least in theory) between HR and the top/senior management, in the development of the corporate strategy. Theoretically, a senior HR representative should be present when an organization’s corporate objectives are devised. This is so, since it is a firm’s personnel who actually construct a good, or provide a service. The personnel’s proper management is vital in the firm being successful, or even existing as a going concern. Thus, HR can be seen as one of the critical departments within the functional area of an organization.
Continual monitoring of the strategy, via employee feedback, surveys, etc.
The implementation of an HR strategy is not always required, and may depend on a number of factors, namely the size of the firm, the organizational culture within the firm or the industry that the firm operates in and also the people in the firm.
An HRM strategy can be divided, in general, into two facets – the people strategy and the HR functional strategy. The people strategy pertains to the point listed in the first paragraph, namely the careful correlation of HRM policies/actions to attain the goals laid down in the corporate strategy. The HR functional strategy relates to the policies employed within the HR functional area itself, regarding the management of persons internal to it, to ensure its own departmental goals are met.
Careers and education
Cornell University’s School of Industrial and Labor Relations was the world’s first school for college-level study in HRM.
Several universities offer programs of study pertaining to HRM and broader fields. Cornell University created the world’s first school for college-level study in HRM (ILR School). University of Illinois at Urbana-Champaign also now has a school dedicated to the study of HRM, while several business schools also house a center or department dedicated to such studies; e.g., University of Wisconsin-Madison, University of Minnesota, Michigan State University, Ohio State University, Roosevelt University,and Purdue University.
There are both generalist and specialist HRM jobs. There are careers involved with employment, recruitment and placement and these are usually conducted by interviewers, EEO (Equal Employment Opportunity) specialists or college recruiters. Training and development specialism is often conducted by trainers and orientation specialists. Compensation and benefits tasks are handled by compensation analysts, salary administrators, and benefits administrators.
Professional organizations
Professional organizations in HRM include the Society for Human Resource Management, the Australian Human Resources Institute (AHRI), the Chartered Institute of Personnel and Development (CIPD), the International Public Management Association for HR (IPMA-HR), Management Association of Nepal (MAN) and the International Personnel Management Association of Canada (IPMA-Canada), Human Capital Institute. National Human Resource Development Network in India.Bangladesh Institute of Human Resource Management,Dhaka, Bangladesh. The Chartered Institute of Human Resource Managers(ICHRM), Bangladesh.
Functions
The Human Resources Management (HRM) function includes a variety of activities, and key among them is deciding the staffing needs of an organization and whether to use independent contractors or hire employees to fill these needs, recruiting and training the best employees, ensuring they are high performers, dealing with performance issues, and ensuring your personnel and management practices conform to various regulations. Activities also include managing your approach to employee benefits and compensation, employee records and personnel policies. Usually small businesses (for-profit or nonprofit) have to carry out these activities themselves because they can’t yet afford part- or full-time help. However, they should always ensure that employees have—and are aware of—personnel policies which conform to current regulations. These policies are often in the form of employee manuals, which all employees have.
Note that some people distinguish a difference between HRM (a major management activity) and HRD (Human Resource Development, a profession). Those people might include HRM in HRD, explaining that HRD includes the broader range of activities to develop personnel inside of organizations, including, e.g., career development, training, organization development, etc.
There is a long-standing argument about where HR-related functions should be organized into large organizations, e.g., “should HR be in the Organization Development department or the other way around?”
The HRM function and HRD profession have undergone major changes over the past 20–30 years. Many years ago, large organizations looked to the “Personnel Department,” mostly to manage the paperwork around hiring and paying people. More recently, organizations consider the “HR Department” as playing an important role in staffing, training and helping to manage people so that people and the organization are performing at maximum capability in a highly fulfilling manner.