Human resource management (HRM) entails planning, implementing, and managing recruitment, as well as selection, training, career, and organizational development initiatives within an organization. The goal of HRM is to maximize the productivity of an organization by optimizing the effectiveness of its employees while simultaneously improving the work life of employees and treating employees as valuable resources. Consequently, HRM encompasses efforts to promote personal development, employee satisfaction, and compliance with employment-related laws.
Planning: refers to the development of human resource policies and regulations.
Implementation: involves four primary activities: acquisition, development, compensation, and maintenance.
Acquisition: entails the hiring of workers most likely to help a company attain its goals, demands and supply of labour.
Development: encompasses the training of workers to perform their tasks in accordance with company strategy. This activity involves company efforts to control and change employee behaviour via reviews, appraisals, incentives, and discipline.
Compensation: covers the payment of employees for their services.
Maintenance: requires structuring labor relations—the interaction between a company's management and its unionized employees—and ensuring compliance with federal and state employment laws.
Evaluation: includes the assessment of a company's HRM policies to determine whether they are effective.
Competitive advantage of any firm accrued on the basis of development of the five capitals including natural, social, financial, manufactured and human capital. Human capital is among the most important resources that are utilises and refers to the skills, knowledge and abilities of personnel. HRM focuses on the importance of investments in skill by both organizations and people themselves emphasising issues of motivation and commitment. The lack of “in place and streamlined” HR functions in SMEs results in weak team building and high attrition rates, employee dissatisfaction with pay that leads to non conducive work environment, employee loyalty issues.
Human Resource Management strategy of an organization’s helps in maximizing organization’s return on investment in human capital and minimizing financial risks. This is achieved by aligning the supply of skilled and qualified individuals and the capabilities of the current workforce with the organization's ongoing and future business plans.
Also, to ensure that organization's human resource requirements are met effectively taking into account the legal, ethical and practical constrains in order to respect and retain of the workforce. SME’s in particular can survive and sustain a competitive advantage over larger firms by minimizes employee turnover, absenteeism and lost productivity costs. HRM in SME’s may contribute to or can be considered to be a key element in increasing employee satisfaction.
Recruitment and Training: this function helps in hiring the right kind of people for a specific job description. It includes formulating appropriate contract defining the roles and responsibilities, authorities and obligation of an employee. Recruitment is followed by training to the employees according to existing skills and competence. This help the organization in building a good team of working, capable, committed and trained professionals that is essential for the sustenance of the organization.
Performance Appraisals: in order to motivate and enhance the existing potential of each employee towards achieving the organizational goals and objective, the HRM team communicates with employees about all the necessary information regarding employee performance on regular basis to help them understand the outline for their anticipated targets in much clearer terms and thereby, helping them in the execution of organizational goals with their best possible efforts.
Maintaining Work Atmosphere: in order to get the best performance of each individual in an organization, work atmosphere or work culture play a crucial role in achieving employee satisfaction. HRM, continually strives to maintain a congenial atmosphere at work place. This helps the employees to focus more on their duties and responsibilities, avoid distraction or health and safety issues.
Managing Disputes: in order to resolve any issues and concerns that may arise between employees and the management in an organization like discrimination, wages, human rights issues, behavioural issues etc. HRM acts as a consultant and mediator to sort out the issues in an effective manner through dialogue or counselling.
Developing Public Relations: it is the responsibility of HRM establishing good public relations with the internal and external stakeholders. This includes organizing business meetings, seminars and various official gatherings on behalf of the company in order to establish relationships with other business sectors. Sometimes, the human resource department plays an active role in preparing the corporate communication, business and marketing plans for the organization too.
The ideal positioning of the HRM departments shall be central with maximum access to all divisions and management levels. In larger enterprises, HRM function is generally headed by a Vice President, while in small and medium enterprises, a middle-level manager may head HRM. In any case, because the HRM department is responsible for managing productivity and development of workers at all levels, the top HRM manager shall have access to, and the support of, key decision makers. In addition, the HRM department should be situated in such a way so that it can communicate effectively with all divisions within the company. This can be achieved through horizontal integration of HRM with other departments allowing HRM to integrate, educate, and train the workforce, and to facilitate changes within the organization without affecting or influencing the other departments.
The structure of HRM departments varies with the type and size of the organization. Many large organizations like governments, institutions, manufacturing companies, and service firms, HRM department is developed various clusters of workers or according to different specialised areas, such as sales, engineering, marketing, or executive education, while in small enterprises or SMEs, HRM departments are completely independent and are organized purely by function i.e. same HRM will impart training to all divisions of the organization.
SME’s differs from large businesses in many ways with facts such as SMEs are family based business run on either ownership or proprietorship with informal or personal relationship between owner and workers, huge independence in decision making and large number of unskilled and semi skilled workforce. Lack of appropriate knowledge and skills to implement HRM effectively remains a problem among SMEs. Generally, it is misunderstood as the value system that an owner passes on to its work force.
Managing Knowledge Workers: in today’s time when people have higher educational qualifications, taking up responsibilities at a lesser age and experience, have high bargaining power due to the knowledge and skills, high demand for the knowledge workers, and techno suaveness, it has become difficult to manage different kind of people who does not obey the principles of management for the traditional group.
Managing Technological Challenges: recently, organizations are getting more and more technologically oriented; preparing the work force to accept technological changes is a major challenge. It is a huge challenge to bring in IT and other technology accepted at all levels in organizations.
Developing Leadership: generally leadership is understood as specific traits and certain qualities; however, at an organisational level leadership is based on comprehensive knowledge and ability. HRM faces challenge to integrate individuals with performance potential and knowledge based expertise in to business by imparting necessary "soft skills" and organization behavioural skills.
Managing Change: in the era of globalization and boom in global opportunities, the major challenge faced is to manage change in like restructuring, turnaround, mergers, downsizing, etc. HRM has to continuously strive to undertake interventions that are dependent on managing the people issues in the process.