> Explain the role of HRM in organizations.
> Define and discuss some of the major HRM activities.
Every organization, large or small, uses a variety of capital to make the business work. Capital includes cash, valuables, or goods used to generate income for a business. For example, a retail store uses registers and inventory, while a consulting firm may have proprietary software or buildings. No matter the industry, all companies have one thing in common: they must have people to make their capital work for them. This will be our focus throughout the text: generation of revenue through the use of people’s skills and abilities.
What Is HRM?
Human Resource Management (HRM) is the process of employing people, training them, compensating them, developing policies relating to them, and developing strategies to retain them.
It is a strategic and distinctive approach to employment management which seeks to achieve competitive advantage through the development of a highly committed workforce. It is designed to maximize employees’ performance in service of an employer’s strategic objectives.
Human resource management involves developing and administering programmes that are designed to increase the effectiveness of the workforce of an organization or a business. It includes an entire spectrum of creating, managing and cultivating the employer-employee relationship. HRM aims at fostering a mutual and a win-win work interaction between the employer (management) and the employees.
Why is it called Human Resource Management?
We will start by defining each word that makes up the concept.
📌 Human: refers to the skilled workforce in an organization.
📌 Resource: means scarce or limited availability.
📌 Management: Refers to how to optimize and make best use of the scarce or limited available resource in order to achieve organization’s goals and objectives.
You will hear most times that there are typically 4 assets managed by organization’s.
These assets are:
📌 Physical assets (lands, buildings, facilities, equipment etc.)
📌 Financial assets (bonds stocks etc.)
📌 Intangible assets (patent and design)
📌 Human assets (competent or skilled individual with the capacity to render services to the organization’s success.
It is not necessarily the number of workers in an organization, but mostly the collective value of the capabilities, knowledge, skills, life experience and the motivation of an organization’s workforce.
Now, of all the assets previously mentioned, the human asset is considered as the most crucial because it is at the pivot of operation.
As a field, HRM has undergone many changes over the last twenty years, giving it an even more important role in today’s organizations. In the past, HRM meant processing payroll, sending birthday gifts to employees, arranging company outings, and making sure forms were filled out correctly—in other words, more of an administrative role rather than a strategic role crucial to the success of the organization.
It’s necessary to point out here, at the very beginning of this lesson, that every manager has some roles relating to human resource management. Just because we do not have the title of HR manager doesn’t mean we won’t perform all or at least some of the HRM tasks. For example, most managers deal with compensation, motivation, and retention of employees—making these aspects not only part of HRM but also part of management. As a result, this lesson is equally important to someone who wants to be an HR manager and to someone who will manage a business.
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