Human Resource Management: Functions, Strategy & Talent

Introduction to Human Resource Management

One classic definition of human resource management is that it is the strategy for acquiring, using, improving, and preserving an organization's human resources. It could be argued that the human dimension is almost completely forgotten in relation to how organizations manage people. This leaves most employees very dissatisfied and undermines the development of an effective workforce. This omission results in a high turnover rate, which negatively affects an organization's overall performance. It is important, therefore, that employees be managed in ways consistent with broad organizational requirements such as efficiency or quality. In most cases, organizational effectiveness depends upon people — and upon a good fit between business strategies and human resources (Heathfield 2012).

Human Resource Management (HRM) functions include a wide variety of activities. Key among these is the responsibility for human resources — that is, making decisions about what staffing needs an organization has, and whether to use independent contractors or to hire employees to fill those needs. This may also include recruiting and training the best employees, ensuring high performers are retained, addressing performance issues, and ensuring that personnel and management practices conform to the organization's regulations.

Core HRM Functions and Activities

HR activities also include managing employee compensation and benefits, maintaining employee records, and developing personnel policies. Small businesses often must carry out these activities themselves, as they cannot yet afford full- or part-time HR help. Nevertheless, they must ensure that employees have access to — and are aware of — personnel policies that conform to current regulations. These HR policies are typically distributed in the form of employee manuals available to all staff (Mazurek 2012).

Some scholars distinguish between Human Resource Development (HRD) and HRM as separate professions and fields of practice. Others subsume HRM within HRD, explaining that HRD encompasses a broader range of activities aimed at developing personnel within organizations — including career development, training, and more. Both fields have undergone tremendous change over the past 20 to 30 years. Many years ago, large companies looked to the "Personnel Department" primarily to manage paperwork around hiring and paying employees. More recently, companies view "HR" as playing a major role in staffing, training, and managing people so that the organization performs at maximum capability. There remains ongoing debate about how HR-related functions should be organized within large companies (Armstrong 2010, 15–16).

HRM vs. Human Resource Development

Recently, the term talent management has come to refer to the activities performed to attract, retain, and develop employees. Some people and organizations use this phrase specifically in reference to talented and/or high-potential employees. The term is often used interchangeably with "HR." Similarly, many practitioners use the phrases "Human Resource Development," "Human Resource Management," and "Human Resources" interchangeably, though distinctions between them do exist (Armstrong 2010, 15–16).