Human Resource Management: Key Functions and Practices

Introduction to Human Resource Management

All organizations require employees to make them successful, and people are considered as important a resource as finance, machinery, and land. The important point to note is that individuals all have different temperaments and working methods, and some people within the organization bear the responsibility of making everyone work together effectively. These people form the human resources department, otherwise known as the personnel department.

If an organization is not staffed correctly, it ends up losing the economies of scale it should have achieved, along with potential customers and profits. At the same time, if there are too many employees, the organization faces significant financial losses — either from retaining surplus staff or from redundancy payments when laying them off. The organization must also maintain its own staff to handle these matters internally; otherwise, considerable funds will be required for external consultation. Furthermore, employees cannot be removed immediately, as minimum notice periods are legally required. These challenges together create a variety of complex problems that HRM is designed to address.

Manpower Planning

Staff requirements must be planned with the total picture of the organization in mind. The available manpower should be sufficient to meet present needs as well as future expansions, taking into account the funds and other resources available to the organization and the predicted future of the industry. The final plan must account for all of these factors. Existing staff must then be categorized in terms of total numbers, skills, ages, flexibility, prior experience, character, potential, and predicted capabilities.

Future availability must then be roughly estimated across different time spans — one year, three years, and ten years. All such planning must account for typical staff turnover, promotions into other responsibilities, retirements, and similar factors. The future business plans of senior managers must also be incorporated. With all this work, one can reach an assessment of the likely situation that would arise if human resources managers were to do no planning at all.

That outcome is not acceptable, and even arriving at such a baseline assessment requires considerable effort. The human resources manager then makes a forecast — which may initially be only approximate. In other organizations, individual department managers will produce their own rough estimates, and it will be the responsibility of the HR department to finalize them. This approach is taken because personnel requirements flow from sales and production forecasts, technological changes, predicted changes in efficiency or productivity, the possible introduction of subcontractors or external agencies, variations caused by new payroll or health and safety legislation, and changes in government policy. With all of this information, one can produce a plan that is far better than an educated guess. The predicted staffing situation is then balanced against available staff, and plans are made for recruitment, training, retraining, and — where necessary — labor reduction. The ultimate goal of this entire effort is to bring labor supply and demand into equilibrium and enable the organization to achieve its planned objectives.

Recruitment and Selection of Employees

The first major task in manpower planning is obtaining people to work within the organization — whether for the first time or as replacements. To do this, the job must first be analyzed and its essential requirements determined. These requirements should be documented in a job description that clearly sets out the physical and mental characteristics needed. When recruitment is for the replacement of existing staff, the organization should first ask whether recruitment is truly necessary; in most cases, replacement should occur through the process of internal promotion.

It must be remembered that selecting employees is a costly exercise, as the employee will need to be compensated for years to come. For this reason, some organizations find it worthwhile to engage external agencies with strong reputations, or to use specialist consultants. At the same time, whoever handles recruitment must be thoroughly familiar with the role in question.

The main sources of staff include internal promotion, careers officers and appointment boards at universities, employment agencies, and advertising. Where advertising is used, it must not be offensive to any group. Different application forms will be needed for different levels of appointment. Candidates will often make claims about experience and qualifications on their forms, and these must be carefully verified. Application forms should also include a health questionnaire, which should be followed up with a medical examination. Once all forms are received, the suitability of each candidate must be assessed — ultimately through interviews. Interviews may be conducted by a panel drawn from different areas of the organization, or by a series of individual interviewers. The length of interviews may vary depending on the position. During selection, assessors must carefully evaluate candidates' aptitudes, attainments, and general intelligence. For senior positions, performance in leaderless group exercises, command tasks, and group problem-solving should also be assessed.