For business to grow and thrive in today's competitive environment, organizations must deal with several challenges. First of all, they must provide "value".
Traditionally, the concept of value has been considered a function of finance and accounting.
However, we believe that how Human Resources are managed, is crucial to the long-term value of a company and ultimately, to its survival. So definition of value includes not only profit but also employee growth and contribution to the organization.
In any organization, the human resources department is also very much a support function. It sets the policies and procedures that are to be followed with respect to employees by managers of the value chain, ensures that they follow those procedures, and keeps the "human" score.
Like its financial counterpart, the HR department is also becoming increasingly powerful. In more and more cases, the overall head of this function reports directly to the chief executive, and is usually known as vice-president-human resources or personnel director.
The purpose of an HR department is to improve the productive contribution of its workers. HR department determines every organization's success by improving the human contribution.
Human Resource Management (HRM) has undergone tremendous change 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.
During the last decade, the Personnel/HRM field has shifted from a micro focus on individual HRM practices to a debate on how HRM as a more holistic management approach may contribute to the competitive advantage or greater effectiveness of the organization. Three different perspectives have been used in recent research on the relationship between HRM and organizational performance:
1. Effects of individual "high performance" or "best" HRM practices,
2. Effects of internally appropriate combinations of HRM practices, and
3. Effects of appropriate strategic fit between strategy and HRM practices
HRM includes a variety of activities, and key among them is deciding what staffing needs you have 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 non-profit) have to carry out these activities themselves because they can't yet afford part- or full-time help.
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.
HRM owes a great deal to older models of management but its orientation is consistent with other modern management techniques. Often HRM is associated - or even confused - with initiatives such as total quality management (TQM), culture change and business process re-engineering.
Each has its own rationale but there are underlying themes in common with HRM. They are all products of a late twentieth-century re-evaluation of management thinking.
The HR profession and practices have undergone substantial change and redefinition but every one agrees on the need to successfully manage human resources for a company to maximize its competitiveness.
Human resource management is now widely recognized as a critical factor in securing the high quality, patient-centred healthcare system that everyone wants.
Evidence from many sources suggests that healthcare organizations with innovative and robust people management processes are more effective at all levels, including patient outcomes, than organizations lacking these approaches.
More recently, organizations consider the "HR Department" as playing a major role in staffing, training and helping to manage people so that employees and the organization are performing at maximum capability in a highly fulfilling manner.
Initially, the role of the personnel function was a strictly administrative one, a mix of accounting, finance and employee relations. But human resource has become more of a service function than an administrative one. It has become an internal service to help managers do their jobs effectively and has thus become more important.
SIZE OF ORGANIZATION: Organizations can range from single-person businesses to multinational corporations employing hundreds of thousands of people. Generally, the sophistication and importance of HR is greater in larger organizations.
As organizations grow larger and technology becomes more complex, it also becomes increasingly difficult to coordinate the people involved in an enterprise. Beyond a certain size it is impossible for one person to know what people are doing or even what their names are.
It allows us to quantify HR processes and outcomes so that objectives and targets can be set meaningfully. Cost, quality and quantity are measurable and indices can be devised to estimate the effectiveness of a variety of processes.
This is revolutionary thinking for many HR professionals who have traditionally used subjective descriptions and values for their work. Serious appreciation of HRM in small and medium enterprises (SMEs) is a comparatively recent phenomenon. HR researchers have largely ignored the SME sector.
Yet smaller companies should be fruitful subjects for study because many conduct people management in the direct fashion advocated by HRM models. But irrespective of the unit's size, the same HR activities are required in small businesses but on a smaller scale.
The small business manager must be able to properly perform the functions of HRM and achieve the same goals that a larger HR department does. In these organizations, the owner-manager performs these activities.
In other situations, small-business human resource departments are staffed with one individual and possibly a full-time secretary. Accordingly, such individuals are forced, by design, to be HRM generalists.
Yet the field of HRM is not one that exists in isolation. Rather, it's part of a larger field of management. Reinforcing many new philosophies like that of work force diversity, downsizing, reengineering, total quality management (TQM), outsourcing and supporting this effort has made HRM an even more vital component of the management team.
Similarly, the strategic nature of HRM continues to gain acceptance as more organizations look to ensure that they have the right number of the right people at the right time and in the right place.
