Human Resources Management : The Essential Guide

Effective Human Resources Management also known as HRM is a vital area of business strategy and key to improving organizational performance. Exploring areas of employee engagement and motivation, organizational development, learning and development, labour relations and the strategic environment organizations compete within, allows you to gain an understanding of the complex world of HRM. This essential guide is here to provide an insight into various methods to tackle human resources management.

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This Human Resources Management (HRM) guide covers the following areas:

• HRM Definition
• Importance
• History
• Where is HRM today?
• 5 Major Functions of Human Resources
• Process optimization
• Best practices
• Worst practices
• Benefits
• What does HRM mean for an employee?
• What does HRM mean for a manager?
• What does HRM mean for a company?
• 5 innovative examples
• Conclusion

What is Human Resources Management?

Human Resources Management (HRM) is the process that covers the key procedures, tasks, activities and policies in an organization in relation to their primary assets - the employees. This includes, but is not exclusive to; recruitment, training, compensation, developing policies and developing strategies to retain talent.

In simple language, human resources is how you get the best out of a company's people, so that they work to their full potential. Human resources management is the policies and practices that make this happen.

The Importance of Human Resources Management

The importance of personnel management has significantly increased over the last 20 years. Its roles have become more multifaceted than its basic beginnings of processing the payroll, conducting interviews and performance appraisals, noting internal gradiences, etc.

In today's workplace it's crucial that the work conducted by the HR team is fully integrated into the business and actively contributes towards helping it achieve its strategic goals, whether that's by implementing individual policies or making changes across the board such as developing a more beneficial workplace culture.

In this way, HRM has moved away from being a process-orientated function to one of great strategic importance.

The move to remote work has placed human resources at front and centre. How do you get the most out of teams during this time of change? HR has a central role to play to ensure employee engagement remains strong.

The History of Human Resources Management

Human Resources Management is a concept that has been utilized ever since human beings started following an organized way of life. It’s the degree to which it has been utilized which is constantly developing. Even during ancient times, only the best soldiers were recruited for the royal armies, and the same ethos still stands today in recruitment processes. Nonetheless there are notable events that have played a big part in shaping the world of HRM today.

Pre-historic Times

HRM can be found with pre-historic roots due to its association with various organizational functions such as the process of selecting a tribal leader, or passing on vital knowledge through generations about hunting, health, safety, and gathering food.

The first written example of HRM elements being used within society was within China where employee screening techniques were used all the way back in 1115 BC. The Greeks had developed apprenticeship programs by 2000 BC. These are examples of how key recruitment has always been in selecting and training the right people for certain jobs.

The Industrial Revolution

England's industrial revolution of the late 1700s drastically transformed the practices of production. Machines were brought in to churn out products which previously were handmade; cottage industries were replaced by large factories; and small scale production gave way to large scale production. This in turn created a whole new system of work with more workers within single organizations.

In order for these organizations to succeed they needed sufficient recriuitment methods to attract the potential employees and develop a well-organized structure within the company, with a far greater emphasis on management than had been present before.

However, working conditions during the industrial revolution were harsh. Hazardous conditions were the norm such as no ventilation in factories, no safety measures surrounding the handling of heavy machinery, and this caused thousands of deaths. This, alongside the average shift being 14 hours long - even for children - and workers having no rights to demand a raise or safer conditions from employers gave way to a division between the labor force and the bureaucratic management. Over time, this gap grew bigger, and the conditions of the labor force vastly deteriorated within the capitalist economy.

Hence the birth and necessity of human resources management - to tackle this issue and to give employees a voice.

The beginnings of human resources management were highly indicative of a social welfare approach. It was arguably aimed at the vast swathes of immigrants who moved from the east to the west looking for work.

The early programmes focused on assisting immigrants to integrate into their new jobs and communities through language lessons, housing and medical care. Within the workplace, there was a growing interest in techniques available to ensure an increase in productivity.

1700s - 1900s

Due to the increasing demand for greater workers' welfare, the first Labor Unions were established in the 1790s to provide greater power to create change for the employees. These unions grew rapidly between the 1870s and 1900s. Vital to the relationship between the labor unions and management were the HR departments that facilitated their relationships.

This meant that HR departments were pushed to become more capable in both politics and diplomacy in order to bring unions and management together on common ground as a means to achieve both greater welfare for the workers, and greater productivity for the management.

1900s - 1960s

In response to the growing need for welfare reforms, especially within the labor force, came a few schools of thought based on case studies which paved the way for HR. Frederick Taylor's case study on the principles of scientific management was the starting point for championing better management of workers. Using a scientific method to determine the most efficient way to work. This meant that workers were matched to tasks they are suited to, proactively monitoring performance, providing feedback and allocating planning tasks to line managers so workers can focus on the task at hand.

There was also Elton Mayo and the Hawthorne studies which initially focused on how working conditions impacted productivity, but subsequently revealed a pinnacle factor in improving production was the recognition of the importance of psychological and social factors at work.

This created the first HR roles, which at the time fell under the titles of ‘employment manager’ and ‘labor manager’. However, between the 1900s and 1960s this was prior to the term Human Resources Management. Once HRM was coined, this area of employee management was largely focused on administration and welfare advancements with multiple reforms such as the Wagner Act of 1935. The Fair Labor Standards Act accounted for minimum wages for laborers and the Social Security Act ensured old age benefits for people after retirement.

However, the development of labor relations was not restricted to legislation. Its progression also lay in other realms. For instance, Cornell University established a school of Industrial and Labor Relations in 1945 with the first official study program for HR, and Civil Rights movements started to tackle issues of diversity, equal opportunity and affirmative action - for which HRM was chosen to take action within the workplace.

The proliferation of Information Technology coupled with the globalization of business created great change within companies and the workforce, and how both are managed.

1960s on

It was between the 1960s and 1970s that HRM gained momentum after the passing of several acts like the Equal Pay Act of 1963, the Civil Rights Act of 1964, the Employee Retirement Income Security Act of 1974, and the Occupational Safety and Health Act of 1970. These laws ensured the safety and protected the rights of employees. Laws were enacted to prevent discrimination of disabled workers under the Americans With Disabilities Act in 1990.

With the advent of all these acts, corporations placed a lot of importance on human resources management to avoid plausible lawsuits. By the end of the 1970s, HRM had taken over the world! Almost all big and medium-scale industries had a department to manage their recruitment, employee relations, record-keeping, salaries, wages, etc. Towards the 1980s, the importance of HR continued to grow to support increases in skilled labor, training, regulation compliance, dismissal, etc. HR managers were tasked with the challenges of hiring and firing employees.

Human Resources Management has been given various names throughout its long history. Since being recognized as a separate and important function, it has been called 'Personnel Relations', which evolved to 'Industrial Relations', then 'Employee Relations', and finally to 'Human Resources'.

Today, Human Resources Management has the same importance as other departments in most companies. With the constant increase in education and technology, and frequent fluctuations in economic status and structures, HR remains the oldest, most mature, and most efficient of the management styles. It quintessentially underlines the importance of human beings working in any organization.

The Objectives of Human Resources Management

HRM has come a long way from its administrative and welfare-championing beginnings. In today’s economy it is a multifaceted and crucial aspect of almost all businesses, with the role of HR in planning and driving strategic growth being just as important as technology or business leadership. Alongside the increasing importance laid on work experience, workplace culture, the digitization of HRM - particularly the implementation of technologies such as analytics, digital labor, AI, and performance management - has played a fundamental role in its advancement.

The role of Chief Human Resources Officer (CHRO) or Chief People Officer (CPO) has become one of the most important roles within a company and is getting its due recognition from the rest of the C-suite. These roles are no longer based on the administrative side of business but are vital in implementing everyday changes to aid the transformation from traditional-style organizational structures to new, agile structures. A major part of this is in response to the changing needs of today's talent as they seek a greater variance of employment arrangements, which if met can in turn boost both motivation and production.

One of HR’s fundamental shifts in recent years has been the introduction of employee experience as a process which mirrors the customer experience. Employee engagement has evolved into a strategic priority as companies that have highly engaged workforces (EX excellence) are 21 percent more profitable than those with poor management.

The move to remote-work has highlighted the central role of HR. How do you engage teams who are physically distant from each other? How do you streamline people processes so that everyone continues to have a satisying work environment? HR teams have innovated over the course of this year to create remote workplaces that engage and inspire.

The role of Cheif Experience Officer highlights the centrality of human resources to modern executive boards. EX is almost as imperative as CX, as happy staff make for happy customers. The role HRM plays in this is not simply integrating a slide into the office, but implementing the right framework, culture and software to maximize staff retention, performance, employee engagement, and satisfaction.

What are the 5 major functions of human resources?

Human resources are complex – as humans are complex! It’s important to break down the major functions of HR.

These are:

1. Learning and Development
2. Compensation and Benefits
3. Employee relations & Management Counsel
4. Employee Engagement
5. Recruitment and Onboarding

The above are far from comprehensive. HR will also have to create strategy that is legally compliant.

1) Learning and Development

We place this first as the importance of L&D should not be underestimated! As we explored above, modern Human Resources Management is about how you can add value to a company through its people.

Adding value means helping employees to learn and progress. Create a learning and development plan that aligns with broader company targets. In what areas does your company seek to grow? How can your people boost their skills to meet future targets?

Taking the time to discuss personal development plans with employees one-on-one is a great starting point. SMART goals can help employees set measurable and actionable personal targets.

In the virtual workplace, online courses, webinars and podcasts provide freely available opportunities to build commercial awareness and core skills.

2) Compensation and Benefits

It is the responsibility of HR leaders to create a strategy for compensation and benefits. A great benefits programme can help attract excellent new hires and improve employee turnover. Benefits are also a form of employee recognition – which is known to boost engagement.

It is also HR’s responsibility to ensure that they maintain proper documentation of compensation and benefits. This helps ensure legal compliance and oversight. For example, 2015 amendments to California’s pay equity law has led companies to imp)rove pay analyses. In order to ensure pay equity, HR should take care when initiating salary offers and ensure they take all information into account.

Beyond the law, compensation and benefits provides an opportunity to foster an inclusive and rewarding company culture. Holiday pay can be an important area for

Parental leave should also be an area of focus. According to the Bureau of Labor Statistics, only 17% of workers had access to paid family leave. Fair family leave can improve retention, as employees are able to balance work and life commitments.

3. Employee relations & Management Counsel

Employee relations are the way managers maintain positive relations with their employees. HR have a central role to play in advising and supporting managers in this. CIPD highlights the need for regular communication between managers and employees, especially in the time of coronavirus. As we move to remote work, gauging employee experience becomes more difficult - as managers see only the tip of the iceberg. HR can help facilitate regular Pulse surveys, or Diversity and Inclusion or wellbeing surveys, which can measure engagement and mood.

Are staff experiencing difficulties in work-life balance, which can sometimes negatively impact on employee relations? Make sure managers have the resources they need to check-in regularly with staff, and encourage them to schedule regular one-on-ones.

4. Employee Engagement

Employee engagement is the level of commitment employees feel for the company they work for. Passion, enthusiasm and initiative are all symptons of engagement.

In recent years, HR teams have recognized the transformative effects of employee engagement. A Gallup study found that companies with highly engaged employees had 59% less employee turnover and 41% lower absenteeism. Profits were even 21% higher.

Clearly the magical power of engagement should not be understated. Human resources can create a targeted strategy to boost it. For example, learning and development programmes are known to improve engagement by creating a growth mindset among employees. And companies in which managers provide feedback daily have 3 times the engagement of those who do not.

Also consider the role of well-being. Creating exercise programmes or offering mental health resources can also imrpove engagement. Looking at the employee as a whole person (although it seems obvious!) can help - what are their likes/dislikes, what drives them? And of course, this requires open communication and fact-finding through surveys and employee focus groups.

5. Recruitment and Onboarding

How can you ensure you attract the best talent to your company? Your recruitment strategy should reflect your company's values. What competencies and skills do you seek?

Ensure your recruitment practices are inclusive. HR teams are responsible for job specifications. Are you using gendered language that may turn certain candidates off? Do you require skills or qualifications that could be developed on the role? HR should advertize widely and not rely on internal networks.

It may also be HR's job to arrive at a salary decision - ensure that you come to any number in an equitable, reasoned and evidence-based way. Make sure that any decisions have the agreement of relevant parties in line with labor law.

Onboarding is also key. Ensure managers have the resources they need to train staff, and make new hires aware of any learning and development opportunities. According to clickboarding.com, 76% of new hires think 'socializing' is key to a positive onboarding experience. With social distancing, be creative with how you make onboarding friendly and social. An online quizz is often a good start, and encourage managers and new hires to have their video on. We build trust through eye contact and body language. Onboarding can really count as an employee benefit if it is done well.

Other responsibilities of HR

Performance management

Performance management has become a controversial topic. As employees move to work-from-home, some managers have struggled to trust their employees are pulling their weight. This has led to some firms using performance management software that takes screenshots of employees' computers, or oversees them as they work. While these practices may work for some companies, for others they can do more harm than good.

Software can definitely help with work-from-home. It helps teams align their tasks to OKRs, and facilitates company-wide communication through surveys.

Performance management should focus on how employees can improve. By establishing a culture of open communication , managers can build trust with employees so that they can be honest about areas they find difficult. Encourage employees to set SMART goals so that they are able to put weekly tasks in the context of wider targets. Keep your employees engaged, and make sure they are able to see how their achievements contribute to the success of the business and showing them where they could further add value.

Performance Reviews

One way to measure performance management is through performance reviews. Software can facilitate complex reviews, for example those involving multiple managers. While performance review ratings can be useful for managing employee progress, also create questions that invite managers to write more nuanced written appraisals.

Succession planning

An important part of Human Resources Management is identifying the key roles which will be critical to business success in the future, then working out which employees could be best suited to such positions. You're responsible for supporting them to gain the skills which they will need to be successful in those roles and filling the skills gaps in your organization.

How to optimize a Human Resources Management process

Go Digital

Many HR processes can be digitized, whether it be setting goals or doing your annual review. There are multiple platforms available online which provide alternatives to the PDF and Excel spreadsheets you may currently have floating around the office. Having a self-service portal online allows employees to centralize communications and synchronize HR tasks that need to be done in order to increase efficiency.

With work-from-home, software has never been more crucial to HR. It helps you streamline performance reviews, track employee engagement and diversity and inclusion, and boost employee relations. It is possible to view remote work as an opportunity to make internal communications more effective.

Work on Branding

There's no doubt that today's recruitment industry is as fierce as ever, with millions being spent on recruitment each year. Retaining the top talent is a highly sought-after achievement, and the forefront of drawing the right candidates to your organization is branding. Therefore, if you are scaling, or looking to bring new and better talent to your company, think about the ways in which you are attracting them.

Currently, candidates are interested in work opportunities that provide more flexible work hours. As remote-work means many balance caring responsibilities with work, bear this in mind as you advertize your vacancies. How can you emphasize your company's culture of work-life-balance to entice excellent candidates?

Remain Current

Sign up to newsletters to know what’s going on within the HR industry such as new policies, technology and innovation within the HR industry - all of which could provide useful information to update your current processes. For instance, check out the top HR trends of 2019.

What makes a successful Human Resources Management process?

There is a plethora of types of HR strategies. Nonetheless, they all start with the same foundation: to create a work environment that is synonymous with productive, engaged and loyal staff.

Every organization is different and requires their own strategy. The key to a successful HR strategy is to identify what unifies and motivates employees, and how you develop a strategic plan around that understanding.

Conduct regular surveys collecting data on your employees and what motivates/engages them. Once you have established your employees' sentiment, you must look at the tools available in creating a strategic plan such as:

• Competitive salaries
• Enviable benefits package
• Promotion opportunities
• Continuous staff training and development
• Transparent and regular communications
• Focus on employee wellbeing
• Investment in corporate social responsibility
• Employee autonomy
• (Virtual) Open-door policies
• Freedom to be creative
• Enhanced hiring practices
• Remote working support, flexible/results-oriented approach

Employees are now looking beyond the salaries offered and want to know what a company's HRM can offer them. Recruitment is a great opportunity to consolidate your company culture - what does your organization value and what do you hope for the next generation at your company to achieve?

What does a bad Human Resources Management process look like?

There are a few common HRM practices which continue to cause issues within both unsuccessful and successful organizations.

1. The failure to document performance issues

Documentation, documentation, documentation. Thanks to HR software, this doesn't have to mean piles of paperwork! Keep track of all the interactions you have with employees.

Written policies and standard operating procedures are the boundaries that govern employee conduct. When a violation occurs it must be accurately and thoroughly documented. If an employee is reprimanded for repeated tardiness, it's important evidence that can support a decision to terminate that individual for unsatisfactory job performance.

In addition, when a company is consistent in its application of performance issues, it's better able to address potential legal issues that may arise in the future, such as a discrimination claim.

2. Employee has no access to their personal data

Unsuccessful HRMs do not give employees visibility of or the ability to update personal information; or to give them access to leave records, salary data, attendance records, training and promotional details.

One example of this is performance management software that monitors staff to a point where companies are at risk of a breach of privacy.

As a result, employees are unsure if the management decisions are based on correct information. This creates suspicion and negatively affects employee-employer relationships.

3. Disregard for training

Taking time to train your employees is a valuable investment in the future of your business. By including training in the onboarding process your employees become more fully engaged and understand how to use their skills to best benefit your company. Employers who spend time on training also get training's indirect benefit: employees who feel like they’re valuable and capable of doing more for your company.

HR professionals should bear in mind the importance of training and development. Do your employees have access to learning opportunities, whether that's online learning, podcasts or 'lunch and learn' sessions? These can help employees to build their skills, improving retention and business outcomes.

4. Inadequate HR policies

Don’t overlook the importance of an internal HR audit. Set aside the time annually to make sure your HR policies are current and complete. For example, many businesses don’t include a vacation pay-out policy in their employee handbooks, a complaint process or a disaster and workplace violence plan for the organization.

If employees don’t know ahead of time how their time will be treated, they will likely complain. Sometimes the unthinkable happens and disaster strikes. By providing clear guidelines on how to respond prior to an incident, you can help minimize the impact it might have on your employees and your business.

Benefits of Human Resources Management

1. Better organizational culture

Organizational culture is the assembly of values, working rules, company vision, traditions and beliefs that a company has adopted over the years. The HR management system plays a vital part in influencing the organizational culture within a business. Establishing guidelines, procedures and company standards lets employees know and learn expected behaviors.

For example, a policy may state that punctuality is important within the company, which promotes improved time management skills among employees, or the HR team may adapt a more flexible time management policy that values employees’ freedom to manage their own schedules – also referred to as ‘flexi-time’. Therefore, the organizational culture affects the way people do their work and cooperate with one another and with customers.

2. Improved planning for change

No company expected the rapid changes that 2020 would bring. It is the responsibility of the HR team to help stabilize the company for ongoing change. How can an HR department ensure that everyone works in psychological safety, even in times of major transition?

Firstly, this requires building bridges between departments and managers. How can teams better support one another with the move to remote-work? Has the pandemic created a requirement for innovation - and what resources and efforts need to be applied to make this happen? HR is at the ship's helm, directing a sustainable course of action, and ensuring everyone knows their role.

3. Enhanced training and employee development

Nearly all employees, including ones that are highly qualified and skilled, require training at some stage. Policies and procedures need to be firmly conveyed to all staff as part of their onboarding process – thereby keeping everyone on the same wavelength. The HR management system is also in charge of ongoing employee development. This continuing education keeps employees’ skills up to date so they bring original and modern ideas to the company.

4. Better health and safety policies

The HRM system plays a key role in ensuring health and safety in the workplace. This can be achieved through policies and procedures, but the HR function may go a step further to make sure employees understand the risks of certain activities.

For example, if there is heavy machinery in the office, HR can post warning signs and posters listing the steps to take in case of an emergency. This minimizes the possibility that an accident will occur and helps to eliminate any subsequent legal action that might be taken against the company.

5. Qualified recruitment and retention process

While recruitment and retention may seem like a given for HR management systems, it's the main hub for all HR’s policies and systems. Obtaining qualified workers, keeping them involved within the company, training them correctly to successfully complete their jobs and encouraging them to undergo further education, upskilling, awarding them with benefits and compensation are all drivers to organizational success and should be continually on the minds of HR professionals.

Developing and implementing the right Human Resource Management system for your business is important. While it is possible to take care of these functions manually, an automated system ensures there is plenty of time available for the human resources staff to develop and maintain the data that goes into those systems. Remember, a Human Resource Management system is not “one size fits all” - each company is different so find the right system that works best for you.

What does Human Resources Management mean for an employee?

As an employee at any level, HRM will be vital to your experience within an organization. It will be your first touchpoint and your last. It will be your agony aunt and your performance manager. A good HRM will give you transparency, training, the ability to develop and provide you with the instruments and environment to do the best you possibly can in your role.

What does Human Resources Management mean for a manager?

As a manager, you’ll have the responsibility of liasing with your HR team in order to develop a strategy that will best suit your department, team and individuals in order to reach the company goals - as well as motivating, engaging and retaining your staff. You’ll be tasked with collecting data to be used for the strategy and be the HR team's go-to person in highlighting and implementing any changes necessary. It will be vital that you are constantly communicating across the board and advocating a desirable company culture.

What does Human Resources Management mean for the company?

Any organization's backbone is its human capital, therefore it is fundamental that you treat your workforce well in order to maintain and increase productivity. It is the company's responsibility to safeguard their employees' welfare, privacy and sentiment. Fundamentally the company is responsible for implementing the HRM system.

5 Innovative Human Resources Management Examples:

1. Netflix and unlimited holiday

One of Netflix's most controversial policies is their approach to employee leave and expenditure. Employees are allowed to take holidays as and when they please as long as it doesn’t cause harm to the business. Moreover, there is no set amount of time allocated for parental leave, allowing the parents to decide when they are ready to return to work.

This trust also extends to company spending and expenses such as travel as Netflix set no spending limits and trusts their employees to be responsible with company spending. most controversial policies is their approach to employee leave and expenditure.

Employees are allowed to take holidays as and when they please as long as it doesn’t cause harm to the business. Moreover, there is no set amount of time allocated for parental leave, allowing the parents to decide when they are ready to return to work. This trust also extends to company spending and expenses such as travel as Netflix set no spending limits and trusts their employees to be responsible with company spending.

There are obvious benefits to this policy. While obviously the above won't be an option for every company, it's important to think about how you HR practices can build trust and flexibility. Employees with improved work-life-balance are more likely to feel engaged and work creatively.

2. Google and its tough hiring process

The recruitment process within Google uses no sifting software; the whole process is done by human recruiters. The first round is a telephone interview, second an on-site interview in front of a panel of 4 Google employees. Then your file is put in front of an independent hiring committee made up of Google employees from all levels, then in front of a senior leader for approval, and finally an executive will review and approve your employment offer.

3. Zappos and offering cash to quit

The e-retailer Zappos argues that hiring mistakes cause the greatest damage to businesses, so they've come up with their own unique solution. During the initial training of a new employee, Zappos offers to pay them for any time spent training plus one month's salary, and all they have to do is quit. This, they argue, weeds out the non-committed and creates a company culture of loyalty and dedication.

4. Airbnb and treating employees as customers

Airbnb figured that employees should love working at a company enough to promote it in a way that makes people want to do business with them. This lead them to hire a Global Head of Employee Experience which shot them to the top of Glassdoor's “50 best places to work” list. After all, employee satisfaction is a huge part of employee retention. Employees who don’t feel supported or trusted, and like they’re part of a meaningful team, are not going to hang around!

5. WP Engine and the new hire high five line

As part of their onboarding process WP Engine has made it a tradition to welcome a new hire into the company via a ‘high five line’ in which the new hire gets to high five everyone in the office. This is down to the science behind physical touch being essential to bonding humans. High fives have been found to be the happy medium of enough physical contact without being invasive, and bonded teams function at a greater level.

Conclusion

Human Resources management has come a long way from humble beginnings. It is the voice of the workforce, and a vital aspect of any organization.

Employees interact with human resources management through their life-cycle: it the initial point of contact, developing talent, and it's the last point of contact through exit interviews.

In more recent years, HRM as developed into a selling point for organizations who seek to attract the best talent. Company culture has become psynonymous to product or brand. Employee experience is crucial to this.

With the move to remote-work, HR professionals have an essential role to play. How can we cultivate collaborative, inspired teams and encourage employees to develop in the current climate? Human resources management is an evolving industry- and it will be fascinating to watch trends and practices over the next few years.