The purpose of human resource management differs from company to company. For some it is ensuring that the firm is covered legally in terms of looking after its staffs needs, and for others it means being able to get the most out of their staff.
In Michael Armstrong’s ‘Handbook of Human Resource Management’, he states that the overall aim of HRM is to “ensure that the organization is able to achieve success through people.” Through this, “HRM systems can be the source of organizational capabilities that allow firms to learn and capitalize on new opportunities” and it can do this in several areas.
Extensive research has shown that distinctive human resource practices can mould a firm’s core competencies and determine how they compete in a given market and how the firm performs as a whole and by having an effective HR department, it has been proven that it can improve company-wide organizational effectiveness and generally create a decent place to work. However, this all depends on the firm having a “clear vision and a set of integrated values.” With these in place, a HR department can concern itself with the development of both the company and customer relations policies.
The human capital of an organization is the people who work there and upon whose shoulders the success of the business depends. Human capital has always been regarded as the prime asset of an organization and as such, businesses are encouraged to invest in their staff as well as their clients to ensure their ‘survival’ and growth. A good HRM department would aim to ensure that as such the company find and keep the best possible skilled, committed and motivated workforce that the firm needs, and this often means taking steps to assess and ensure that staff needs are met. This can include developing their skill-set by providing learning and other training opportunities.
Armstrong’s book defined human capital management as “represent(ing) the human factor in the organization; the combined intelligence, skills and expertise that give the organization its distinctive character. The human elements of the organization are those that are capable of learning, charging, innovating and providing the creative thrust which if properly motivated can ensure the long-term survival of the company.”
A good human capital management practice would ultimately enable you to:
- Improve productivity.
- Reduce costs.
- Build up the Company’s internal and external image.
- Enable financial and intellectual growth of the Company.
To do this, there is a set of fundamental skills a company must have, and strategies it must utilize, in order to build up within its ranks the best and the brightest talent available for its specified field. Once understood, these skills and strategies are inseparable, and, somewhat surprisingly, amazingly simple.
Following are the building blocks that a company has to undertake in order to introduce a human capital management system into an organization.
- Workforce Analytics: Gain a deeper understanding of your current and future workforce needs, enabling you to plan workforce costs, simulate scenarios, monitor performance and benchmark HR processes.
- Talent Management: Assess your existing talent management programs, develop a customized action plan and deploy the tools required to successfully attract, retain and promote key talent.
- Organizational Effectiveness: A key challenge in surviving during, and thriving after, market downturns is to preserve employee commitment and engagement. Design and implement programs to build and sustain engagement and commitment.
- Change Management: Create an organization that can adapt to market shifts and how to communicate effectively with employees to alleviate concerns about job security during periods of change.
The relationship between companies and employees has changed dramatically over the past few decades. With a shift from guaranteed employment in return for submission to the company. The dynamic today is more like a partnership between the worker and the employer. This provides companies with more flexibility in terms of hiring practices, but also encourages a decreased worker commitment. Hence it is imperative for a company to integrate good human resource practices in order to stay in the market as well as move forward.