1.1 Human Resource Management

Every organization, large or small, uses a variety of capital to make the business work. Capital includes cash, valuables, or goods used to generate income for a business. For example, a retail store uses registers and inventory, while a consulting firm may have proprietary software or buildings. No matter the industry, all companies have one thing in common: they must view people as human capital. This will be the focus throughout the text as human capital is defined as  achieving organizational effectiveness through the use of people’s skills, education, knowledge, expertise and abilities.

What Is Human Resources Management?

Human resources exists within organizations who are a group of people who have been given specific roles and responsibilities, who work together to successfully achieve the goals of the organization.

Human Resource Management (HRM) is an integrated set of processes, practices, programs, and systems in an organization that focuses on the effective deployment and development of its employees. These processes include employing people, training them, compensating them, developing policies relating to them, and developing strategies to retain them. It is, by most accounts, one of the most critical functions of an organization, because for an organization to be efficient, it needs employees and systems that support them. Simply stated, HRM is all about managing people. Human resources professionals ensure the right people are hired, trained and perform to customer and company standards.

Organizational Performance

Organizational performance is the company’s ability to achieve its goals and objectives. Measuring organizational performance compares actual outputs with the intended goals. These comparisons assist organizations to determine if they reach the goals they set out to achieve. The rationale for measuring performance is to justify capital, help with decision-making and problem-solving, minimize risk to the organization, and ensure effective use of resources. A typical evaluation could include operational performance, financial performance, shareholder return performance, and human resources. Human Resources is responsible for managing the employee’s  performance to ensure achievement of the organizational goals, or the motivating force that guides employees to success.

Organizational Structure

An organization’s structure is the hierarchy of a company’s individuals, teams and leaders. It defines how tasks are assigned, who reports to whom, and how activities are coordinated. It is the foundation for establishing the company’s policies, procedures, and routines. According to an article in Forbes (Organ, 2023), companies can have the following structures:

• Centralized Structure: strict subordination, often in larger organizations, the chain of command moves from the top to the bottom of the hierarchy with decreasing responsibility and authority as each level move down
• Decentralized Structure: Teams have more autonomy, make more decisions, collaborate between departments and groups, and adapt to change quickly.
• Circular Structure: an organization with concentric circles, and the leadership is in the circle’s centre.  Instead of information flowing from the top to the bottom, information flows out to various organizational rings.
• Vertical Structure: a clear chain of command with small group leaders at the top of the organization, the leaders have authority, and each level down has less responsibility and authority.
• Flat Structure: employees may report to multiple supervisors with cross-departmental responsibilities and authority.

Regardless of the organization’s structure, they help the company and the employees to understand the goals and objectives; and how information is disseminated throughout the organization.

Strategic Plans 

A strategic plan is the organization’s plan to align its internal strengths and weaknesses with its external opportunities and threats.  Some companies perform this through a SWOT Analysis which is a planning tool and assessment of strengths, weaknesses, opportunities and threats (Kenton, 2022). The SWOT Analysis helps the company find facts and data within its industry.  Once completed, the organization is armed with information to develop the strategic plan.  From here, the company can “take action.” Often the terms vision, mission, objectives and goals are used in referencing the strategic plan. Finally, the plan needs to be managed. This is called strategic management. The plan is executed through its strengths to achieve success.

Human resources professionals can play an important role in the strategic plan. They may facilitate the process, be involved in external and internal research, or manage the strategic plan related to its people.

HRM as an Integrated Set of Processes

HRM relies upon a sophisticated set of integrated process to help the organization manage human capital. The effectiveness of HRM lies in how well integrated these processes are and how well aligned they are with the mission and strategy of the organization. For example, a new policy on workplace safety protocols will only be effective if employees are trained to understand and respect it. In addition, that policy has little chance of taking hold if it is not part of the performance appraisal process. Finally, in a unionized environment, any policy will have to be designed with the cooperation of the labour union so that it is integrated into the collective agreement.

“1.1 Human Resource Management” from Human Resources Management – 3rd Edition by Debra Patterson is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License, except where otherwise noted.