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In today’s work environment, it is important to understand that any company is only as good as its employees. Human resource managers serve many purposes within an organization. This lesson explains some of the ways that human resource management systems get the most out of every employee, every day.

Human Resource Management

Many people agree that a company’s most important asset is its employees. Human resource management (HRM) is the art and science that deals with nearly every facet of a company’s workforce.

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It consists of the hiring, training, pay, benefits, performance, evaluation, motivation, engagement, communication, administration, retirement, and firing of every employee.

Importance of HRM

Underestimating the importance of HRM in an organization is a serious mistake, and one that can mean the end of the business itself. The goal – and purpose – of any human resource management team is to enrich the employee experience, which in turn will help to improve the company’s output.

There is a difference between the daily actions of the human resources department and the management of human resources. HRM is not just the writing of policies that people should follow. It extends to interaction with every level of management, from the first-line supervisor to the executive level, so that every manager is empowered with information to make the best use of employees and to keep morale at its highest.One function of HRM is to ensure that there are training programs in place so that employees can perform their jobs safely and effectively. Think about your very first job.

When you arrived on the first day, you probably had many questions about what was expected of you. Even after receiving training to perform the duties of your job, you likely had other questions, such as:

  • When do I get my first paycheck?
  • Why are all these taxes being deducted?
  • What are my health benefits?
  • Does my family have dental coverage?
  • How do I know if I am doing a good job?
  • How does my work have an impact on the overall mission of the company?

If these and other questions went unanswered, your motivation level would probably decrease. If employee motivation decreases too much, turnover rates (the percentage of employees who leave a company during a given time period) increase dramatically. High turnover can be detrimental to a company’s profit because the costs of hiring and training new employees are much higher than retaining current ones. Also, low motivation among employees can negatively impact the customer experience.

Therefore, it is extremely important to have an effective HRM team that works to minimize this rate.

Challenges in HRM

As you saw in the section above, it is extremely important that organizations have effective HRM systems in place. In today’s rapidly-changing world, there are some challenges that are common among many HRM teams, including:

  1. Change management
  2. Leadership development
  3. Pay and benefits programs
  4. Health benefit costs
  5. Succession planning

Change management refers to the methods used to adopt new processes or systems within an organization. New technology can create opportunities for companies to perform better, faster, and more cost-efficiently, but adapting to it can create challenges.

The process of training all employees on new equipment or procedures can be time-consuming. Also, some employees may not easily adapt to change. Think of it like this: When a new video game system comes out, there may be a different controller, buttons, menus, etc. There is a period of time where you learn the new features on your own (also called self-training).

You can do this easily if you have a high level of motivation. If not, you might have some resistance to the new technology. HRM teams must train everyone on new processes, regardless of motivation levels.Leadership development focuses on getting the best performance out of existing leaders, as well as acquiring and cultivating the next generation of leadership. Leaders must develop a variety of people skills in order to get the most from others. Because all leaders have different learning styles and capabilities, there is no one-size-fits-all approach to leadership development, so HRM teams must be able to adjust development programs for all employees.Pay and benefits programs vary widely, but in order to attract the best and smartest people, companies have to offer more (and better) benefits than their competitors.

In today’s workforce, people do not have the same level of loyalty to a company that they did many years ago. Not only do companies have to attract the best, but they have to keep them there too! Constant evaluation of these programs can certainly pose a challenge.The cost of healthcare has consistently risen, and is a major expense for many employers.

Chances are, you have heard about the Affordable Care Act (commonly known as ‘Obamacare’). There are many new guidelines that must be followed, and companies have to spend a lot of money to comply with the new rules. HR managers must also ensure that their teams are up to speed on all the new regulations.Succession planning is the process by which companies pass on the knowledge, skills, and responsibilities of employees that may leave or are leaving (often through retirement) to their younger counterparts. Many employees who are part of the ‘Baby Boomer’ generation (people born between 1946 and 1964) are retiring.

Companies must work to pass on their experience and expertise to others within the company, but this can sometimes be a challenge, especially if there isn’t an established succession program within the company.

Lesson Summary

Human resource management deals with nearly every facet of a company’s workforce, and consists of the hiring, training, pay, benefits, performance, evaluation, motivation, engagement, communication, administration, retirement, and termination of every employee. HRM not only involves writing policies and procedures, but also includes working with management at all levels to enrich the employee experience. Training and development programs help to motivate employees, which decreases turnover rates.Some of the challenges that HRM teams face today include change management, leadership development, pay and benefits programs, health care cost and compliance, and succession planning.

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