You often see phrases like these in the annual reports of major businesses:

  • "Our people are our greatest asset"
  • "Nothing is more important than our employees"

You see them so often that it is tempting to treat them as clichés. However, behind the cliché lies an important truth, which is that the human element plays a major part in the success of every business.

Effective human resource management has become more important in recent times. Here are some reasons why:

  • Most businesses now provide services rather than produce goods – people are the critical resource in the quality and customer service level of any service business
  • Competitiveness requires a business to be efficient and productive – this is difficult unless the workforce is well motivated, has the right skills and is effectively organised
  • The move towards fewer layers of management hierarchy (flatter organisational structures) has placed greater emphasis on delegation and communication

As a result, if a business is to be successful and achieve its objectives, then it needs to manage its human resources effectively. So step forward "human resource management"!

Human resource management is usually shortened to "HRM". It is defined by the CIPD as:

"The design, implementation and maintenance of strategies to manage people for optimum business performance"

In other words, HRM is about how people are managed by a business in order to meet the strategic objectives of the business. The functional objectives set for HRM need to be consistent with the corporate objectives.

The key is to remember that HRM is a strategic approach. HRM uses a variety of tools to help meet the strategic needs of the business, each of which needs together in an integrated way. The key tools are:

  • Workforce planning
  • Recruitment & selection
  • Training & development
  • Rewarding and motivating staff
  • Communication
  • Roles and responsibilities (organisational structures)
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