Human resource management (HRM) describes how businesses and organizations follow to hire, train, and compensate their employees. Within a company or organization, the human resource team is often involved in developing the many policies that relate to employees and developing strategies to retain them.
As a field, HRM has undergone many changes during the past few decades, which has made its role even more important for most organizations. In the past, HRM referred to the employees who processed payroll, sent birthday gifts to employees, arranged company outings, and made sure employee forms were filled out correctly. In other words, HRM played an administrative, rather than a strategic or operations planning role.
HRM no longer simply consists of writing policies and procedures and hiring people (an administrative function). Today's HRM also creates organizational strategic plans to ensure the best people are hired and trained to perform the right job when they are needed most (in the present and when they may be needed to accomplish future objectives).
The HRM strategic plan should address the major objectives the organization wants to achieve and consider how the business will accomplish its long-term goals. The plan should specify the activities HRM will perform to achieve the goals outlined in the strategic plan. This new role is critical to the success of many organizations.
A business strategy is a long-term plan of action designed to achieve a particular goal, set of goals, or objectives. The HRM team can ensure it is a critical part of the company's overall business strategy by understanding the business cycle, articulating the company's goals, and aligning itself with its overall key strategic objectives.
As with other organizational departments, HRM must prove its value to the overall business strategy. As businesses become more concerned about cutting costs, HRM departments must demonstrate the value they bring by aligning themselves with the company's key business objectives. This begins by understanding the challenges businesses face and finding ways to reduce potential internal and external negative effects.
Human capital refers to the people who work for a business, usually one of the organization's most precious resources. In addition to offering competitive pay, employers can provide employees with workplace benefits, such as paid holidays, health and dental insurance, contributions to 401(k) and retirement plans, parental leave, wellness programs, and other incentives to attract and retain valuable employees.
While HRM is charged with attracting the best employees, cost containment can be a major challenge. It can be difficult to predict how much money a company needs to spend to attract and retain the best employees and how much they can save by limiting the number of benefits they offer or restricting the distribution of certain perks. Cost containment is a balancing act: HR managers need to estimate how much they need to offer in their hiring package to attract and retain employees without offering too much to affect the company's profitability.
HR managers must plan to ensure they have the right number of workers in the right place at every point in time. Also, by creating a recruiting and selection process with cost containment in mind, HRM can contribute directly to the company's overall profit margin. Since it is so expensive to recruit, hire, and train new employees – in terms of time and money – HRM should take steps to ensure they hire the right people for the job the first time.
Corporate or organizational culture refers to the general beliefs, attitudes, values, and behaviors that a company or organization promotes among its employees. This culture can dictate how the employees dress, act, perform their jobs, and treat their co-workers and customers.
Hiring managers and the people who work at an organization determine corporate culture. By advertising the organization's corporate culture and explaining what the organization seeks to achieve – on the company website and in its job descriptions – HRM can provide important context for job candidates considering whether they want to work there. Establishing a consistent and positive corporate culture is essential to a successful organization.
A professional code of ethics provides a code of conduct that members of a business or profession create and follow to promote or regulate ethical conduct among their employees, boards of directors, and/or members. While many of these ethical rules address the specific needs or mission of the organization or business profession, many of the principles cut across all types of professions – business leaders derive their ethical guidance from the same moral principles their community follows.
Most organizations have written policies to ensure everyone exhibits fairness and continuity within the organization. HRM, executives, and other organizational managers should be involved in this policy-making process. HR managers should recognize when the company needs to adopt new or additional policies, make changes when the current guidelines no longer work, solicit opinion and employee buy-in on the changes, and communicate the new or revised policies to employees. HRM cannot work alone: everything they do must involve all other departments at the organization.
HRM is usually responsible for developing a code of ethics and professional conduct at the organization. For example, many companies state employees should not receive gifts from clients or vendors to avoid giving the appearance of a conflict of interest. These gifts might include meals, baseball tickets, or paid travel expenses to attend or present at conferences. These policies define expectations regarding the need to act professionally, such as treating coworkers and customers with respect and avoiding situations that others may regard as sexual harassment.
Many corporate leaders recognize that being socially responsible, such as by promoting local community events and encouraging environmentally-sustainable practices, is not only popular among their customers and employees, but these practices also make good business sense. For example, while the initial investment in high-tech and renewable energy solutions can be high, companies can save money from lower electricity bills, promoting goodwill that generates customer loyalty, and creating a more healthy environment for employees. On a basic level, corporations benefit from having a healthy and productive workforce and a peaceful working environment that is more profitable in the long run.
Policymakers in many countries have created laws to protect their employees, such as workplace discrimination and unsafe working environments. Since the legal and legislative environment for HRM frequently fluctuates, HR managers need to be constantly aware of new and upcoming local and national rules, regulations, or policies that could affect their organization. Businesses typically charge their HRM team with communicating any additions or changes to the entire leadership.
For example, in the United States, legislators have recently modified the rules that dictate how large employers must offer health insurance to their employees via the Affordable Care Act passed in 2010. Similarly, Congress members may vote to increase the lowest wage employers can legally pay their workers (the minimum wage), revise the procedures and precautions companies must follow to protect the health and safety of their employees, and adjust other labor laws, such as those that dictate how employers must allow their employees to create unions, engage in collective bargaining, and strike if necessary.
The U.S. Equal Employment Opportunity Commission, EEOC, is the federal agency the United States Congress created in 1965, whose actions are mandated as part of the Civil Rights Act of 1964, the Age Discrimination Act of 1967, the Rehabilitation Act of 1973, the Americans with Disability Act of 1990 and the ADA Amendments Act of 2008. The EEOC is charged with investigating employment discrimination claims and ensuring the relevant federal agencies enforce the laws that prohibit these practices.
If the EEOC has reason to suspect an employer is responsible for discriminating against its job applicants or employees based on their race, color, religion, sex (including pregnancy, gender identity, and sexual orientation), national origin, age (40 or older), disability or genetic information, it will collect evidence to support a case to legally punish or sue the employer.
Workplace diversity refers to how well the company exhibits various employees of different ages, races, sex, national origin, religious beliefs, and physical abilities. Just as the marketplace has become more diverse due to an increasingly global economy, the ideas and perspectives each individual brings to the workplace can broaden an organization's knowledge base and ability to address different situations and challenges. Studies show that organizations that include employees representing a range of ages, races, and ethnicities are more successful than those who do not. Creating a diverse workplace can provide organizations with a competitive advantage by promoting new ideas and creativity in today's global marketplace.
Multiculturalism goes deeper than diversity and focuses on inclusiveness, understanding, and respect. It also examines inequalities, such as which groups have the power to make decisions in society. HRM professionals should understand how to motivate employees by creating an inclusive workplace.
Employers promote a sense of inclusion among their employees by encouraging a diversity of individuals to get involved in leadership decision making. These actions can give employees a sense of belonging, enhance employee satisfaction, and reduce the high cost of employee turnover. HRM is typically responsible for training employees about current and relevant discriminatory work and hiring practices. They are charged with ensuring no laws are broken, such as when individuals create a "hostile work environment" for others.
Affirmative action refers to policies that promote members of groups who have suffered from past discrimination, such as by providing access to education and employment opportunities.
Employee turnover refers to the number of employees who leave a company during a given period of time.