Importance of HRM in Business| Major Components

Human Resource Management

Human Resource Management, Personnel Management or Employee Relations are commonly known terms about which we hear in newspapers, media and business industry updates. After hearing about such terms, we create an image of managers, officers, workers and laborers. Here below is an overview and introduction of HRM, and I hope it will help you to understand HRM in better ways. Famous and well accepted definition of HRM is, it is the process of managing people in organizations in a structured and thorough manner. Importance of HRM along with major components plays a vital role in managing organizations. Therefore HRM creates opportunities to facilitate employees.

Through the structured and systematic way of HRM, HR Managers try to place the right people, in the right time, and at the right places. It is also called “art and science” that manages all human beings related issues in any organization, firm or company.

HRM is all about people in an organization. In different MNCs (Multinational Companies), HR Managers are also called People Managers and People Enablers. Human, which is called the most valuable and important asset of any organization, manages under such HR Managers.

No doubt, for meeting the strategic goals of the organization through attraction, employees’ maintenance and cost effectiveness, Human Resource Management plays an important role. So the main word ‘fit’ is very important in the HR Department and organization that gets the best employees fit between the organization’s goals, strategic direction and personally for the employee it always seems moving the smooth track.

Importance of HRM

Human Resource Management has its great importance in any organization as HR Managers apply the best use of human and other capital assets. Moreover, we may also say Human Resource is the management of most sensitive and central assets of any organization. Below points show the importance of HRM for different organizations:

1. It helps in managing, preparing and completing all personnel policies or programs.
2. Through a systematic and scientific process, HR supplies the best, skilled and required workforce to the business and organization.
3. It increases the benefits of any organization through training and development of human resources.
4. Change management is one of the main and necessary factors of organization to develop and compete in the market. So the HR Managers prepare and train a workforce for change management.
5. HRM motivates people and encourages them to enable short & long term goals of companies and organizations.
6. It helps in cost reduction through innovative and experimental values in an organization.
7. For the workers’ safety, health and future benefits, HR plays important roles.
8. Workers’ career management and reward system with best compensation, all are the responsibilities of HR Managers, through which they can get the best work and energies from them.

Major Components of HRM

These are also called the parts, steps or processes of Human Resource Management. Overall importance of HRM and Human Resource Management revolves around these components. Every function has a deep collection of plans, tasks and results in itself. A short detail and the introduction of these important HR components are as under.

Human Resource Planning

This is one of the most important components of HRM. Through this function, HR Managers identify and respond to the needs of organizations; it may also involve in forming new policies, systems, and updated programs for assuring the effective human capital and its management for changing conditions. Strategic planning and future of HR needs is discussed under this process.

Recruitment

The next step is “recruitment”, which collects a pool of candidates for getting the best and suitable candidate for any post or position. Internal or external announcements and gathering of initial data of candidates are collected for their selection.

Selection

The next component is “selection”. Under this section, the selection of suitable and job match persons’ is completed. Different types of tests, interviews and examinations are completed in this section. Candidates arrive forward after passing all these different types of educational, mental, physical and managerial tests. So this is the most important and necessary part of Human Resource Management.

Training and Development

This component has two parts, training and development. Both are completed for the betterment of new and old employees, so that they can be matched with their jobs. Therefore the training process is specifically for new employees and development for old ones. Introduction to job, functions and work environment is provided that help to understand the whole job and the organization. Different on and off job classes, workshops and training sessions are included in this component too.

Performance Appraisal

For a frequent check and balance or control over workers, employees and managers, performance appraisal plays an important role in Human Resource Management. Through different ways and techniques, monthly, quarterly and annually, a performance check process is completed. If there is any deficiency, then different strategies are applied for getting the best results in the future, otherwise firing takes place.

Compensation

The step deals with salaries, jobs, bonuses and all financial issues of HR. Wages and salaries are managed under this function. Different types of packages including GP funds, golden handshakes and pensions are controlled by HR Managers here. Updated software and tools are used for competitive and best salaries of employees. In addition this section keeps an eye on market trends and tries to provide competitive salaries to each employee.

Employee Separation

The final and most important component to complete the HRM process is “Employee Separation”. Basically this deals with firing or retirement of workers and managers. A complete record is taken, and golden handshakes, GP fund details, facilities and retirement programs are completed. Moreover, the basic purpose of this component is to separate the human asset of any organization according to his/her value, working and importance.

Labor and organization relations, managing unions, managing information systems in the HR department. Along with keeping eyes on modern trends. Moreover these are also some important most used actions in Human Resource Departments.

This was a short, however exclusive introduction of Human Resource Management, which deals with the most precious human capital of any organization. Moreover experts say that where there is human, there will be Human Resource Management. The HR Department works with clear and specific goals to fulfill the needs of human capital. Therefore the importance of HR cannot be ignored and to complete this important part of organizations. The HR planning, recruitment, training and development, performance appraisal, compensation. Along with employee separation are considered as its main and necessary functions/parts, steps, or components, etc.