Why is human resource management important?

by | Feb 26, 2016

Why is human resource management important? To the uninitiated, the role of the HR manager may seem pretty straightforward. After all, someone has to maintain HR records and process payroll and someone has to put together job descriptions, advertise vacant posts and screen applicants. But the role of the HR manager is so much more than just an administrative one. Effective HR management is absolutely essential to any organization that wants to succeed. The importance of human resource management in creating high-performance organizations cannot be overstated.

Human capital directly affects the bottom line

Whether your organization is small or large, having the right people in the right posts is absolutely critical. It’s not just a matter of skills, it’s also a matter of mindset and motivation. It’s the difference between being a passenger on the road to success or an employee that drives progress. And valuable as any individual employee may be, it’s also about ensuring that should this employee leave, there’ll be someone to step into the breach. Financial capital is important, but it’s human capital that utilizes finance to generate profits. There is no machine that turns investment into revenue. No matter how mechanized an organization may be, it is guided by human hands. Building human capital is one of the most important functions of human resource management.

Utilizing budgets for maximum benefit

No budget can be limitless, and the more effectively it used, the more financially successful the organization will be. Human resource managers ensure that the costs of managing a workforce are optimized. For example, they can seek the best possible health insurance deals or seek out more effective payroll software. It’s also important to offer market-related remuneration. Set the bar too high, and unnecessary costs are incurred. Set it too low, and high staff turnover will end up costing the company in terms of time and money spent on recruitment and repeated training initiatives.

Keeping work relationships positive

In a high-stress working environment (and what working environment doesn’t have its stresses) conflicts often arise between employees or between employees and their managers. These conflicts are more than just personal spats. They also influence the way in which teams work together and can end up costing the organization in terms of lost productivity and poor co-ordination. Conflict resolution is more than just a matter of keeping everybody happy, it’s also about keeping the business running effectively.

Providing personal and professional development opportunities

Relevant training benefits organizations in more ways than one. Training and career development opportunities not only allow organizations to have access to an expanded skills base without having to hire additional staff, they also build employee loyalty and engagement. Although a few employees may be quite happy to stagnate and do the absolute minimum, the majority of people have a need for personal and professional development. If they don’t see that happening in their workplace, they’ll lose interest in their jobs (with a resulting decline in productivity) and later move on to greener pastures. Losing employees with valuable knowledge of the organization is a setback that has accompanying financial implications for any business.

Measuring, improving and maintaining employee satisfaction

Do people in your organization really love their jobs? If they do, they’ll be willing to give their best efforts. If not, they’ll just be there for the sake of a paycheck. This impacts directly on results. If you don’t love your job, you aren’t going to go the ‘extra mile. Instead, you’ll do the absolute minimum. After all, you’re just waiting for home time every day and your paycheck at the end of the month. Apart from listening to employees when they express their needs, HR managers can conduct surveys to determine whether job satisfaction can be improved and how this can be achieved. Exit interviews can be particularly enlightening if handled with sensitivity. Happy employees are much more productive than unhappy employees. And you can bet your bottom dollar that this impacts on the organization’s success.

Measuring and improving performance

The work performance of every individual in an organization impacts on its success. As a human resource manager, you are tasked with determining how effective employees are in their jobs, working with them to find strategies for improvement, and providing equitable rewards for outstanding work performance. From an employee’s perspective, there’s no point in outperforming if that isn’t going to be recognized, and there’s no point in improving performance if no-one cares how good or how bad you are at your job. Although managers in various departments will have an important role to play, it is the HRM function that determines the framework for performance appraisal and measurement and the guidelines for remedial action and rewards.

Business as usual no matter what

Are there ‘indispensable’ employees on your payroll? If so, your organization is at risk. Anything can happen. Without one employee, the business cannot function as it should. Succession planning is one of the factors that highlight the importance of human resource management. If a key employee becomes ill, leaves the organization or passes away unexpectedly, the business must still be able to function as usual.

Attracting talent

Do top graduates, promising young managers and seasoned executives clamor for positions in your organization? If so, you are an ‘employer of choice’. Everybody wants to work for your company, so you get to take your pick from the best talent that’s available. But how do organizations reach these lofty heights? Through outstanding HRM practices, that’s how! Human resource managers have a key role in determining the image of the company as an employer, and having the best people on your payroll means that your organization has access to the expertise it needs to perform at its absolute best.

Implementing the values of your organization

As a human resource manager, you recruit the workforce. Organizational values are not only impressive sounding words, they’re also values that individuals have to live up to. It all begins with the recruitment process, and this factor informs your onboarding, code of conduct, performance management systems. By implementing organizational values through your work in HRM, you build and maintain the values that are key to its ultimate success. As a human resource manager, the wellbeing of your organization is in your hands The importance of HRM cannot be understated. And although you may not be the financial manager or the CEO, your role contributes significantly towards the success and wellbeing of the organization in which you work. I hope we answered why is human resources management important? Find more HR articles on our Better Business Blog

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