Human Resource Management and its Importance in Modern Day Organisations

When we say HR in the context of organisations, this can be in reference to the people or employees, but it can also refer to the specific department in the business that manages these employees. Either way, HR is an integral part of any organisation. Depending on the type or size of the company, the HR department could consist of a big team led by an HR manager or it could just be one person in charge of the company’s entire HR operations, but they play an essential role in the business regardless. Managing HR is vital for the success of organisations, hence the importance of human resource management (HRM). 

Table of Contents 

• What is Human Resource Management (HRM)?
• [7] HRM Functions 
• The Role of Human Resource (HR) Managers 
• Why is HR Management Important? 
• Human Resource Management System (HRMS) 

What is Human Resource Management (HRM)?

Human resource management (HRM) is essentially the process of managing the people, a.k.a the workforce, of an organisation. This involves effectively managing HR operations and implementing HR strategies to ensure that the organisation can succeed and reach its goals. Human resource management covers a wide variety of HR functions. 

For example: 

• Recruitment and selection 
• Training and development 
• Employee health and wellbeing
• Performance management 
• Benefits and compensation

In a nutshell, human resource management is key when it comes to successfully and strategically managing people in an organisation, which is why it’s important to hire the right people for HRM. 

What’s the difference between HR and HRM?

As mentioned above, significance of human resource management can either refer to the employees in a company/the workforce, or the department in charge of managing the company’s human resources. On the other hand, human resource management is the strategic process of ensuring that HR functions are operating effectively and successfully per the company’s aims and objectives. 

For instance, part of HRM is making sure that the right people are in the organisation through effective recruitment strategies and then taking care of these employees in order to retain them in the business.  

7 HRM Functions

As we’ve mentioned, human resource management covers a wide variety of HR functions in an organisation. 

Here are some examples: 

1. Recruitment and Selection 

This is a key function of human resource management – in order for an organisation to be successful, the top talent must be in place to begin with which can only be done through effective recruitment and selection. HRM includes managing the recruitment process from start to finish e.g. sourcing, screening, interviews, etc. and making sure that the right people are selected for the right roles in the company. During this process, it’s also important to keep employee retention in mind. 

2. Training and Development 

Employee training and development is another key function of human resource management that HR managers should consistently focus on. It’s important for organisations to invest in the training and development of their employees so that they can grow and reach their highest potential, which would be beneficial to the business in the long-term as it allows them to retain a high quality workforce. 

Helping employees realize the importance of choosing the right career is also important, because training and development can be more effective when employees know what they want to do in life.

3. Human Resource Planning 

Another function of HRM is human resource planning, which involves analysing the organisation’s current workforce supply and also assessing the organisation’s current and future HR needs. This requires a lot of planning and organisation in order to ensure that the organisation has effective talent strategies in place.

4. Employee Health and Wellbeing 

This is a very important part of human resource management as employee health and wellbeing should always be a top priority for HR managers and HR teams. This includes taking care of both the physical and mental health of employees and making sure that there is always support available for them.

5. Performance Management 

Performance management is a vital part of managing people in organisations. This includes monitoring and evaluating the performance of employees/teams so that the organisation’s strategic goals can be met and employees can reach their full potential. Although this is one of the functions of HRM, performance management is also something that’s carried out by line managers and supervisors. 

6. Benefits and Compensation 

Another importance of hrm in an organization function is benefits and compensation, which can include processes such as salary and benefits administration, for example. An important part of HRM is ensuring that the company’s benefits and compensation packages are attractive to current and future employees. 

7. Employee Engagement

The employee engagement function involves assessing engagement levels and strategizing effective ways to improve it. HR managers or specialists can choose to conduct employee engagement surveys to evaluate employee engagement. Higher employee engagement can lead to increased motivation and productivity, and company retention rates are also likely to improve if employees are engaged. 

The Role of Human Resource (HR) Managers 

When it comes to human resource management, HR managers play a very key role so it’s important for organisations to hire the right people for this job. The HR manager is in charge of the organisation’s HR operations and responsible for managing the HR department.  

As with any managerial position, HR managers should have a strong ability to manage operations and implement strategies, and given that HRM is all about people, it goes without saying that HR managers should be great with people. 

HR Manager Responsibilities: 

• Manage the organisation’s HR operations and oversee day to day HR processes and activities 
• Evaluate the organisation’s current overall HR strategy and identify areas of strengths and weaknesses 
• Work closely with departments and managers on human resource planning
• Create and implement new and effective HR strategies 
• Lead the recruitment and hiring process 
• Ensure that the workplace environment is of high quality 
• Focus on the health and wellbeing of employees 
• Manage employee benefits and compensation 
• Develop effective training and development programs for employees 

These are some of the key skills that every HR manager should have: 

• Management skills 
• People and interpersonal skills
• Communication skills 
• Decision-making skills 
• Problem-solving skills
• Organisational skills

Why is HR Management Important? 

HRM in Modern Day Organisations 

Human resource management has grown in importance through time, particularly in modern day organisations. This is because HR operations have become more and more complex and the HR department of organisations are tasked with more responsibilities.

For instance, it’s without a doubt that the Covid-19 pandemic has had a significant effect on the human resource management of organisations and this is due to all of the changes that took place as a result of the pandemic. For example, when lockdowns occurred, many organisations had to switch to remote working, and then eventually there was the transition back into the office, and even the transition to hybrid working for some companies. The pandemic will have also affected the health and wellbeing of many employees, both physically and mentally, so this has become an even bigger focus for HR. It has been a challenging time for people in organisations, and consequently a challenging time for human resource management as well. HR management processes had to adapt and be updated accordingly. 

Recruitment and Selection 

Although there are many HRM functions, recruitment and selection is one of the most important functions. Organisations can’t operate without their employees and organisations can’t be successful without the right people, which is why it’s so important to get the recruitment and selection strategy right – a function that comes under HR management. Even though other managers and/or departments play a part in the recruitment process, it is ultimately up to the HR manager or team to ensure that the organisation has an effective staffing strategy in place. The HR department is responsible for overseeing the recruitment process from start to finish, and carrying out important tasks such as background checks, for example. 

Human Resource Management System (HRMS) 

In order to improve the efficiency and effectiveness of human resource management, organisations can choose to invest in and implement a Importance human resource management system into their organisation (HRMS).

This is a system or software that manages the various different HR functions of a business, just like the HRM functions mentioned above. Each human resource management system has different features and functions so it’s completely up to each organisation to choose the one that would suit their needs best .

What are the benefits of HRMS? 

Below are some of the benefits of using a human resource management system:

1. Using a human resource management system saves time and effort for HR as the HRMS can complete routine HR tasks and streamline HR processes
2. The self-service portal/feature on HRMS is beneficial for employees as they can have the option to manage certain tasks themselves e.g. requesting time off
3. HRMS can support the training and development of employees which is highly important for organisations
4. The human resource management system can be used to track and monitor KPIs so that they can be analysed per the organisation’s strategic aims and objectives
5. Data and information can be stored and protected on the HRMS 

Choosing a HRMS 

It’s important to choose the right HRMS for your organisation that would suit all your HR needs. Here are 5 steps that you can take when choosing a HRMS for your organisation:

Step 1. Define HR needs

• What HR challenges is your organisation facing? 
• What exactly do you want to achieve with the HRMS? 
• Identify the HRMS features and functions that would most align with your business goals 

Step 2. Liaise with IT department

• Speak to the IT department or specialists of your company ask them for their input on the HRMS 
• What sort of HRMS would suit the IT infrastructure of your organisation? 
• The IT department are likely to know which HRMS would be compatible with your organisation 

Step 3. Set the budget

• The budget is an important factor to consider when choosing a human resource management system 
• Determine the minimum and maximum amount that your company is willing to spend on the HRMS 
• Management approval may also be required for the budget 

Step 4. Shortlist

• There will be a range of HRMS for you to choose from so this list will have to be narrowed down 
• There might also be an option for a free trial for some of there HRMS which can help you with your selection
• Depending on the criteria that’s been set, select a few that are most suitable for your organisation’s HR needs
• This is your shortlist 

Step 5. Purchase 

• From the shortlist, it’s time to select the best option for your organisation 
• Initiate the purchase of the HRMS from the vendor 
• Begin Implementing the HRMS into your organisation 

Read our complete guide on human resource management system

Importance of strategic human resource management is extremely important, particularly in modern day organisations. The responsibilities of the HR department and HR managers have grown and continue to grow. There are more and more HR functions and processes to manage, as well as new policies and compliance issues to consider. Human resources must be strategically managed in order for the organisation to meet its business goals and maintain its competitive advantage and this can only be done through effective human resource management and planning.