Human resources management

In business and finance, human resources management includes the policies, procedures, and philosophies that a business organization uses to coordinate its employees. The primary function of human resources management, or HRM, is to maximize employees' potential with the goal of achieving organizational success. The field grew out of the human relations movement in the early twentieth century.

HRM focuses on the practices of attracting, developing, training, motivating, compensating, and retaining a high-performing workforce to meet an organization's objectives. The duties of human resources managers include recruiting, interviewing, and hiring new workers; designing training and development programs; and facilitating labor relations.

Effective HRM may be the most important factor in determining organizations' prospects for long-term success. By getting the most out of their employees, organizations can gain a competitive advantage and increase their bottom lines.

Brief History

The beginnings of HRM can be traced to craft guilds during the Middle Ages. In craft guilds, tradespeople or craftspeople in the same occupation joined together to improve their working conditions.

The field took another step forward during the Industrial Revolution, which spanned the late eighteenth century to the mid-nineteenth century. Hand labor was replaced by machinery, steam power, and factory systems. These new production methods drastically changed the division of labor and workplace conditions. During this time, the divide between owners and workers grew substantially as owners started treating their workers like machines.

In modern times, HRM originated from the human relations movement, which emphasized the human component of work. The movement dawned from a landmark study led by Harvard researcher Elton Mayo between 1924 and 1932. The series of experiments conducted at the Hawthorne plant at Western Electric near Chicago, Illinois, became known as the Hawthorne studies.

The Hawthorne studies measured worker productivity. The research showed that when employees are involved in determining how their jobs are done, they are more likely to enjoy their work, which raises productivity. The study also revealed that how workers are treated affects their performance. Mayo devised the concept of the social man, which states that individuals are motivated by their needs for social acceptance and positive work relationships.

In addition to Mayo, Abraham Maslow and Douglas McGregor were key figures in the human relations movement. Maslow developed the hierarchy of needs, a five-tier model that prioritized what motivates humans to achieve one's full potential, or self-actualization. McGregor created "Theory X" and "Theory Y," opposing beliefs that managers have about employee motivation. Theory X is pessimistic, assuming workers have little motivation. Theory Y believes workers are motivated to better themselves, presenting employees as resources that businesses can develop to achieve success.

As businesses increased in size, they established specialized departments to deal with hiring, compensation, and the administration of benefits. During the 1930s and 1940s, the term personnel departments came into vogue. Managers who ran personnel departments were called personnel managers.

In the 1980s and 1990s, human resources management replaced personnel management. The name change reflected the shift in organizational practices to focus on individual employees and how to motivate them.

Overview

In the twenty-first century, organizations began placing more weight on HRM practices to try to enhance the quality of work and increase profits. The varying duties of HRM aim to maximize employees' performance to meet company objectives.

HRM plays into a business's strategic decisions, including acquisitions and mergers. The coordination of management's goals with human resource policies and procedures fosters employee behaviors that contribute to organizational success. This function is called the strategic management of human resources. Planning includes determining HRM needs, which forms the basis for recruitment strategies.

Once an organization establishes its HRM needs, human resources managers can start recruiting new employees. This process includes identifying, interviewing, vetting, and hiring candidates with the best qualifications. Businesses may recruit internally by appealing to current employees seeking promotions and/or transfers or externally by bringing in outside candidates.

A core function of HRM is employee training and development. HRM pinpoints an organization's training and development needs, then designs and implements programs to address them. Training teaches workers how to do their current jobs through orientation and management skills training. Development concerns cultivating employees' abilities and skills for future positions.

A growing priority of HRM is career development. Organizations are turning to career development programs to encourage employees to grow their potential and prove their value. Companies want to retain the best-qualified employees to boost productivity, performance, and efficiency, thus serving the companies' long-term interests.

Organizations assess employees through performance appraisals. These evaluations measure job performance and motivate employees through rewards or penalties. Companies praise good behaviors that promote the company's objectives and try to remedy negative behaviors. HRM management works with company management to devise the appraisal process. Appraisals can be used in deciding promotions, raises, and terminations.

Human resources managers administer compensation to employees. Employees receive compensation—pay and benefits—for doing their jobs. Benefits may include medical insurance, life insurance, profit sharing, stock plans, and retirement plans. Raises reward employee performance.

Organizations and HRM also work together to provide a safe and healthy work environment for their employees. The Occupational Safety and Health Act, passed by Congress in 1970, ensures safe working conditions. Concerns about workplace injuries and employee stress have sparked the creation of accident prevention programs and wellness programs.

HRM plays an important role in labor relations. The relationship between employer and employees must be a positive one if both parties are to benefit. The pressure to trim departments, cut staff, and outsource jobs to maximize profits can stoke tension between management and workers. Human resources managers navigate these issues by securing or improving pay, benefits, and working conditions.

Based on the concentration of duties, human relations managers can be placed into three main categories. Recruiting managers coordinate a company's recruiting, interviewing, and hiring process. Payroll managers oversee an organization's payroll department, which distributes pay and benefits to employees. Labor relations directors supervise policies guiding workers in union and non-union environments and handle labor complaints.

By effectively managing human resources, businesses benefit from optimizing their employees' potential. By meeting their employees' needs, companies motivate workers to do their best on the job. This leads to greater productivity and efficiency. In turn, organizations find a competitive edge and reap higher profits.

The success of a business is contingent on its capacity to hire, develop, and retain qualified workers. Therefore, HRM can make or break a company's long-term prospects.

Bibliography

Albarran, Alan B., et al., editors. Handbooks of Media Management and Economics. Lawrence Erlbaum Associates, 2008.

Beaumont, P.B. Human Resource Management: Key Concepts and Skills. Sage Publications, 1993.

"The Human Relations Movement." Harvard Business School, 2012, www.library.hbs.edu/hc/hawthorne/intro.html. Accessed 22 Aug. 2024.

Barney, Nick. "Human Resource Management (HRM)." TechTarget, Oct. 2023, www.techtarget.com/searchhrsoftware/definition/human-resource-management-HRM. Accessed 22 Aug. 2024.

"Human Resources Managers." Occupational Outlook Handbook, US Bureau of Labor Statistics, 17 Apr. 2024, www.bls.gov/ooh/management/human-resources-managers.htm. Accessed 22 Aug. 2024.

Maurer, Roy. "HR Manager Is One of the Most Promising Careers." The Society for Human Resource Management, 6 Sept. 2019, www.shrm.org/topics-tools/news/organizational-employee-development/hr-manager-one-promising-careers. Accessed 22 Aug. 2024.

Simons, Rae, editor. Human Resource Management: Issues, Challenges and Opportunities. Apple Academic Press, 2011.

Sims, Ronald R., editor. Human Resource Management: Contemporary Issues, Challenges, and Opportunities. Information Age Publishing Inc., 2007.

"What Human Resources Managers Do." Occupational Outlook Handbook, US Bureau of Labor Statistics, 17 Apr. 2024, www.bls.gov/ooh/management/human-resources-managers.htm. Accessed 22 Aug. 2024.