One of the most important factors that influence the financial performance of any company is human resources and it is essential to manage them in a wise manner. Generally, managers of different companies use human resource development programs in order to help their employees improve their professional and personal skills and abilities, and to enrich their knowledge in the particular sphere. These programs are very useful, because their main aim is to develop the most efficient labor force, create a competitive advantage, and achieve company’s goals.
It is not a secret that there should be a range of favorable factors, if you want to set up and carry on your own business. These factors include capital, land, workforce, and entrepreneurial talent. The last one is essential for effective business. A company may have a lot of money and assets, property and equipment, but it may suffer losses because of the inability to manage its resources in an efficient way, as well as to make feasible planning and sound decisions. There is another important issue, connected with effective business performance – human resource management. As a matter of fact, every successful businessman acknowledges that human resources are the key element to the overall success of any company or organization.
Usually, human resource development programs are held by the department managers. HR professionals are also responsible for effective recruitment and retention of staff. There are many opportunities for human resources and methods of employees’ development. Development and education programs may be applied directly at workplaces or outside of them. Managers are in charge of motivating employees and developing programs that encourage personnel to work better, as well as of developing expansion of initiatives and benefits. The most important factor in employee motivation is desire and opportunity to study and develop professional skills.
Human resource management: general information
First of all, the notion of human resource management should be defined, and its major aims within any organization should be outlined. In general, human resource management (HRM) department is a unit within a company, the major functions of which are recruitment and management of the company’s staff. Human resource management comprises a wide range of procedures and techniques, such as workforce planning, recruitment, attraction and selection of new employees, personnel administration, compensation, payroll, training, development of managers and subordinates, employee benefits, performance appraisal, labor relations, etc. HRM is a function, performed by HR managers in order to guide employees. This process also comprises such issues as motivation of employees, hiring, performance management, workplace safety, etc.
It is obvious that a company cannot create a team of well-qualified and skilled employees without good labor force. With the help of effective training and human resource development (HRD) programs, personnel can fully self-actualize and achieve all their personal and professional goals, and contribute to the overall business success. Such programs are usually held by the department managers and may be applied directly at the workplaces or outside of them. HRD programs can be held in the form of college courses, classroom trainings, external seminars and conferences, or coaching by a manager (Noe, Hollenbeck, Gerhart, & Wright, 2013).
Everything changes with time, and the role of HRM is changing as well. In the past, HR managers dealt more with administration and finance, for example, with hiring staff and paying benefits. Nowadays, human resource managers should adapt to the changing business environment and slightly transform their functions according to the new market requirements. Companies become more flexible and customer-orientated. Nowadays, major responsibilities of HR professionals include employee benefits and payroll administration, as well as recruiting, hiring, communication, training, team building, performance management, and organization development. In his book, Ulrich points out that today, a human resource manager should also perform some additional roles that include being an employee advocate, a business and strategic partner, and a change champion at the same time.
HR managers should think of themselves as of strategic partners in order to perform their functions in a more efficient way and to contribute to a company’s success. HR management aims at supporting business strategies and HR professionals know everything about successful work systems. As an employee advocate, an HR manager knows exactly the ways to create a favorable working environment and to motivate employees. An HR manager introduces employee assistance programs and provides development opportunities, along with the establishment of the organizational culture. It is quite important for an HR team to regularly evaluate the company’s results, make feasible plans, and introduce appropriate change strategies in order to be always updated and fully respond to new market requirements (Ulrich, 1996).
Nowadays, more and more businesses are interested in strategic human resources management (SHRM) that means the macro-organizational approach to viewing and performing the role and function of HRM. That is to say, managers try to connect and coordinate the strategic tools and methods of a company with the process of human resource management. As a result, an effective combination and coordination of these two processes enables the company to achieve its objectives in a more effective way. In this context, it should be said that human resources management practices are closely connected with the strategic management processes of a company. That is to say, strategic human resource management aims at helping businesses meet the needs of their employees while promoting companies’ goals.
SHRM requires thinking ahead, anticipating future prospects and results, planning ways for a company to meet the needs of its staff, and vice versa. Companies that work hard and implement SHRM practices create a favorable work atmosphere and achieve a high rate of productivity. According to Wright and McMahan, four criteria must be met in order for a firm’s resources to provide a source of sustained competitive advantage. They are as follows:
· The resource should be useful for a firm, that is, it should add some positive value to a firm;
· The resource should be rare or unique; a firm should possess unique resources among its competitors;
· The resource should also be imperfectly imitable;
· This resource cannot be replaced with another resource by competitors (Wright & McMahan, 1992).
In fact, people are the most important source of economic prosperity and efficiency, that is why, wise and sound human resource management is of a huge importance. If employees are interested in the results of their work and if they are committed to their jobs, this will result in an extremely good performance of a company and increase in productivity. It is essential to combine the strategy of the company with its current human resource management. Another important issue of HRM is connected with a sound combination of an organizational culture and business performance that can lead the company to a great success.
It is hard to overestimate the role of HRM in organizations. People are the key element of any successful business performance. Employees carry out different important activities and HR managers organize staff and their work, so that they can perform these activities and their duties in as efficient manner as possible. In order to succeed and achieve all set objectives, managers should view their employees as assets, not costs. HR professionals and other managers within a company work in cooperation in order to develop necessary employees’ skills. HR managers suggest the ways to assign different tasks to employees, and introduce strategies aimed at increasing the commitment of employees. This process begins from recruitment, when people are matched with the appropriate positions. It should also be said that HR professionals help a company develop its competitive advantage. It includes creating the capacity or a company’s ability to offer unique products or services. Often businesses hunt for talented and well-qualified employees and try not only to find and hire them, but also to keep them and help them grow and develop.
Human resource management and competitive advantage
As it has already been noted, human resource management is gradually evolving. This change includes the shift from short-term to long-term planning, and investment in human resources rather than cost cutting. The changing business environment and global influences also contribute to the HRM evolution. Generally, HRM is based on the employees’ commitment and engagement into the working process, feasible and flexible practices that rapidly respond to all the needs of the company. In this context, the notion of diversity should also be mentioned: it means that managers understand that employees from the different backgrounds can contribute to the common goals and perform their work in a more efficient way. Every person has his/her own qualities and is talented in his/her own way. An organization can use this in order to fulfill its objectives. A diverse workforce ensures that all selection policies are established according to the objective principles.
In fact, diversity can directly contribute to a company’s well-being and help build its competitive advantage. It is proved that diverse workforce can improve creativity and employees’ contribution on all levels, and, as a result, the company’s competitiveness as well. Diversity can also be a key element for improving company’s services and products. Moreover, managers have a great opportunity to find out the needs and preferences of their customers. When a company values diversity and equality, it understands wants and needs of the customers better and can accordingly improve the quality of its services. It is crucial to realize that all people are equal and are talented in their own way, and each person can enrich a company’s experience and contribute to its success.
In order to provide an equal approach towards each employee and promote diversity at a workplace, HR managers should introduce education and training programs, implement positive action policies, and monitor diverse workforce. It is essential to build fruitful cooperation and promote mutual understanding through communication with employees and their active participation. Increased involvement of employees in the decision-making process can improve productivity and reduce any concerns about diversity. Managers can use different methods to promote diversity and equality, such as trainings, feedback sessions, and consultations (Harvey & Allard, 2012).
One of the main responsibilities of HR managers is recruitment, where HR professionals make strategies and plans in order to hire the right people. It is important to take into account all the criteria, which are required to fulfill a vacant position. In simple words, recruitment is the process of finding capable people, who may match company’s requirements. Using a specific set of instruments, managers select from those people a person, who will be the best candidate for the position. This process is very important, because a company’s future performance will depend on the choice made by the HR managers. If they select the right people, having taken into account job description, skills, and talents of applicants, these people will succeed in their jobs and contribute to a company’s overall performance. If HR managers make a mistake, new employees can not only damage the company’s reputation, but also bring unnecessary expenses or even losses.
Workforce planning is also essential for the effective performance of the company. An HR team should consider all possible outcomes and opportunities for further growth. For example, the company may expand to the new markets, or begin sing new technologies, which will require high qualification and new skills. It should also be mentioned that the business environment is constantly changing and some external shifts in the labor market can influence recruitment and selection processes. In order to provide their company with competitive advantage and ensure that it will function to its full capacity, HR managers should predict all possible internal and external changes, as well as monitor any of them during planning their recruitment strategies. Usually, a recruitment strategy includes promotion planning, visions of equality and diversity, and the desired image of an organization that will be available for others in the market.
The major aim of an HR team is not only selection of the right candidates for positions, but also retention of the existing employees. As compared to recruitment, retention of qualified and talented workers is much more difficult task that can prevent a company from additional expenses on recruitment activities. Moreover, employees always look for self-actualization, fair rewards, and mutual understanding. If they find what they are looking for, their attitude towards job and a company will alter for better. It is not a secret that a few committed and loyal employees are better than a hundred of the new ones. That is why HR managers pay much attention to this issue (Bratton & Gold, 1999).
As it has already been mentioned, recruitment and selection directly contribute to the competitive advantage of a company. If these two procedures are held in an ineffective, time- and cost-consuming way, there may be the following negative consequences: company’s productivity may reduce along with the employees’ morale. In addition, recruitment takes much time and managers cannot focus on their own responsibilities.
It is obvious that HRM plays an essential role in the business, and, therefore, recruitment and selection are the key elements of HRM activities. Wise planning, effective hiring strategies, and retention of employees will help promote a company’s image, increase productivity, enhance customers’ awareness, and successfully achieve goals. Some companies find their new managers within their own organization. This means that employees have promising future prospects and can progress up the career ladder. Organizational success can also be achieved with the help of individual and team reward and recognition strategies. The way employees do their work depends on the way they are valued and rewarded. Therefore, rewards and communication within a team increase employees’ motivation and productivity. Thus, another pre-requisite of a company’s successful performance along with the effective recruitment and selection is a fair reward system (Cacioppe, 1999).
There is a variety of recruitment and selection methods that are available today for the HR professionals. These methods can be applied in different situations, depending on a particular position. It can be external sourcing, internal, or third party sourcing. Internal sourcing is a method of recruitment used for advertising a new position to the existing employees. Today many organizations use this method, because it is the easiest way to find the right people: they do not need additional training and a company already knows everything about its employees. Moreover, internal sourcing allows cutting costs on job advertisement and takes less time than other methods do.
As compared to internal sourcing, external sourcing involves the use of different recruitment procedures and tools, such as newspaper advertisements and job announcements. The search for the right candidates requires much time and effort, but it is worth it. New employees can breathe new life into a business and offer innovative approaches towards solving old or long-standing issues. This method is also used when the existing employees do not match the requirements of the new position. Third party sourcing presupposes that a staffing company or other organization will be looking for the candidates for a vacant position. This method is easier than a previous one, but it requires additional expenses and may also be too time-consuming (Richason, n.d.).
It should also be noted that the choice of the recruitment methods could be influenced by a range of external factors, such as industry competition, the level of unemployment, or labor shortages. If competitors offer better career opportunities or more generous benefits, it is essential to show that your company has more strengths and better reputation. Furthermore, HR managers should take into consideration possible challenges, which may occur on their way. An HR team should decide about a recruitment strategy and be ready for possible expenses.
Today there are many companies, which have succeeded in human resource management. One of them is Starbucks Coffee Company that has achieved great success not only in domestic, but also in the international markets. Owing to high-quality products, a unique atmosphere in the stores and committed employees, Starbucks is now one of the leading companies in the industry. Starbucks fully implements the principle of workforce diversity. From the very beginning, all employees are seen as the partners, who can contribute to the company’s success and help build its competitive advantage. The company also tries to get its staff involved in the decision-making process and highly values employees’ loyalty (Starbucks Coffee Company, 2013).
Conclusion and recommendations
Nowadays, human resource management is essential for effective business performance. Businesses cannot achieve its goals and win a market share without productive human resources. Today employees are the key element to the success, and those, who know the ways to manage them will remain in the driver’s seat. HR professionals are in charge of not only recruitment and selection of the right people, but also of staff retention. Wise HR strategies and recruitment methods can contribute to the company’s competitive advantage and increase overall productivity. Among recruitment methods, one can single out internal sourcing, external, and third-party sourcing. Each of these methods has its advantages and disadvantages, and should be used according to the job specification for a vacant position.
Every company should be more attentive to the needs of employees, introduce corporate culture in order to be more steady and efficient, than its competitors, implement various motivation and promotion programs, hold regular trainings and seminars, establish and regulate working discipline, as well as encourage team spirit, teamwork, and cooperation. Managers should communicate with employees in order to satisfy their needs better and get them involved in the decision-making process.
In order to ensure that a company has competitive advantage and good reputation, HR professionals should widely use the principles of equality and diversity. This enables a company to work to the full, using diverse workforce to find out more about its customers’ needs and improve existing services and products. Diversity encourages employees’ creativity and out-of-the-box thinking; it can also benefit both the company and its staff.
Well-planned recruitment and selection processes support businesses, improve their reputation, and encourage employees to communicate, participate, and be involved into the decision-making process. Moreover, retention of staff is also a prior responsibility of the HR managers, because it creates a stable atmosphere in the workplace, improves employee satisfaction and, therefore, overall productivity, contributes to competitive advantage of a company. To sum up, managing human resources is an art, which requires hard work, feasible planning, and wise recruitment strategies that can significantly contribute to success of any company.