Understanding Importance of Human Resource Management in an Organization

Introduction:

- No matter what business you're in you have to manage people. To do this successfully, you have to be well-versed in a variety of issues, from recruiting, to hiring, to compensating,training, and managing performance. 

 I want to share with you the fundamentals of managing people; also known as Human Resources.

We'll begin by taking a look at administrative and strategic HR, talent management, and the business case for diversity. 

We'll also look at training employees in managing performance.Finally, we'll consider culture and international assignments. Managing people well isn't just a formula; rather, it's about creating a work environment that allows others to do their best. Let's get started.

 Whether you worked for a Fortune 500 firm or for a small business, you have to address people-related business issues. These include finding and keeping top talent. As a manager, in the course of your work, you have to deal with financial, material, information, and human resources. The very best managers are optimizers because they get the most out of all of the resources available to them.

 My intent is to focus on some key concepts that will get you started on your way to managing people effectively. With all of this in mind, let's dive into Human Resources Fundamentals.

Administrative HR

- Suppose you were starting a brand new organization. You probably wouldn't have an HR Department because your organization is just getting underway. Nevertheless, as you begin to grow, you and the managers you hire will need to be concerned about five broad areas that involve people, staffing, retention, development, adjustment and managing change. Together, these five broad areas constitute human resource management or the HRM system, and much of it is administrative. The first area is staffing, which begins by identifying the work to be done and the kinds of personal characteristics necessary to do the work.

Determining the numbers of people and the mix of skills that you'll need to do the work, and then recruiting, selecting and eventually promoting qualified candidates. Retention of your new employees is more likely when you do three things well: Reward employees for performing their jobs effectively, ensure harmonious working relations between employees and their managers and maintain a safe, healthy work environment. Development focuses on preserving and enhancing your employees' competence in their jobs by improving their knowledge, skills,abilities and other characteristics.

HR specialists call these competencies. Adjustment is concerned with compliance with federal and state laws, as well as with your organization's policies, for example, through discipline, and business strategies such as cost leadership. Finally, managing change is an ongoing process. Its objective is to enhance your new organization's ability to anticipate and respond to developments in the environment, political, economic, social and technical, and to enable employees at all levels to cope with those changes.

To some, these activities are the special responsibilities of the HR Department, but they also lie within the core of every manager's job. In fact, HR Departments typically don't even appear until organizations reach about 100 employees. Thus, a broad objective of HR management is to allow all of your employees to perform to the very best of their abilities. A special objective of the HR Department is to help your line managers to manage those workers more effectively.

As Jack Welch, the legendary former CEO of General Electric, noted, "Look, HR should be every company's 'killer app.' What could possibly be more important than who gets hired, developed, promoted, or moved out the door? Business is a game, and as with all games, the team that puts the best people on the field and gets them playing together wins. It's that simple." Doing things to help line managers put the best people on the field, helping people at all levels to grow, getting them to play well together and to stay, is really what administrative HR is all about.

Strategic HR

- Imagine this, you're the coach of a basketball team, and you're preparing to play your archrival. Would you rather have your team play the game by taking the floor and simply reacting to whatever your opponent does? If you were playing chess, would you simply react to whatever moves your opponent makes? The answer in both of these situations is an emphatic "no". Rather, you would most likely have a well developed "game plan". That game plan is known more formally as a strategy. In business settings, firms make decisions and choices about how to position themselves for sustainable competitive advantage.

Those decisions and choices define each firm's competitive position. Every firm makes decisions about issues such as: Customers. Who will it serve? Processes. How will it create value? Leaders. Their priorities, focus, and dedication. Staff. Who it hires, develops, and retains?Vision. Its reason and purpose for existence. Those decisions define each company's genetic code. That code should be clear, simple, and understandable, for it provides lifelong direction to an organization.

Here are some examples of strategic visions. Southwest Airlines - Fun; low fares. Coca-Cola - A Coke within an arm's reach. General Electric - #1 or #2 in what we do. CNN - 24-hour news.Disneyland - The happiest place on earth. At a broader level, strategy answers questions such as: Why should customers buy from your company? What do you do better than anyone else?Do you offer products or services that no other competitor can match? Do you offer the cheapest products or services? Are your products or services the highest-quality ones available?Do you deliver your products or services faster than any competitor can? Does your company provide the very best customer service? Competitive strategy is about choices and trade-offs the firms the firms make.

It's about being different. It means deliberately choosing a different set of activities in order to deliver a unique mix of value to the customer. Human Resource Strategy refers to the decisions, processes, and choices that firms make about how they will manage their people. It parallels and supports the strategic business plan. To do that well, however, it requires a focus on planned, major changes in the organization, and on critical issues such as: What are the HR implications of your proposed strategy? What constraints might you face in implementing that strategy? What are the implications for how you'll manage your people, how you'll develop them, and the leadership succession issue? What can you do in the short term to prepare for longer-term needs? In this approach to the strategic management of human resources, a firm's business strategy, and it's HR strategy, are interdependent.

To illustrate, consider that you're in a start-up business in a completely new market space.Think eBook readers versus traditional print media. Think 3D printing. Think advanced batteries and fuel cells to replace gasoline engines. You're trying to appeal to customers who want a break from the present, and also to those who want to invest in a product that will see the future industry. To survive, you need a critical mass of early users. What does all this mean for the people you hire? Well, they should be smart, technically savvy, and totally committed to your vision.

How will you judge their performance? The key consideration will be their ability to generate and execute breakthrough ideas. How will you reward them? Because early stage companiesdon't have the cash flow to pay high salaries. Major emphasis would be on stock options or stock grants. What would you emphasize in training and development? Because the major emphasis at this stage is on research and development, training will focus primarily on developing technical competencies.

Can you see how HR strategy parallels and facilitates the more general business strategy? This is what HR strategy is all about.

Talent management

- Talent Management is the process employers use to anticipate and meet their needs for human capital, that is people. It's gained increasing attention in the last decade or so, as companies, professional associations, and even governments have become interested in it.Unfortunately, there's not a common understanding in what the term "Talent Management" means. Nor is there a common understanding of its aims and scope. For example, there's disagreement among experts about whether talent management is about all employees, the inclusive approach, or whether it refers only to the talents of high-potential, or high-performing employees, the exclusive approach.

Regardless of one's perspective, a major challenge is to manage the talents of employees effectively after they are on board. There are at least four broad approaches to talent management. Let's consider each one of them briefly. First is the People Approach. Identify star performers, and then devote special attention to developing them. Devote lesser attention to workhorses, high performers with little potential to move up, or problem children, low performers with high potential.

Next is the Practices Approach. Connect key HR practices, those use to attract, recruit, and retain talent. Identify high-potential employees, and manage leadership succession plans.Develop employees through coaching and mentoring, and deliver performance through effective performance management. Another approach to consider is the Position Approach.Identify A, B, and C Positions.

A Positions, are strategically important, and mistakes can have serious financial consequences.B Positions, are support roles, and C Positions are not strategic and can be outsourced. The challenge is to get A players into A Positions. Finally, there is the Strategic Pools Approach.Focus on identifying pools of internal talent for the purpose of succession planning, and then devote time and resources to ensuring that replacements are ready should a need arise.

In practice, these four approaches represent a range of dilemmas that any talent management system has to deal with. Most organizations use them in combination to address trends such as the following. Global abundance but local scarcity of talent. Fewer young people and more older people, many heading rapidly towards retirement. Of course, this depends on each nation's demographic trends. More differences across generations at work, as well as similarities.

For example, the need for respect, supportive bosses, and credible, trust-worthy leaders. And more diverse, remote, and virtual workforces with different attitudes towards work. What does all of this mean for you personally? Recognize that you are in control of your own talent. For example, you may decide to work for multiple organizations at the same time. After all, talent can come from anywhere in the world. At the same time, you have more freedom than ever to manage your own career.

As for the role of HR in talent management, it is the provider of talent guidance, tools, and coaching, to enable you to own responsibility for your personal development.

Making the business case for diversity

- The concept of diversity, all the things that make us different from each other, is more than just a passing blip on the corporate conscience. Diversity is not just things you can see, like age and gender, race and ethnicity, it's also the many things you can't see, like experience, field of education, where you grew up, your personality type and cultural influences that affect how you think and what you believe. Diversity is not just something a company should have, or ought to have, it's something that virtually all companies already do have.

Many companies view it as a major competitive factor, and something to celebrate and to leverage to their advantage. As MGM Resorts says, "We are at our most effective "as an organization when we are at our most inclusive." Likewise, IBM proclaims proudly, "We learned early on "that fostering diversity is not only the right thing "to do for society, but for business as well." In this video I want to share with you five key trends in organizations and in markets that comprise the business case for diversity.

The first is changing labor markets. You can be sure of this, over the next 25 years the U.S. workforce will comprise more women, more immigrants, more people of color, and more older workers. Globally, more than 500 million people, double the number today, will legally workoutside their home countries in the next 20 years. Why? Experts point to factors such as conflict,natural disasters, climate change and economic opportunism.

Workplaces everywhere will be characterized by more diversity in every dimension. Next is the shift from manufacturing to services. Today roughly 90% of U.S. employees work in service-based industries such as banking, financial services, healthcare, tourism and retail. Looking ahead, virtually all of the growth in new jobs will come from service-producing industries. Jobs in those industries require lots of interaction with customers.

To be effective, employees need to develop the skill of customer literacy, that is the ability for employees to read their customers, to understand them, to anticipate and monitor their needs and expectations, and to respond sensitively and appropriately. In the service game, customer literacy is an essential skill, and having a diverse workforce is an important step towards that kind of customer literacy. Another key trend is the globalization of markets.

As organizations around the world compete for customers, they offer customers choices unavailable to them domestically. People everywhere worship two words, cheap and available.With more options to choose from, customers have more power to insist that their needs and preferences be satisfied. To satisfy them, firms have to understand their customers better. To do that, some firms have established a strong local presence, such as Japanese car makers using advertisements that showcase local dealerships and satisfied owners.

Others have forged strategic international alliances, such as Microsoft and Nokia, Fiat and Chrysler. Leading global companies measure success in this area of cultural learning just as they measure other business factors. A big trend today is the growth in mergers, acquisitions, and international alliances. The managers who have worked out the results of all the mergers, acquisitions, and strategic international alliances occurring over the past 20 years, already know what several large studies have found, that integrating diverse company cultures is the top challenge in mergers and acquisitions.

Corporate cultures may differ in many ways, such as the customs of conducting business, how people are expected to behave, and the kinds of behaviors that get rewarded. The challenge for both workers and managers is to understand and capitalize on that diversity as companies combine their efforts to offer goods and services to customers in far-flung markets. 

The final trend to consider is new business strategies that require more teamwork. Teams mean diverse workforces because they often draw from the most talented or experienced employees.Young and old, male and female, better and less well-educated, members from different departments, these are just some of the dimensions along which team members may differ.Coordinating those talents to develop new products, better customer service, or ways of working more efficiently is a difficult yet essential aspect of business strategy, and it presents new kinds of management challenges.

So think about diversity in your company. Is the mix of people changing? How is your industry changing? Does it require closer interaction with customers? What about the actual work? Is more of it being done in teams? Are you expanding into new markets? Think about the short-term and long-term consequences of these changes. By deeply considering these factors and their implications for your company, you'll be well on your way towards managing diversity effectively.