Chapter 10 - Human Resource Management
To-Do-List: Activity 10.3
Learning Objective: To understand the purpose of Human Resources Management
What do you think are the responsibilities of a Human Resources Manager?
Human Resources is the business function responsible for activities such as:
Recruitment of capable, flexible, and committed staff;
Management and rewarding the performance of workers;
Development of staff skills given the organization's objectives;
The purpose of HRM, therefore, is "to recruit, train, and use the workers of an organization in the most productive manner towards achieving the organization’s objectives.”
One of the starting points of HRM activities is called Workforce Planning:
Workforce Planning is about planning the business' workforce (number and skills) according to its current and future needs. It involves recruiting and selecting the appropriate employees taking into consideration the business' situation and future objectives.
This process starts with an workforce audit in which the skills, qualifications, and the number of existing employees is thoroughly analyzed.
From the audit it is possible to understand the number of new employees are required by the business, which depends on:
Demand forecast for the business products and services - based on season, competition, trends, etc.;
Productivity level of employees which is believed to increase constantly due to advanced technology and training (fewer workers needed for the same output);
Business objectives such as expansion or improved customer service;
Changes in labor laws such as increase in minimum wage or reduced working hours heavily impact on workforce planning;
Labor turnover and absenteeism rates give businesses a good idea of their need for recruitment.
Analyzing the number of workers needed is not all that takes for a complete workforce planning. Looking at the skills, knowledge, and capacitation is key for the firm's success.
These variables depend upon:
Pace of technological change dictates skills needed in some cases;
Change in the company's needs for more flexible and multi-skilled workforce rather than specialized workers (or vice-versa).
Workforce planning is only effective if linked to the company's long-term objectives!
Activity 10.2
Human Resources Departments are also responsible for assessing and taking measures regarding Labor Turnover: a measure of the rate at which employees are leaving an organization:
Labour Turnover indicates employee discontent, low morale, and low motivation;
Some industries have as a characteristic higher turnover than others;
Areas with low unemployment may also display higher turnover rate (better opportunities).
Here is how Labour Turnover Rate is calculated:
High Labor Turnover can bring businesses various costs:
Cost of recruiting, selecting, and training;
Costs associated with loss of customer loyalty;
Cost of poor performance before new recruits are found (gap);
Cost related to the loss of team-spirit.
Can high labor turnover be any good for the company, though?
Better staff can be selected when low-performing ones are leaving;
New ideas and practices are brought in;
Business going through a process of rationalization find high labor turnover an easy way of doing so;
Chapter 10 - Human Resource Management
To-Do-List: Activity 10.3
Learning Objective: To understand the purpose of Human Resources Management
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