Human Resource and its importance

14 Dec


”’Human resources”’ is a term in which many organizations describe the combination of traditionally administrative personnel functions with performance management, employee relations and resource planning. The field draws upon concepts developed in Industrial/Organizational Psychology. Human resources has at least two related interpretations depending on context. The original usage derives from political economy and economics, where it was traditionally called labor, one of four factors of production. The more common usage within corporations and businesses refers to the individuals within the firm “Human Resources”, and to the portion of the firm’s organization that deals with hiring, firing, training, and other personnel issues called ”Human Resource Management”


The term “human resources,” refers to the coherent and strategic management of employees in an organization. As companies reorganize to gain competitive edge, human resources plays a key role in helping companies deal with a fast-changing competitive environment and the greater demand for quality employees. Below are the six key people-related activities that human resources completes to add value to a company:

1. Effectively managing and utilizing people.
2. Trying performance appraisal and compensation to competencies.
3. Developing competencies that enhance individual and organizational performance.
4. Increasing the innovation, creativity and flexibility necessary to enhance competitiveness.
5. Applying new approaches to work process design, succession planning, career development and inter-organizational mobility.
6. Managing the implementation and integration of technology through improved staffing, training and communication with employees.

The principal objectives of HRM may be listed thus:

  • To help the organization reach its goals: HR department like other departments in an organization exists to achieve the goals of the organization first and if it does not meet these purposes, HR department (or for that matter any other unit) will wither and die.
  • To employ the skills and abilities of the workforce efficiently: The primary purpose of HRM is to make people’s strengths productive and to benefit customers, Stockholders and employees.
  • To provide the organization with well trained and well motivated employees: HRM requires that employees are motivated to exert their maximum efforts that their performance be evaluated properly for results and that they be remunerated on the basis of their contributions to the organizations.
  • To increase to the fullest the employee’s job satisfaction and self actualization: It tries to prompt and stimulate every employee to realize his potential. To this end suitable programs have to be designed aimed at improving the quality of work life (QWL).
  • To develop and maintain quality of work life: it makes employment in the organization a desirable, personal and social situation. Without improvement in the quality of work life it is difficult to improve organizational performance.
  • To communicate HR policies to all employees: It is the responsibility of HRM to communicate in the fullest possible sense; tapping ideas, opinions and feelings of customers non customers regulators and other external public as well as understanding the views of internal human resources.
  • To be ethically and socially responsive to the needs of society: HRM must ensure that organizations manage human resource in an ethical and socially responsible manner through ensuring compliance with legal and ethical standards.

People have always been central to organizations, but their strategic importance is growing in today’s knowledge based industries. An organization’s success increasingly depends on the knowledge skills and abilities (KSAs) of employees particularly as they help establish a set of core competencies that distinguish an organization from its competitors. With appropriate HR policies and practices an organization can hire develop and utilizes best brains in the marketplace realize its professional goals and deliver results better than others.

The Importance of Human Resources Management (HRM) in Modern Organizations:

Organizational Psychology holds that successful organizations do not owe their success solely to market realities and sustainable competitive advantages. Actually, there is a lot more. Successful companies are those that consider their human capital as their most important asset. Facts and figures are the quantitative elements of successful management, yet the qualitative, i.e. the cognitive aspects, are those that actually make or break an organization.Human Resources Management (HRM) is the strategic management of the employees, who individually and collectively contribute to the achievement of the strategic objectives of the organization. Assuming that the employees of an organization are individuals with own mental maps and perceptions, own goals and own personalities and as such they cannot be perceived as a whole, HRM holds that the organization should be able to employ both individual and group psychology in order to commit employees to the achievement of organizational goals.

Aiming to enable the organization to achieve its strategic goals by attracting, retaining and developing employees, HRM functions as the link between the organization and the employees. A company should first become aware of the needs of its employees, and at a later stage, understand and evaluate these needs in order to make its employees perceive their job as a part of their personal life, and not as a routine obligation. To that end, HRM is very crucial for the whole function of an organization because it assists the organization to create loyal employees, who are ready to offer their best.

The HRM activities in modern organizations are typically performed in communication with the General Management in an effort to provide a variety of views when a decision must be taken. In that way, decision making is not subject to the individual perceptions of the HR or the General Manager, but it becomes the outcome of strategic consensus.

The main goals / responsibilities of HRM are:

• To retain low employee turnover rate by inspiring people to work for the company

• To attract new employees

• To contribute to employee development

To achieve these goals, Human Resources Management trains and motivates the employees by communicating ethical policies and socially responsible behaviour to them. In doing so, it plays a significant role in clarifying the organization’s problems and providing solutions, while making employees working more efficiently.

Strategic Management and HRM

As discussed in the articles on modern day HRM practices, there is a need to align organizational goals with that of the HR strategy to ensure that there is alignment of the people policies with that of the management objectives. This means that the HR department can no longer be viewed as an appendage of the firm but instead is a vital organ in ensuring organizational success. The aims of strategic management are to provide the organization with a sense of direction and a feeling of purpose. The days when the HR manager was concerned with administrative duties is over and the current HRM practices in many industries are taken as seriously as say, the marketing and production functions.

Importance of HRM for Organizational Success

The practice of HRM must be viewed through the prism of overall strategic goals for the organization instead of a standalone tint that takes a unit based or a micro approach. The idea here is to adopt a holistic perspective towards HRM that ensures that there are no piecemeal strategies and the HRM policy enmeshes itself fully with those of the organizational goals. For instance, if the training needs of the employees are simply met with perfunctory training’s on omnibus topics, the firm stands to lose not only from the time that the employees spend in training but also a loss of direction. Hence, the organization that takes its HRM policies seriously will ensure that training is based on focused and topical methods.

In conclusion, the practice of HRM needs to be integrated with the overall strategy to ensure effective use of people and provide better returns to the organizations in terms of ROI (Return on Investment) for every rupee or dollar spent on them. Unless the HRM practice is designed in this way, the firms stand to lose from not utilizing people fully. And this does not bode well for the success of the organization.

Human resources management helps an organization and its people to realize their respective goals thus:

At the enterprise levels:

1) Good human resource practices can help in attracting and retaining the best people in the organization. Planning alerts the company to the types it will need in the short medium and long run.
2) it helps in training people for challenging roles, developing right attitudes towards the job and the company promoting team spirit among employees and developing loyalty and commitment through appropriate reward schemes.

At the individual level:

Effective management of human resources helps employees thus:

1) It promotes team work and team spirit among employees.
2) It offers excellent growth opportunities to people who have the potential to rise.
3) It allows people to work with diligence and commitment.

At the society level:

Society, as a whole is the major beneficiary of good human resources practices

1) Employment opportunities multiply.
2) Scarce talents are put to best use. Companies that pay and treat people well always race ahead of others and deliver excellent results

At the national level:

Effective use of human resources helps in exploitation of natural, physical and financial resources in a better way. People with right skills, proper attitudes and appropriate values help the nation to get ahead and compete with the best in the world leading to better standard.

In short, Good HR practices help:

1) attract and retain talent
2) train people for challenging roles
3) develop skills and competencies
4) promote team spirit
5) develop loyalty and commitment
6) increase productivity and profits
7) improve job satisfaction
8) enhance standard of living
9) Generate employment opportunities.

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Posted by on December 14, 2012 in HRD


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