Human Resources is a term used to describe the individuals who make up the workforce of an organization, although it is also applied in labour economics to, for example, business sectors or even whole nations. Human resources is also the name of the function within an organization charged with the overall responsibility for implementing strategies and policies relating to the management of individuals (i.e. the human resources). This function title is often abbreviated to the initials “HR”.
Human resources is a relatively modern management term, coined as late as the 1960s. The origins of the function arose in organizations that introduced ‘welfare management’ practices and also in those that adopted the principles of ‘scientific management’. From these terms emerged a largely administrative management activity, coordinating a range of worker related processes and becoming known, in time, as the ‘personnel function’. Human resources progressively became the more usual name for this function, in the first instance in the United States as well as multinational or international corporations, reflecting the adoption of a more quantitative as well as strategic approach to workforce management, demanded by corporate management to gain a competitive advantage, utilizing limited skilled and highly skilled workers.
HR Purpose and role
In simple terms, an organization’s human resource management strategy should maximize return on investment in the organization’s human capital and minimize financial risk.
Human resource managers seek to achieve this by aligning the supply of skilled and qualified individuals and the capabilities of the current workforce, with the organization’s ongoing and future business plans and requirements to maximize return on investment and secure future survival and success.
In ensuring such objectives are achieved, the human resource function is to implement an organization’s human resource requirements effectively, taking into account federal, state and local labour laws and regulations; ethical business practices; and net cost, in a manner that maximizes, as far as possible, employee motivation, commitment and productivity.
HR Key functions
Human Resources may set strategies and develop policies, standards, systems, and processes that implement these strategies in a whole range of areas. The following are typical of a wide range of organizations:
- Maintaining awareness of and compliance with local, state and federal labour laws
- Recruitment, selection, and on boarding (resourcing)
- Employee record-keeping and confidentiality
- Organizational design and development
- Business transformation and change management
- Performance, conduct and behaviour management
- Industrial and employee relations
- Human resources (workforce) analysis and workforce personnel data management
- Compensation and employee benefit management
- Training and development (learning management)
- Employee motivation and morale-building (employee retention and loyalty)
Implementation of such policies, processes or standards may be directly managed by the HR function itself, or the function may indirectly supervise the implementation of such activities by managers, other business functions or via third-party external partner organizations. Applicable legal issues, such as the potential for disparate treatment and disparate impact, are also extremely important to HR managers.
Management trends and influences
In organizations, it is important to determine both current and future organizational requirements for both core employees and the contingent workforce in terms of their skills/technical abilities, competencies, flexibility etc. The analysis requires consideration of the internal and external factors that can have an effect on the resourcing, development, motivation and retention of employees and other workers.
External factors are those largely outside the control of the organization. These include issues such as economic climate and current and future labour market trends (e.g., skills, education level, government investment into industries etc.). On the other hand, internal influences are broadly controlled by the organization to predict, determine, and monitor—for example—the organizational culture, underpinned by management style, environmental climate, and the approach to ethical and corporate social responsibilities.
Human Resources Major trends
- To know the business environment an organization operates in, three major trends must be considered:
- Demographics: the characteristics of a population/workforce, for example, age, gender or social class. This type of trend may have an effect in relation to pension offerings, insurance packages etc.
- Diversity: the variation within the population/workplace. Changes in society now mean that a larger proportion of organizations are made up of “baby-boomers” or older employees in comparison to thirty years ago. Advocates of “workplace diversity” advocate an employee base that is a mirror reflection of the make-up of society insofar as race, gender, sexual orientation etc.
- Skills and qualifications: as industries move from manual to more managerial professions so does the need for more highly skilled graduates. If the market is “tight” (i.e. not enough staff for the jobs), employers must compete for employees by offering financial rewards, community investment, etc.
In regard to how individuals respond to the changes in a labour market, the following must be understood:
- Geographical spread: how far is the job from the individual? The distance to travel to work should be in line with the pay offered, and the transportation and infrastructure of the area also influence who applies for a post.
- Occupational structure: the norms and values of the different careers within an organization. Mahoney 1989 developed 3 different types of occupational structure, namely, craft (loyalty to the profession), organization career (promotion through the firm) and unstructured (lower/unskilled workers who work when needed).
- Generational difference: different age categories of employees have certain characteristics, for example, their behaviour and their expectations of the organization.
Human Resources Development is a framework for the expansion of human capital within an organization or (in new approaches) a municipality, region, or nation. Human Resources Development is a combination of training and education, in a broad context of adequate health and employment policies, that ensures the continual improvement and growth of both the individual, the organization, and the national human resourcefulness. Adam Smith states, “The capacities of individuals depended on their access to education”.
Human Resources Development is the medium that drives the process between training and learning in a broadly fostering environment. Human Resources Development is not a defined object, but a series of organised processes, “with a specific learning objective” (Nadler,1984) Within a national context, it becomes a strategic approach to inter sectoral linkages between health, education and employment.
Human resources development is the structure that allows for individual development, potentially satisfying the organization’s, or the nation’s goals. Development of the individual benefits the individual, the organization – and the nation and its citizens. In the corporate vision, the Human Resources Development framework views employees as an asset to the enterprise, whose value is enhanced by development, “Its primary focus is on growth and employee development…it emphasizes developing individual potential and skills” (Elwood, Olton and Trott 1996) Human Resources Development in this treatment can be in-room group training, tertiary or vocational courses or mentoring and coaching by senior employees with the aim for a desired outcome that develops the individual’s performance. At the level of a national strategy, it can be a broad inter-sectoral approach to fostering creative contributions to national productivity.
Training and development
At the organizational level, a successful Human Resources Development program prepares the individual to undertake a higher level of work, “organized learning over a given period of time, to provide the possibility of performance change” (Nadler 1984). In these settings, Human Resources Development is the framework that focuses on the organization’s competencies at the first stage, training, and then developing the employee, through education, to satisfy the organization’s long-term needs and the individual’s career goals and employee value to their present and future employers. Human Resources Development can be defined simply as developing the most important section of any business, its human resource, by attaining or upgrading employee skills and attitudes at all levels to maximize enterprise effectiveness. The people within an organization are its human resource. Human Resources Development from a business perspective is not entirely focused on the individual’s growth and development; “development occurs to enhance the organization’s value, not solely for individual improvement. Individual education and development is a tool and a means to an end, not the end goal itself” (Elwood F. Holton II, James W. Trott Jr). The broader concept of national and more strategic attention to the development of human resources is beginning to emerge as newly independent countries face strong competition for their skilled professionals and the accompanying brain-drain they experience.
Recruitment and selection
Applicant recruitment and employee selection form a major part of an organization’s overall resourcing strategies, which identify and secure people needed for the organization to survive and succeed in the short- to medium-term. Recruitment activities need to be responsive to the increasingly competitive market to secure suitably qualified and capable recruits at all levels. To be effective, these initiatives need to include how and when to source the best recruits, internally or externally. Common to the success of either are: well-defined organizational structures with sound job design, robust task and person specification and versatile selection processes, reward, employment relations and human resource policies, underpinned by a commitment for strong employer branding and employee engagement and on-boarding strategies.
Internal recruitment can provide the most cost-effective source for recruits if the potential of the existing pool of employees has been enhanced through training, development and other performance-enhancing activities such as performance appraisal, succession planning and development centres to review performance and assess employee development needs and promotional potential.
For many organizations, securing the best quality candidates requires external recruitment methods. Rapidly changing business models demand skill and experience that cannot be sourced or rapidly enough developed from the existing employee base. It would be unusual for an organization to undertake all aspects of the recruitment process without support from third-party dedicated recruitment firms. This may involve a range of support services, such as: provision of CVs or resumes, identifying recruitment media, advertisement design and media placement for job vacancies, candidate response handling, shortlisting, conducting aptitude test, preliminary interviews or reference and qualification verification. Typically, small organizations may not have in-house resources or, in common with larger organizations, may not possess the particular skill-set required to undertake a specific recruitment assignment. Where requirements arise, these are referred on an ad HOC basis to government job centers or commercially-run employment agencies.
Except in sectors where high-volume recruitment is the norm, an organization faced with sudden, unexpected requirements for an unusually large number of new recruits often delegates the task to a specialist external recruiter. Sourcing executive-level and senior management as well as the acquisition of scarce or ‘high-potential’ recruits has been a long-established market serviced by a wide range of ‘search and selection’ or ‘headhunting’ consultancies, which typically form long-standing relationships with their client organizations. Finally, certain organizations practice outsourcing complete responsibility for all workforce procurement to one or more third-party recruitment agencies or consultancies. In the most complex of these arrangements, the external recruitment services provider may not only physically locate, or ‘embed’, their resourcing team in the client organization’s offices, but work in tandem with the senior human resource management team in developing the longer-term HR resourcing strategy and plan.
Despite its more everyday use, terms such as “human resources” and, similarly, “human capital” continue to be perceived negatively and may be considered insulting. They create the impression that people are merely commodities, like office machines or vehicles, despite assurances to the contrary.
Modern analysis emphasizes that human beings are not “commodities” or “resources”, but are creative and social beings in a productive enterprise. The 2000 revision of ISO 9001, in contrast, requires identifying the processes, their sequence and interaction, and to define and communicate responsibilities and authorities. In general, heavily unionised nations such as France and Germany have adopted and encouraged such approaches. Also, in 2001, the International Labour Organization decided to revisit and revise its 1975 Recommendation 150 on Human Resources Development. One view of these trends is that a strong social consensus on political economy and a good social welfare system facilitates labour mobility and tends to make the entire economy more productive, as labour can develop skills and experience in various ways, and move from one enterprise to another with little controversy or difficulty in adapting. Another view is that governments should become more aware of their national role in facilitating human resources development across all sectors.
Trans-national labour mobility
An important controversy regarding labour mobility illustrates the broader philosophical issue with usage of the phrase “human resources”. Governments of developing nations often regard developed nations that encourage immigration or “guest workers” as appropriating human capital that is more rightfully part of the developing nation and required to further its economic growth.
Over time, the United Nations have come to more generally support the developing nations’ point of view, and have requested significant offsetting “foreign aid” contributions so that a developing nation losing human capital does not lose the capacity to continue to train new people in trades, professions, and the arts.
In the very narrow context of corporate “human resources” management, there is a contrasting pull to reflect and require workplace diversity that echoes the diversity of a global customer base. Such programs require foreign language and culture skills, ingenuity, humour, and careful listening. These indicate a general shift through the human capital point of view to an acknowledgment that human beings contribute more to a productive enterprise than just “work”: they bring their character, ethics, creativity, social connections and, in some cases, pets and children, and alter the character of a workplace. The term corporate culture is used to characterize such processes at the organizational level.