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Human Resource Management 101 – What are the Functions, Objectives, and Success Strategies?

Reading time 5min

In 2004, the term “human capital” won the taboo term of the year. Employees are much more than an economic variable, and the concept of Human Resource Management (HRM) also reflects this fact.

In this article, we'll cover the scope of tasks performed in HR departments today, how to successfully implement strategic HR management, and how to achieve your goals. You will quickly realize why Human Resource Management is a must for every company.

What is Human Resource Management?

What is Human Resource Management?

Human Resource Management encompasses all of the strategies, measures, and actions related to the areas of staffing and recruitment in a company. The responsibility for HRM does not fall into the hands of one HR Manager, but is determined by all managers and the managing director.

Based on this definition of HR management, we can recognize the importance and significance it brings to ensuring employee satisfaction.

Thus, Human Resource Management is indispensable for finding, motivating, and retaining suitable employees.

What Are the Objectives of Human Resource Management?

What Are the Objectives of Human Resource Management?

The outdated term "human capital" implies that business objectives are pursued in human resource management – but not exclusively. Since the well-being of employees is an essential factor in breeding company success, the task is to ensure that social goals take on equal (if not greater) importance alongside business goals.

Business goals

  • Profit maximization
  • Higher productivity
  • Higher competitiveness
  • Low fluctuation
  • Low personnel costs

Social goals

  • Employee satisfaction
  • Fair working atmosphere
  • Flexible working hours
  • Work-life balance
  • Appreciation

Social goals have a positive impact

Both HR management and the company benefit when social goals are achieved. After all, social goals are, to a certain extent, a prerequisite for the sustainable achievement of business goals.

It is no secret that satisfied employees are sick less often, show up to work more motivated, and are more productive and loyal.

Human Resource Management thus achieves lower employee turnover and can save costs for recruiting and new employee training. At the same time, an employer becomes more attractive and gains advantages in attracting new employees.

What Are the Key Functions of Human Resource Management?

What Are the Key Functions of Human Resource Management?

Human Resource Management tasks include the following six areas. As you will soon find out below, a single person from the HR department could not handle all of these tasks alone.

Workforce Planning

Personnel planning determines which and how many personnel are needed within each department and what experience and qualifications are required. If positions are lacking or unfilled, this restricts the company's operations and potential is lost.

Recruiting and Downsizing

The recruitment of new employees takes place both internally and externally. Those responsible create JDs, use various channels and platforms to attract applicants, and manage the sourcing for talents based on open opportunities.

This contrasts with staff redundancy, which would result in downsizing or letting go of extraneous employees (for example, upon retirement).

Personnel Administration and Communication

Once hired, every employee has a set of administrative tasks they're required to perform. From employment contracts to complying with legal requirements such as job security to applications for training or leave.

Internal communication, from the first day of onboarding to the last day in the company, is an important prerequisite for dealing with employees in a structured, transparent, and informed manner.

Salary Management

Employees may love the work that they do, but at the end of the day, the reason they work is to get paid – and if they're not being compensated appropriately, that can quickly lead to annoyance and frustration. Areas such as competitive remuneration and incentives such as bonuses or regular salary increases are also HR management tasks.

Personnel Development and Retention

Qualified new talent can be hard to find and recruit. As a result, we see the increasingly importance of internal personnel development.

With the implementation of training and development courses, workshops, retention programs, career enrichment and job rotation opportunities, HR management is setting the right course for the future. Many companies, for example, opt for internal training centers or “academies” to qualify employees in-house for new tasks.

HR managers must not lose sight of the interests of their employees here.

Staff Controlling

In personnel controlling, key figures are used to ensure that measures and processes can be monitored and controlled. Since business and social goals are pursued in personnel management, qualitative factors such as measuring employee satisfaction also fall under personnel control.

Important key figures are, for example, sick days or fluctuation in various areas of the company (e.g., offsite retreats, conferences, etc.).

Who Can Benefit From Personnel Management?

Who Can Benefit From Personnel Management?

Actually the real question is: Who can do without their employees?

Human Resource Management is essential for any company that wants to be successful in the long term – whether small or large.

Companies constantly face challenges in retaining and finding new, qualified employees. It is also noticeable in other areas of personnel management if your organization lacks strategic personnel management or invests too little.

The shortage of skilled workers and demographic change do not make the battle for the right talent easy. In addition, competition is fierce and recruiters are more than ready to snatch up your employees with a better employment contract faster than you could hire him or her a few months earlier.

Digitalization has long since made itself felt in everyday working life, and Generation Z has its own ideas about ideal working conditions.

If you don't keep up with this, you will lose an important competitive advantage in the long term: qualified personnel.

What the Future Holds: Outlook & Trends

What the Future Holds: Outlook & Trends

Modern HR management is continuously changing, adapting and evolving. According to a study on "Trends in Compensation and HR 2021/2022" by Lurse AG, the greatest need for action in HR management currently lies in digitization.

Classic administrative tasks are increasingly being computerized and automated. Human Resource Management will therefore have more time in the future to focus on strategic projects.

Moreover, remote work, home office, and working from any location pose new challenges for the coordination and organization of employees as well as personnel management.

Digitalization and globalization demand diversity, open corporate cultures, and a willingness to embrace change. In addition to this, we see increasing importance of social goals and a redefined understanding of work from younger generations.

In the future, employer branding, employer attractiveness and market competition will be significant factors in attracting and retaining qualified talent.

How Advanced Is Your Human Resource Management?

How Advanced Is Your Human Resource Management?

Is your HR management ready for the future?

If not, it's important to:

  • Equip yourself now with the right investments
  • Stay open to change

At the end of the day, satisfied employees pay off in many ways and make your company more successful in the long term.

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