Outi-Maaria Palo-oja

Human resource management is essential for the company goals and functions – at least for the bigger companies. In small companies it’s rarely clearly expressed plan or statement. It’s said that to get best out of your business, you have to get best out of your employees.

Different definitions

In Wikipedia HRM is defined as:

HRM means employing people, developing their capacities, utilizing, maintaining and compensating their services in tune with the job and organizational requirement.

This definition is very practical in its tone. It is in line with the figure by Information Village about the issues that are usually considered as parts of human resource management.

However, HRM is also a strategic approach to manage people and the workplace culture. As Heathfield puts it:

HRM is now expected to add value to the strategic utilization of employees and that employee programs impact the business in measurable ways.

This definition clearly points out that human resources are valuable or vital source for competitive advantage. Current human resouces are utilised to fulfill company goals in operational level. If the talent or skills of current employees are not consistent with organisational objectives, company has to decide whether to train staff for these purposes or to recruit new workforce. In this manner human resources are similar assets than any other company asset.

The difference, however, is that human resources consist of living and feeling persons who have their personal goals, interests, and motivation. Thus, satisfaction through e.g. compensation and personnel policies must be ensured. Basically, human resources are company asset that must be maintained well in order to harness it for organisational purposes.

Human capital

Usually capital is related to technology, facilities and machinery or equipment. People, however, are maybe the most valuable asset for company.  For highly innovative companies people are rare because they may have unique skills and knowledge. Thus, human capital is not always interghangeable or replaceable. The best talents are highly valued and companies may spent months to look for a suitable person for the most critical jobs.

These thoughts are taken directly from resource based view (RBV) of the firm which key points are that resources are valuable, rare, in-imitable and non-substitutable.

Functions

At operational level, HRM deals with workforce related issues that are in short planning, attracting, developing, and retaining employees. Below you see Rashid Rupani‘s presentation about the basics of HRM.

Material for strategic HRM

In my next blog post I will summarize HRM from strategic point of view. Here are some digital sources for self-studying strategic HRM.

Strategic HR planning at Google

BrightTALK webinar: Keeping human capital strategies relevant in turbulent times (free registration)

Stavrou & Brewster 2010. The Configurational Approach to Linking Strategic Human Resource Management Bundles with Business Performance: Myth or Reality?

Course details and instructions:

Slides for first lecture: