Mostly in classroom or training session the most repetitive question you
been asked is 'What is the importance of HRM'. Similarly in most small
to medium scale organizations top managers or owners do not give
attention to HR issues. This article will discuss the importance of HRM
and thus tries to answer this fundamental question. These content will
also help to convince your boss to give attention to people issues.
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| Source: Importance of HRM by Tahir 2012 |
Hiring Right Person:
Its important for organization to select or hire right people, if organization hire wrong people such as criminals, low performers, thiefs, etc this will seriously effect organization's relation with its customers and other major stakeholders thus resulting in poor performance or even winding up of the business.
Hiring becomes more important when you are selecting someone for managerial role or even top managers. Top management set the direction for organization and middle and lower level management implement the top management's plan. Therefore if organization select wrong managers then it can result in setting wrong direction and thus can fail eventually. So if organization have good HR system in place it can result in effective hiring.
Turnover Issues:
Many organization experience high turnover, by turnover it means that number or percentage of employees who leave the organization during a specific time period. If organization adopt good HRM practices, it can result in lowering turnover however If organization do not have good HRM practices it is most likely result in higher turnover. Higher turnover cost the organization because it takes time and money (Recruitment and Selection cost) to replace those who leave the organization. New people also can not perform on their full capacity from day 1, it take them some time to adjust and understand the job requirement thus during all this time their productivity is lower than average. Similarly organization also has to pay for the training cost to train new employees which is another direct cost. Moreover if your employees leave the organization, they also take valuable knowledge and experiences with them which they gained during the job and similarly they take away their relationships and important contact (also called Social Capital) which reduce organization's ability to get some contract or getting some crucial jobs done. Therefore it is wise to have sound HR practices which result in lower turnover and thus these above mentioned problems can be avoided.
Effective Utilization of Employees:
Many poor performing organization perform badly not because they do not have talented staff but just becuase they can not take full advantage of their talented staff. A good HRM system in organizaition create a good structure and culture which provide employees the right authority, power and atmosphere where their skills can be effectively utilized.
Compliance with Legislation:
Every year saveral thousand grieved employees file their case in the court/ attorney becuase they believe that they have been mistreated such as unequal opportunities, unequal pay, unequal promotions, unfair dismissals, injuries at workplace, sexual and racial harassment and so on. If organization have sound HR practices and policies, it result in lowering these incidents and cases by ensuring the compliance with law. This not only create a better image of organization in society but also reduce the expenses because organization do not have to pay heavy fines or lawyer's fee.
Health and Safety Issues:
Every year several thousand employees around the work get injured or died at workplace. Organizations have to pay heavy compensations to these employees and their families. Besides the financial loss this is also a loss of life or some parts of body which has serious consequences on employee's life. If organization have a good HR department or manager along with good HR system and policies thus organization can reduce such accidents and improve the health and safety of its employees.
Managing Change:
Business environment is changing rapidly with huge changes in technology and processes along with fierce competition. In this fast changing environment only those organization can survive who have ability to keep up with such change. To manage this change organization should have good HR system in place becuase its the organization's people who recognize, plan, implement and evaluate such changes in the environment.
Major's Stakeholders Satisfaction:
Organization has many stakeholders including Shareholders, Employees, Management, Customer, Community, Government and Society at large. If organization have good HR practices in place it can result in greater satisfaction to all its major stakeholders. Shareholders are happy because they get higher return on their investment and more sustainable growth, Employees are happy because they get better career and training opportunities and higher pay and satisfaction, Management is happy because they get better results of their strategy, Customers are happy because they get better customer service along with better products, Community is happy because if organization grow it result in greater jobs and thus enhance people's prosperity, Government is happy because of tax collection and lower level of unemployment, and finally society is happy because jobs, profitability and growth of organization and individuals reduce social crimes.
