Human Resource Management

A collective term for all formal systems to manage employees and other stakeholders within a company

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What is Human Resource Management?

Human Resource Management (HRM) is a collective term for all the formal systems created to help in managing employees and other stakeholders within a company. Human resource management is tasked with three main functions, namely, the recruitment and compensation of employees, and designating work.

Ideally, the role of HRM is to find the best way to increase the productivity of an organization through its employees. Despite the ever-increasing rate of change in the corporate world, the HRM role is not likely to change in a significant way.

Human Resource Management

Until recently, a company’s HR department was categorized in the lower rungs. This is surprising considering the crucial role that this department plays in replenishing and nourishing an organization’s resources.

Principles of Human Resource Management

The HR department has transformed significantly from the task-oriented nature of administration it used to be in the 1980s. It is now viewed as a strategy-focused extension of every firm. The HR department thrives on specific principles, as highlighted below:

1. Commitment

One aspect that the HR department tries to deal with is job security. To guarantee job security, many employees know that they need to show commitment to the company and their job duties. The HR management comes in to put measures in place that ensure that staffing levels correspond to the company’s needs and that, in the process, assure employees of their long-term positions within the organization. The firm demonstrates its long-term commitment to the workers by providing regular training, performance evaluations, and goal-setting activities.

2. Competence

Competence is one of the core principles that supports a company’s growth and development. It is also an aspect that affects employees’ job satisfaction and how the company benefits society. The success of a firm depends on the competency of its employees. The HRM department tries to sustain workforce competency by providing training opportunities. It also schedules orientation programs, which provide avenues to enlighten new employees on a company’s mission and objectives.

Training and orientation are essential in improving employees’ skills, knowledge, and competency. The benefit of having a competent workforce is that it leads to the production of safe and reliable products and services that consumers can rely on. In the absence of a high level of competence, a company will be susceptible to lawsuits and legal claims resulting from the products and services that it renders.

Main Functions of Human Resource Management

1. Employee Recruitment

Recruitment is the process of identifying talent gaps in a company and finding the right people to fill the roles. There are four stages in the employee recruitment process:

  • Job analysis – This involves defining the various aspects of a job through job description and specification. Through job description, the HRM department identifies the tasks required for a specific job while the latter defines the requirements an individual needs to fulfill that job.
  • Sourcing – This encompasses the different techniques a company employs to attract potential candidates to fill a given position. This can be achieved through internal and external advertisements.
  • Screening and selection – This is the process of evaluating the candidates who apply for the job. The evaluation is performed to determine the skills, qualifications, competency, and job-related experience that potential candidates bring to the table.
  • Selection of the right candidates – Once the best candidate has been selected, the next process that follows is onboarding. This is simply helping the new recruits become productive members of the company.

2. Employee Orientation

Another core function of human resource management is employee orientation. Also known as onboarding, it is the process of teaching new recruits the necessary skills, knowledge, and behaviors so that they can transition to the new company effectively.

Employee orientation is a broad process conducted by the HR department, and it’s done through different methods, including lectures, meetings, videos, mentoring, and team-building exercises. The main objective of the orientation is to provide new recruits with adequate information regarding the company’s targets, rules, policies, and activities.

3. Employee Development

Employee development refers to all the efforts for improving personal, team, and organizational effectiveness. One aspect the human resource department tackles is talent development. This involves aligning the employees’ skills with the company’s needs. In addition to hiring, training, and orienting employees, HRM should also improve their career opportunities.

Essentially, it is more economical to improve a company’s current workforce than to hire new employees in the future. So, employee development is a trade-off through which human resource management saves money by avoiding the potential costs of hiring new employees.


Human resource management refers to the process of recruiting and developing a company’s workforce. The HR department is concerned with identifying talent gaps in a company, advertising for positions, evaluating potential candidates, and hiring top talent.

Human resource management does not just handle the recruitment of new employees; it also oversees redundancy for companies that want to downsize. HR management also oversees orientation programs to introduce new employees to the company’s goals, objectives, and policies. Overall, human resource management guarantees the smooth running of employees within a company.

Related Readings

CFI is the official provider of the global Financial Modeling & Valuation Analyst (FMVA)™ certification program, designed to help anyone become a world-class financial analyst. To keep learning and advancing your career, the additional CFI resources below will be useful:

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