Why does your company need hrm?

Irecently read an article titled “Should you fire your HR Department?” and it got me thinking about the value-add of HR, which led me to ask myself “What is HRM?” The definition by Susan Heathfield (an HR expert and Organisation Development Consultant) in my view captures the essence of today’s HR function:

“Human Resource Management (HRM) is the organisational function that deals with issues related to people. . . [It] is a strategic and comprehensive approach to managing people and the workplace culture and environment. Effective HRM enables employees to contribute effectively and productively to the overall company direction and the accomplishment of the organisation’s goals and objectives.” 

HR managers must therefore be relational and impartial in nature to create a productive working environment where relationships between employees and their employers, directors, shareholders and clients/customers – the people who constitute the organisation and their relationships are properly managed for optimum productivity and competitive advantage.  In relational economic thinking, the success of an organisation is no longer solely measured in terms of financial growth or profit, but also in terms of the relational issues and employee engagement and satisfaction, which can ultimately affect the bottom line. 

So why does any company need HR?

In the past, the HR function was more focussed on personnel and administration – and invariably bogged down with bureaucratic processes and policing. Many of the tasks arose out of the need for companies to deal with the administration process as well as recruitment, employee benefits and welfare, remuneration, discipline and termination. Although the profession still handles many of these transactional, and mainly administrative tasks, the function is increasingly focussed on it’s strategic capabilities – focussing HR practices on helping the business to achieve it’s strategic objectives through it’s people.

Many start-ups and small businesses tend to overlook the importance of Human Resource Management until they feel the business is big enough. Often seen as an additional overhead that they can do without, many business owners get their department heads to handle the people issues within their teams. This often leads to fundamental and far-reaching problems that could have been averted, had this important resource been included as part of the structure of the business from inception. The tendency is that Department Heads will focus primarily on their functional tasks, with the result that HR matters are placed on the back burner until there is a crisis.

A CEO-level survey done by The Conference Board highlighted the fact that “Human Capital” and talent are amongst the top issues that CEO’s spend time on. Indeed with the growing shortage of talent and professional skills many CEO’s ranked “People” and “Talent Management” as their Number 1 priority.

A professional HR Department or HR Specialist will treat People Management as strategic and establish an HR Strategy that aligns with the business strategy. Successful implementation of a company’s business strategy has everything to do with integrating the HR Strategy:

– Determining the impact of the business objectives and plans on specific departments and people;

– Defining the talent, skills and total number of employees required to achieve the business objectives;

– Designing clear HR policies and procedures that address people issues and contribute to the company objectives clarifying and communicating expectations to employees;

– Embedding a robust culture that inspires employees, and building clear and open communication lines;

– Structuring a Performance Management framework that will help monitor the progress of staff so that key talent is easily identified and decisions taken are in line with the best interest of the businesses strategic direction;

– Providing guidance with employment legislation: ensuring that the organisation is aware of all reviews and changes, highlighting the potential impact of such changes and ensuring compliance as appropriate;

Research shows that many of today’s successful companies have clearly structured and focussed HR Strategies that embed culture and people management. There is an obvious link between strong business performance and an HR Strategy that impacts activities and operational performance. HR must be regarded as the partner in your business that is the “talent master”. Designing your business strategy without people has been likened to preparing next year’s budget without this year’s numbers.

As a business owner, the success of your business will be directly linked to performance and productivity, and as the competition for talent continues to grow, it will be those companies that have integrated HR into their business plans, utilising the skills of HR Professionals, that will come out ahead. Whether you have an internal HR Department or you have an external Consultant providing support, Human Resources is an essential part of any company; it plays an active role in practically every area of a business. At the end of the day, it is all about PEOPLE.

Ibiai Ani is a Human Resources Management & Training Consultant with over 25 years of core HR experience (most of these at Senior Management level in the large corporate private sector – [Shell & Citibank]). As a non-Executive Director on the board of FirstBank of Nigeria Ltd. she provided support and guidance on HR matters. She has a background in Law and Interior Design and currently manages and oversees the activities of The Daisy Management Centre, an HR Consulting and Training Firm based in Lagos.