The importance of HRM

Organizations are made of among others, human resources (HR) which is the most valuable asset in today’s dynamic world. Indeed, it is people and not organizations that constitute an organization. Achievement of organization’s objectives depends on the individually and collective efforts put in by its work force. Human resources management (HRM) may be defined as the coherent as well as strategic maximization of human resources capital in an organization towards making a return on that investment.

The practice, in its efforts, effectively attempts to maintain a ‘fit’ between the employees and the organization’s overall strategic direction. Unlike technology and processes, people have a soul, aspirations, feelings and emotions. As such, the concept of people as an asset, do not indicate perceiving them as commodities. In managing people, the manager must practice disciplines based on psychology, sociology, industrial relations as well as industrial engineering and economics. In achieving an organization’s objectives, it is possible to adjust the technology employed by increasing production speed as well as reducing the machines’ downtime. For a person, who has a soul, ability to reason and act in response, it is hard to alter the person’s working speed as well as the duration. Proper management of human resources leads to a motivated workforce, a development to loyalty and an assurance of survival and success of an organization.

This paper pays a close look at the practice management of human resources in an organization. This will encompass the importance of the practice, functions within this office and some of the motivation techniques that can be used as well as their role in achieving organizational objectives. Furthermore, the paper will focus an attention to a reputable organization in determining the applicability of incentives and compensation in HRM. Every organization has its strategic future which is broken down into objectives that are measurable and comprehensible, so that the workforce can implement. The sensitivity and value placed on organizational strategic plan cannot be left in the hands its employees if they are incapable or not motivated. The organization has a responsibility not only to invest heavily in technology and detailed professional processes but also on its workforce and strategic management policies.

Importance of HRM

HRM as a practice significantly offers support and advice to the line management within an organization. Management of human resources must ensure an attraction, preservation, loyalty and development of highly profiled caliber of people/workforce in order to provide a competitive advantage necessary for the survival and success of the organization. The image of an organization, which develops the goodwill, is largely dependent on how well its human resources are managed. The management of the human resources assumes the following roles. First, HRM manages the demand for human resources. Economies in which organizations are based are dynamic. There are economical shifts of growth and decline that require counteractive measures within an organizations workforce. The said measures demands both quantitative and qualitative procedures within the workforce. The practices of retrenchments, hiring, early retirements and the contract renews for the experienced are all structural adjustments that responds to economic changes affecting organizations.


Second, HRM is responsible in managing social pressure in provision of the desirable environment for the workforce. The hygiene and safety of the working environment must be always maintained as it is a motivation factor in employees’ performance. The provision of appropriate protective gear while working, pollution free environment and other working conditions is a paramount concern for the HRM office Berger, 2008). Third, HRM is important in managing political pressure usually generated by calls to hire from local labor market irrespective of the resultant factors of cost and knowledge/skills. Though it is ethical to hire from the contextual economy, political pressure should not compromise the quality and quantity of organization’s production and a resulting failure in achieving the organization objectives.


HRM also manages the technology by hiring the right workforce or alternatively developing/training the existing workforce in response to technological change. Changes in technology can contribute to obsolescence of the working force which would spill over to the organization not achieving its objectives. HRM office must always find the most appropriate method of counteracting a technological shift by either hiring people with the needed expertise or by training the existing one. In developing an organization culture the later would be more appropriate. If the earlier alternative is adopted, the competition pressure in compensation must be properly dealt with. HRM is also important in designing and management of strategic HR planning. Strategic HR planning is the informed projection of the organizations needs for the appropriate employees, both in quantity and quality, and balancing off this with the organizations ability to sustainably meet the demands of those employees for a substantial period of time in the future. As such, the budgetary constraints associated with right hiring are cheked.HRM needs to make these projections in agreement with the line/functional management’s assumptions.


It is also the responsibility of HRM to initiate, alter and manage job design. Job design is the arrangement/rearrangement of work that is aimed at checking or overcoming employee’s job dissatisfaction and alienation resulting from repetitive tasks. In curbing this state, the HRM office should conduct job enrichment, job rotation, job enlargement and job simplification exercises. All these procedures are aimed at raising productivity levels which is the ultimate goal of the HRM’s office. In cases of mergers and acquisitions, it is the sole responsibility of the HRM’s office to rationalize, orient and harmonize the human resources in the involved organizations. The fundamental issues behind mergers and acquisitions are, more often than not, undesirable and unwelcome by employees. The task of making an otherwise unpleasant issue acceptable lies squarely at the HRM’s office. Moreover, since work environments are different across organizations, the HRM must orient the various workforces involved to the new objectives and/ or organizational culture.

Finally, the HRM is responsible in managing implementation of change. Change may be in terms of process, organizational structure, systems and culture among others. Changes are the inevitable twists that affect the normal and known paths through which an organization operates. Some of the aforementioned twists arise internally from the organization’s need to achieve new status. Others are externally experienced due to the shifts in the business environment. The issues aforementioned under the discussion are achieved through the functions of the HRM office.

Functions of HRM

Generally, HRM management can be subdivided into three interlinked phases. The practice functions include recruiting qualified human resources, managing the employees in the working environment as well as preparing and enforcing exit of the employees from the organization. The process of recruiting employees arises from the organization’s need to properly position itself in the economy. Ideally, recruitment should follow an order closest to; vacancy advertisement, selection of potential candidates, interviewing and contracting the successful candidate(s). Once in the organization, new employees are inducted and trained. It is during work performance that issues such as motivation, compensation development, disciplinary actions, performance appraisals, career planning / development, counseling, talent management, safety management and staff communication are conducted.

The employees continuously offer their service to the organization under the existing HRM measures until they exit. Exit may result from retrenchment, obsolescence, retiring, resignation or termination of employment. The HRM at this phase has a responsibility to counsel and prepare the exiting employee for the challenges and opportunities awaiting the employee in the future. The office should ethically hand over all the legal documents and benefits to the exiting employee for positive development of the organization’s goodwill/reputation in the corporate world. If need be, the HRM should have a succession plan for implementation at this phase. Motivation as a HRM activity can completely change the perception of employees while in the work environment. Different people in the workforce are motivated differently across and longitudinally with time. Compensation and incentive is a major motivation element that is easily applicable in many organizations since, almost every employee joins an organization with a sole/major purpose of earning.

Compensation and incentives HRM

An incentive can be defined as any factor, that can be financial or non-financial that accounts for preference or stimulates/enables a specific course of action. It can as well be said to be the bonus paid on successful achievement of performance objectives. Compensation is the art of offering/giving money or something else, which can easily convert to money, for purposes of paying for work done. In general, compensation and incentive can be referred to a compensation package. A compensation package is the value placed on an employee as presented to that employee. Compensation can be categorized into three categories. First, there is non-monetary compensation. This is the benefit received by an employee which cannot be tangibly valued. Such can include social and career rewards. Job security, recognition, opportunity for growth, flexible working hours, subsidized housing, magazine subscription, laundry services, elder care, are some of the non-monetary compensations (Berger, 2008). Second, compensation can be direct which is the employee’s base wage/salary expressed as salary or hourly wage as profit sharing bonuses paid based on performance. Finally, compensation can be indirect. The later includes facilities like health insurance, paid leave, moving expenses and child care being provided by the employer.

There is a corporate general consensus insisting on relating pay with performance for effectiveness. This may not necessarily be applicable in sectors such as agriculture where many performance results are dependent on factors beyond organization and employee control. Whichever the compensation used, it should also be fair with the market and not discriminating against some employees (Campbell, 2006). A job evaluation should be conducted in placing a value on employee. In such an evaluation, compensable factors such as experience, education level and job responsibility should be considered. Moreover, employees should be involved when considering their indirect compensation needs such as paid vacation, retirement planning, childcare among others. The HRM officer should regularly review the compensation package from time to time to maintain its fairness, equitability and competitiveness.



Importance of compensation and incentives in HRM practice

Use of compensation and incentives is an importance practice in HRM as it has the following advantages. First, to many employees, the basic purpose for joining an organization is to secure a pay. The value placed in such a pay and not necessarily the amount/size motivates the employees more, and as result higher productivity levels are reported. Second, compensation facilitates hiring, retention, promotion and evaluation of the workforce. Without mentioning aspects of compensation, the HRM office might find it impossible to convince people to join the organization to work or even the existing employees to assume higher responsibilities. Third, compensation displays legality of a contract/employment. For a contract to be valid there has to be a consideration, which is partly what a pay or remuneration package serves. Compensation, especially bonuses, which practice sharing of profits with the employees, creates a sense of belonging to the employees. This is extremely important in securing employees’ loyalty during hard times in managerial practices.


In addition, compensation assists in valuing an organization as well as determining its future. Once the HRM office is capable of properly remunerating workforce, the employees are almost assured of their organization’s survival. Usually, when an organization is going under receivership, employees are the first victim as there is reduced employee compensation, which may in acute scenarios deny them their basic livelihood. Finally, compensation and incentives are the easiest motivational practices available for use by the HRM. This is because compensation is directly linked to employee’s welfare more than the improvement of working conditions.

As drawn from the evaluation above, effective management on human resources requires both scientific and a human relations approaches. The emphasis is both goal oriented as well as human welfare oriented. Any successful organization must invest sufficiently on HRM aspect failure to which the wrong organization culture will be developed. In order to effectively invest on the human resources modern firms ought to institute humane employee relations policies, reviews on package offered, appraise performance regularly, build motivation-oriented culture and possibly institute open channels to assist in participative management practices where employees are deliberately engaged during decision procedures. Conclusively, HR practices are crucial for organizational general performances levels and any move to drive the firms towards higher goals ought to be premised on attainable HR strategic goals. As evidenced, strategic policies craft a decisive goals’ path for firm’s benefit whilst building effective workforce team.

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