Maximizing the Power of HRM: Managing Human Capital for Organizational Success


Human resource management (HRM) is the practice of recruiting, hiring, deploying, and managing an organization’s employees. HRM is often referred to simply as human resources (HR). A company or organization’s HR department is usually responsible for creating, putting into effect, and overseeing policies governing workers and the relationship of the organization with its employees. The term human resources were first used in the early 1900s and then more widely in the 1960s to describe the people who work for the organization in aggregate.

HRM is employee management with an emphasis on those employees as assets of the business. In this context, employees are sometimes referred to as human capital. As with other business assets, the goal is to make effective use of employees, reducing risk and maximizing return on investment (ROI).

The modern HR technology term human capital management (HCM) has been used more frequently compared to the term HRM. The term HCM has had widespread adoption by large and midsize companies and other organizations of software to manage many HR functions.


What is the importance of HRM?

The role of HRM practices is to manage the people within a workplace to achieve the organization’s mission and reinforce the culture. When done effectively, HR managers can help recruit new professionals who have the skills necessary to further the company’s goals and aid with the training and development of current employees to meet objectives.

A company is only as good as its employees, making HRM a crucial part of maintaining or improving the health of the business. Additionally, HR managers can monitor the state of the job market to help the organization stay competitive. This could include making sure compensation and benefits are fair, events are planned to keep employees from burning out, and job roles are adapted based on the market.

How does HRM work?

Human resources management works through dedicated HR professionals, who are responsible for the day-to-day execution of HR-related functions. Typically, human resources will comprise an entire department within each organization.

HR departments across different organizations can vary in size, structure, and nature of their individual positions. For smaller organizations, it is not uncommon to have a handful of HR generalists who each perform a broad array of HR functions. Larger organizations may have more specialized roles, with individual employees dedicated to functions such as recruiting, immigration and visa handling, talent management, benefits, compensation, and more. Though these HR positions are differentiated and specialized, job functions may still overlap with each other.

Functions of HRM:

Operating Functions 

  • Recruitment: This is the most challenging task for any HR manager. A lot of attention and resources are required to draw, employ and hold prospective employees. Many elements go into this recruitment function, like developing a job description, publishing the job posting, sourcing the prospective candidates, interviewing, salary negotiations, and making the job offer.
  • Training and Development: On-the-job training is the responsibility of the HR department. Some companies may also provide fresher training for both new hires and existing employees. This Fresher training is mainly done to make the employees up to date in their respective areas as required by the company. This function makes the employees understand the process and makes it easy for them to get on their jobs with much ease. During the training and development process, the results are monitored and measured to determine if the employees require any new skills in addition to what he/she has.
  • Professional Development: This is a very important function of Human Resource Management. This function helps the employees with opportunities for growth, education, and management training. The organization undertakes to sponsor their employees for various seminars, trade shows, and corporal responsibilities. This, in turn, makes the employees feel they have been taken care of by their superiors and the organization.
  • Compensation and Benefits: A company can attain its goals and objectives if it can acclimate to new ways of providing employee benefits. Some of the benefits given by companies are listed below for our understanding:
    • Working hour flexibility
    • Extended vacation
    • Dental/Medical Insurance
    • Maternal/Paternal Leave
    • Education Reimbursement for children
  • Performance Appraisal: The employees of any organization will be evaluated by the HR department as per their performance. This function of Human Resource Management is to help the organization in finding out if the employee they have hired is moving towards the goals and objectives of the organization. On the other hand, it also helps the company to evaluate whether the employees need improvement in other areas. It also helps the HR team in drawing certain development plans for those employees who have not met the minimal requirements of the job.
  • Ensuring Legal Compliance: This function plays a crucial role in protecting the organization. The HR department of every organization should be aware of all the laws and policies that relate to employment, working conditions, working hours, overtime, minimum wage, tax allowances, etc. Compliance with such laws is very much required for the existence of an organization.

Managerial Functions 

  • Planning: This function is vital to set an organization’s goals and objectives. The policies and procedures are laid down to achieve these goals. When it comes to planning, the first thing is to foresee vacancies, set the job requirements, and decide on the recruitment sources. For every job group, a demand and supply forecast must be made; this requires an HR manager to be aware of both the job market and the company’s strategic goals. Shortage versus excess employees for that given job category is determined for a given period. In the end, a plan is ascertained to eliminate this shortage of employees.
  • Organizing: The next major managerial function is to develop and design the structure of the organization. It fundamentally includes the following:
    • Employees are grouped into positions or activities they will be performing.
    • Allocate different functions to different persons.
    • Delegate authority as per the tasks and responsibilities that are assigned.
  • Directing: This function is preordained to inspire and direct the employees to achieve their goals. This can be attained by having proper planning of the employees’ careers, various motivational methods, and friendly relations with the manpower. This is a great challenge to any HR manager of an organization; he/she should be able to find employee needs and ways to satisfy them. Motivation will be a continuous process here as new needs may come forward as the old ones get fulfilled.
  • Controlling: This is concerned with the apprehension of activities as per plans, which were formulated on the basis of the goals of the company. The controlling function ends the cycle and again prompts planning. Here the HR Manager examines the outcome achieved with the standards set in the planning stage to see if there are any deviations from the set standards. Hence any deviation can be corrected on the next cycle.

Advisory Functions 

  • Top Management Advice: The HR Manager is a specialist in Human Resource Management functions. She/he can advise the top management in formulating policies and procedures. He/she can also recommend the top management for the appraisal of manpower which they feel apt. This function also involves advice regarding maintaining high-quality human relations and far above-the-ground employee morale.
  • Departmental Head advice: Under this function, he/she advises the heads of various departments on policies related to job design, job description, recruitment, selection, and appraisals.

Related Articles: