7 basics of personnel management that every HR manager should know

People are critical to the success of any business. Employee performance can be a liability or an asset to a company. As a human resource manager, you play a critical role in the success of your company. Good human resource management (HRM) is essential for businesses of all sizes. In this article, we will explain the basics of human resource management.

We’ll start with a brief description of HRM and HR. Then we’ll go over the seven HR basics you need to know in order to understand what HR does. Finally, you’ll get some information on technical terms like HRIS (Human Resources Information System).

What is Human Resource Management?

Let’s start with a brief definition. Human Resource Management (HRM) is the practice of managing people to achieve better performance.

For example, when you hire people in a company, you look for people who fit the company culture because they are happier, stay longer, and are more productive than people who don’t fit the company culture.

Another example is engagement. Engaged employees are more productive, deliver higher quality work and make customers happier. This means that when we find ways to increase employee engagement, we help the company.

Human Resources provides the knowledge, tools, training, legal advice, administration and talent management that are critical to the continued existence and development of a company.

Human resource management, then, means optimizing business performance through better management of human resources. The next question is: Who are these human resources?

What is a human resource?

It may feel a little strange to refer to people as “human resources.” Human resources are all the people who work for or contribute to an organization in one capacity or another.

These people make up the workforce of an organization. They may be regular employees, for example, but they may also be contractors. Especially with the advent of the gig economy, more and more people are starting to work for a company on a contract basis without having a traditional employment contract.

These individuals include independent contractors, workers provided by contracting firms, on-call workers, and temporary workers.

An independent contractor may be under contract with the same company for years, while an on-call worker may work for 20 different companies over the course of a year. Since these individuals are all involved in the company to varying degrees, the way they are managed and involved in the company should also vary.

In addition, there are an increasing number of non-humans working in the company.

In this case, we are talking about increasing robotization. Robots are increasingly involved in the day-to-day work, and the interaction between humans and machines is becoming more and more important to the success of the company. Although these machines are not considered “human resources,” there is a case to be made that they should be included in some way, as they are part of the workforce.

The seven HR fundamentals

When we talk about human resource management, several elements are considered the cornerstones of an effective HR policy. These cornerstones are:

• Recruitment and selection
• Performance management
• Learning and development
• Succession planning
• Compensation and benefits
• Human resources information systems
• HR data and analytics

In the following section, we will cover these HR fundamentals one by one.

1.recruitment and selection

Recruitment and selection are probably the most visible elements of HR. We all remember our first job interview, right?

Recruiting applicants and selecting the best candidates to work for the company is one of the most important tasks of the HR department. People are the lifeblood of the company, and finding the best employees is an important task.

The search for new employees usually begins when a new position is created or an existing position becomes vacant. The direct supervisor then sends the job description to the HR department and the HR department starts recruiting candidates. In this process, HR may use various selection tools to find the best person for the job. These include interviews, various assessments, reference checks, and other recruitment methods.

Sometimes, when there are many applicants, HR may use pre-selection tools. These tools help separate the wheat from the chaff when it comes to suitable candidates. The successful candidates then move on to the next round, where they receive an interview and a more in-depth assessment.

2.performance management

Once employees are on board, performance management becomes important. Performance management is the second HR foundation. It’s about helping employees do their best at work to increase the company’s bottom line.

Usually, employees have a certain number of tasks that they need to complete. Performance management is a structure that allows employees to receive feedback on their performance in order to perform at their best.

Examples include formal one-on-one performance appraisals, 360-degree feedback tools that include peer, customer, and other caregiver evaluations, and informal feedback.

Typically, organizations operate with an annual performance management cycle that includes planning, monitoring, reviewing, and rewarding employee performance. The results of this process allow employees to be categorized as high performers and low performers, as well as high and low potential employees.

Successful performance management is a joint effort between HR and management, usually led by the direct supervisor and supported by HR. Good performance management is critical. Employees who can perform to their full potential improve a company’s efficiency, sustainability, and profit margin. Employees who consistently underperform may not fit their role or the company culture. These employees may need to be let go.

This is also one of the fundamental tasks of the HR department.

3.learning and development

People are the product of life experiences, the country and era in which they grow up, and a range of cultural influences. In HR, learning and development ensure that employees adapt to changes in processes, technology, and societal or legal changes.

Learning and development helps employees learn and upgrade their skills. Learning & Development (L&D) is led by HR, and a good policy can be very helpful in moving the company toward its long-term goals.

Many companies have predefined budgets for L&D activities. This budget is then divided among employees, with apprentices, future managers and other high potentials often receiving more training opportunities than others. Individual employees can come to a company with very different skills and experience. L&D provides an opportunity for employees to fill skill gaps and develop into leaders. A well-known framework that links performance management to L&D activities is the 9-box grid. Based on employee performance and potential assessments, HR can work with managers to recommend various development plans.

4.succession planning

Succession planning is about planning for contingencies in the event that key employees leave the company. For example, if a key senior executive leaves his or her position, a replacement can be in place to ensure continuity and save the company significant costs.

Succession planning is often based on performance evaluations and L&D measures. This leads to the creation of a talent pipeline. This is a pool of candidates who are qualified and ready to fill (senior) positions if someone leaves. Building and maintaining this pool is key to good people management.

5.compensation and benefits

Another fundamental HR issue is compensation and benefits. Fair compensation is key to motivating and retaining employees. One of the fundamentals of HR management in terms of compensation is ensuring equity and fairness.

Offering the right salary is a critical factor in attracting the best talent. This must be balanced with the company’s budget and profit margins. HR should monitor salary increases and set standards for performance. HR may also conduct an occasional salary audit.

Compensation includes primary compensation and secondary compensation. Primary compensation is direct compensation for work performed, often in the form of a monthly salary and sometimes in the form of performance-based compensation.

Secondary benefits are any non-monetary rewards. These can include additional vacation time, flexible work schedules, childcare, retirement benefits, company cars and laptops, and more.

The goal is to reward employees in a way that motivates them.

6.human resources information system

The last two HR fundamentals are not HR practices, but tools for improving HR work. The first is the Human Resource Information System, or HRIS. An HRIS supports all of the cornerstones mentioned above. For recruitment and selection, for example, HR professionals often use an Applicant Tracking System (ATS) to keep track of applicants and new hires.

For performance management, a performance management system is used to track individual goals and conduct performance evaluations.

In L&D, a learning management system (LMS) is used to distribute content internally, and other HR systems are used to keep track of budgets and training approvals.

Compensation specialists often use a payroll system, and there are also digital tools that enable effective succession planning.

All of these functions can often be handled in a single system – the HRIS. However, sometimes the management of these functions is split between different HR systems.

The bottom line is that there is a significant digital element to HR work, which is why HRIS is the final element when we talk about HR basics.

7.HR data and analytics

The last of the HR fundamentals revolves around data and analytics. In the last half decade, HR has made a big leap toward becoming more data-oriented.

The HR information system just discussed is essentially a data entry system. The data in these systems can be used to make better, more informed decisions.

One easy way to keep track of critical data is through HR metrics or HR KPIs. These are specific measurements that provide information on how a company is performing in a particular area. This is referred to as HR reporting.

These reports focus on the current and past state of the company. HR analytics can also be used by the HR department to create forecasts. Examples include staffing needs, intended employee turnover, the impact of the (hiring) applicant experience on customer satisfaction, and many others.

By actively measuring and looking at this data, HR can make data-driven decisions. These decisions are often more objective, making it easier to gain management support for these decisions.

Conclusion
You now know the 7 fundamentals of HR management. None of these HR fundamentals is isolated. They all interact and influence each other. Think of these 7 fundamentals as building blocks – good management of each fundamental element contributes to the strength of the next. Taken together, these HR fundamentals ensure that a workforce not only performs better, but is capable of performing at its best. Work with icehrm.com, digital HR platform while managing all the HR fundamentals.