One can literary define human resources as the workforce or those individuals working for a certain organization, business entity or economy.
It may also refer to a section or department within that organization that deals with the management of those resources, for instance, the hiring of new employees and their training, besides overseeing the overall provision of the necessary benefits plus the compensation packages to best suit all parties.
This term was initially coined in the United States during the 1960s due to the major concerns that arose in the business world regarding labor relations, and since then, has spread to the entire world (Society for Human Resource Management, 2007).
In any successful organization, the human resources or the workforce is regarded as a great asset, equated to its material and financial resources such as machinery, buildings among other equipment.
Therefore, it is necessary for an organization to manage its resources including the workforce with a lot care and formulate the best practices to capitalize on those assets in order to triumph (Maidenhead, Chartered Institute of Personnel and Development, 2002).
This is the main reason why so many organizations or companies have embraced the human resource section or department.
Though the contributions of this department may not be directly associated with the company’s production, profits, or even its general success, this human resource department gives the employees an opportunity to perform even better by encouraging them, which later on translates or contributes to the company’s or organization’s success.
In managing the human resources, three major factors must be considered; firstly, the demographics: these are the characteristics of the people or the work force for instance the social class of the people their gender or age.
This kind of trend may have an influence on the pension packages, the insurance contributions among others. The second factor is diversity; these are the variations within the work place. That the employee base reflects the general make-up of the society for as long race, sexual or ethnic orientation is concerned.
The third factor is skills and qualifications; that employers ought to compete for quality employees through offering incentives or community investment (Society for Human Resource Management, 2007).
Other factors influencing the management of human resource include:
- Geographical spread: the distance difference between the individual and the work place, the transportation and the infrastructure of that area must be reflected in the pay.
- Occupational structure: According to Mahoney 1989, there are three kinds of occupational structure, that is, craft (being loyal to the profession), organization career (endorsement or promotion within the firm) and lastly unstructured (unskilled employees who only work when required).
- Generational difference: this is the disparity in terms of age among the members of a certain firm. It defines the way people think and their perspective of various life and business aspects (Maidenhead, Chartered Institute of Personnel and Development, 2002).
The role of human resource to the organization and society
In any organization, the challenge is always to offer administrative functions that are faultless like benefit enrollment as well adjustments while at the same time availing time and energy to perform equally fundamental and strategic tasks, however much time and energy consuming they may be.
Initially the main role of HR in an organization was to act as an arm of the management to police and systemize the organization. Here, the HR profession attended to executive agendas too but was mostly perceived as a hindrance by most of the remaining part of the organization (Thornton, 2008).
However, presently the role of HR has come to be accepted by line managers as being a strategic partner, administration expert in redesigning the organization process and a mentor when it comes to change besides being the employee’s advocate or guarantor.
HR as a Strategic Partner
The HR persons add or contribute to the general development and attainment of the objectives of the organization and its business plan as a whole.
This means that HR management ought to think of itself as one of the organization’s strategic partner to guarantee their contribution viability and ability (Maidenhead, Chartered Institute of Personnel and Development, 2002).
The tactical partnership does influence HR services, for instance, hiring of personnel, the arrangement of work positions, rewarding of selected individuals, recognition and appraisal systems, employee and performance development, strategic payments, career and succession process.
HR as an employee Advocate
The HR manager possesses expertise in the creation of a happy working environment in which individuals feel motivated and positively contribute to the success of the organization.
They conduct this mandate by employing various approaches and tactics that are in line with the organization’s goals. Under this docket, the HR is mandated to perform the following tasks.
Management of current employees
One of the core functions of the HR department is to manage employees that work for that organization. In contrast with managers who directly supervise the workers on a daily basis, the HR section deals with issues like benefits, training and payment of workers and the company policies.
Other benefits that could be managed by HR include insurance and pension plans, health matters like leave for illness but paid, vacations payments and employee investments. HR is also mandated to resolve conflicts amongst employees or between managers and their employees or filed grievances by the employees against the organization (Allen, 1973).
They resolve such problems by either imposing penalties on offenders or taking certain appropriate actions to ensure any undesired behavior in the organization does not recur.
In order to achieve these mandates, the HR must adopt strategies that are excellently designed thus able work appropriately and in favor of the entire organization.
Prospective and New Employees
Human resources are also mandated to recruit new employees for the organization. HR personnel may be concerned with hiring of potential employees by means of advertisements or organized job fairs.
Sometimes, the HR section will attempt to recruit diversified individuals to develop the diversity within that organization’s workforce. For instance, an organization might choose to find candidates that are from a given minority demographic.
The HR section does the collection job applications before reviewing them and then forwards the best candidates for the job to the most suitable managers of that organization. The recruiting process might also involve the background test out, testing for drugs and substance usage and credit checks.
This process is often conducted immediately after a new employee has been hired (Allen, 1973). It helps in understanding employees and determines their ability to certain task that require at most sobriety.
Moreover, this process can also be used to identify employees with addiction problems and thus employ some of the intervention measures to help them recover.
The HR department often collects and reviews job applications before forwarding those of the best applicants to the appropriate managers in the organization. The hiring process might also include background checks, credit checks and drug testing.
The HR department bear the responsibility of typically orienting a new employee after he/she has been successfully been hired and provides the employee with necessary instructions regarding the company policies and ensuring proper training of the employee in accordance to the organization’s requirements. This will ensure competence from the worker.
An organization’s human resource section is also responsible to take care of an employee when he/she leaves the organization for any reason.
If, in any case, a worker is laid off duty or maybe let go but unwillingly, certain responsibilities must be undertaken by the HR section, to make sure that the correct procedure was followed or that the process was done in accordance to the law.
In some instances, payment called severance is done or negotiated alongside settling any outstanding balances or any other benefits like paid vacation time.
The HR department is also required to return all keys that belong to the organization, or any other equipment from that worker and ensure his/her accessibility to the company’s resources is restrained up to and including the organization’s computer networks.
The morale of the employees in any organization is a major concern to the human resource department. The HR section is also mandated to organize for holiday parties or any other get-together party for the employees; it has the responsibility of choosing one of the employees as the employee of the month and the rewarding of employees on merit.
The HR concerns itself to providing and maintaining a positive and enjoyable environment for working. This is mainly to motivate the employees and thus improving their production through their enhanced contribution.
It is necessary to understand the needs of the employees and make them feel appreciated, as they are part of the success of the organization. This is possible in numerous ways.
For instance, the HR can employ excellent communication strategies, excellent rewarding processes and rewarding employees with a share ownership of a company. By this, employees will feel tremendously motivated thus increasing their efforts towards reaching the desired objectives of the firm. The HR is responsible for defining the culture to be adopted by a company in promoting some its mission towards realizing the firm’s objective.
In this capacity, HR provides workforces with incredible opportunities. It provides them with a chance to enhance their skills and knowledge within their line of work. The Hr also provides employees with the opportunity expand their desired careers thus meeting employees’ intrinsic and extrinsic desires.
This builds workforces’ in various capacity, as they are able to feel satisfied with their jobs, elevate their revenues, enhance their living standards and promote their societies socially and economically.
HR as Change Champion
The HR professional’s characteristic nature to, frequently, evaluate and assessing the effectiveness of the practices and policies of an organization leads to recurrent but necessary changes within the organization.
One can value HR professionalism exceptionally due to its technical knowledge and ability to perform successful strategies concerning change that best suit the organization. HR minimizes dissatisfaction by the employees by perfectly linking strategic needs of the organization and change hence reducing their resistance to change.
The HR professional is mandated to facilitate the overall accomplishment of his/her organization by first identifying the organizational goals, mission, action plan, and vision then finally come up with measures on how to succeed.
Compensation as one of the most important practices of HR
Compensation can be defined as the full amount of monetary or non-monetary form of payment awarded or given to an employee in favor of work done as required. Key aspects considered before compensation is done:
- A research in the marketplace concerning the value of similar jobs,
- contributions of that employee and his/her achievements in the organization,
- how available is the human resources in the job market with similar expertise,
- the employer’s aspiration to attract certain workers and retain them for the worth they are adding to their duties in their posts
- The company’s profitability or the availability funds in a non-profit making division or public segment setting, thus determining the employer’s ability to avail payments at market-rate compensation
Other payments offered under the compensation docket include; bonuses, sale commission overtime pay, non-monetary perks like stock options in some cases and company-paid car or housing or both.
Compensation may also include profit sharing and benefits. Profit sharing is when the company takes a percentage of its annual profits and decides to divide the sum of money accumulated across all the workers and then distributed using a given formula. This kind of compensation is applicable mostly to profit making organizations and that there has been an accumulated profit over specified period.
Befits, on the other hand, are in form of compensation offered to the workers by the employer over and above the specified payment as basic salary or an hourly rate kind of payment. Benefits amount to a portion of the full compensation package meant for the worker.
Importance of Compensation Strategies
Compensation as a practice serves a major role to the employer and employees in any given organization. The main purposes of compensation include:
- Increase ability to attract the best, most competent and the brightest workers especially amongst graduates,
- Engaging the employees through motivating and boosting their morale thus increasing productivity in their line of duty,
- And retain the key workers and minimize costs incurred during recruitment and training of personnel.
An employer must determine his/her strategy for compensation that will enable him/her achieves his goals. If an employer executes, adopts or implements an excellent remuneration strategy, it is almost certain that many employees will be willing to be employed in the firm.
Moreover, such excellent remuneration plans automatically maintains the existing brilliant workforces, as they will be willing to, always, renew their contracts. It is of massive significance to appreciate workforces with market drive approaches or tactics, as this will also promote the company’s economic and social position.
To the employee, bonuses as a form of compensation as well as profit sharing and stock options given in significant percentages ensure their prosperity in relation to the company or organization’s prosperity. In that, the higher the rank within the organization the more the employee earns in variable compensations.
Worker’s compensation laws; is a legal framework meant to ensure an injured employee due to an accident while on duty or if he/she contracts a disease while performing his/her duty, receives adequate compensation and proper medical benefits.
Ever state recommends that compensation insurance is purchased by employers, to make sure that the affected employees, either by illness or injury, alongside those who depend on them are catered for against potential hardships like illness, injury or even death.
This compensation was not only created to protect the worker but also the employer against abrupt or any potential cost and hardship shocks of the employee due to injury or illness. This compensation law has also given the employee a right to even sue his/her employer in accordance to the law.
As an employer, ensure that workers and the management staff understand that reports concerning accident ought to be filled immediately a worker has been injured in his/her line of duty or claims have job related sickness.
Employees must know how to avail claims to your selected compensation company, work directly with your employee’s compensation manager to make sure that both your liability and that employee’s medical requirements are met.
Ensure the claim is correct and timely filed by working personally with your workers and adhere to your insurance company’s procedures.
Executive manager’s Compensation is a form of compensation that slightly differs from the other employee form of compensation (Strandberg, 2004).
This type of compensation covers executive employees like the president of that organization, the vice president, the chief executive officer the CFO and sometimes the director or some managers of higher ranks in that organization. Executive compensations normally entail:
- The base salary,
- Income protection guarantees after undertaking a liquidity event like during a sale or an offering of a public stock
- Additional benefits referred to as executive-only benefits like perks or extra paid vacation
- Some incentives like stock options
- When an individual in the executive rank comes onboard he is given a signing bonus.
- They are entitled to a guarantee called severance package in any case there is a reason for employment termination rather than cause
The merger of the salaries, the bonuses and incentives is normally called the Total cash Compensation normally for executives, in short (TCC) (Strindberg, 2004).
An organization’s most precious incentive for inspiring and preserving talent is the practice of compensation. Even if the employer decides to pay for performance of tasks or use incentives to promote the desired behavior, a comprehensive system to supervise the progression is a crucial asset.
Compensation Management System facilitates organizations to design and execute compensation plans in accordance to the organization’s requirements with a resolution attached directly to the entire talent management set. Here are some of the best practices that promote the attainment of the compensation goals (Allen, 1973).
- Administer compensation alongside incentive plans in accordance to a specific individual’s needs or departmental needs. This should be in terms of variable pay, the sales multipliers, and one-time incentive. Payment of bonuses or offering of any type of variable compensation may add up to an incentive and equally a disappointment, based on the mode of administering and the way it was perceived or communicated. Administering of incentives must be planned in a way that individuals comprehend the reason behind the payment and that unless the company meets certain predetermined projections there will be no pay out. Another criterion to consider in paying out of incentives is the team’s general success and performance. Employers should avoid paying out bonuses minus evaluating the success of the employee, not unless he/she is obligated by a constitutional (CBSR, 2003).
- Allocate carefully, scarce resources at the same time encouraging top performers in the organization.
- Encourage performance goals. Make sure that the organization’s best performers are being reasonably compensated for promoting success in the organization and supporting company aims with a swift analysis of employee’s performance ratings in his or her report.
- Keep fairness and equality in presenting offers to budding new employees by maintaining compensation standards in accordance to family to which the job belongs or position of that individual.
- Ensure proper management of income of potentially strong workers due to compensation
- Highlight top performers. Build a profile of best performers and avail it to the public within the organization through a company intranet or any other means to encourage other employees to do their best. In the profile include all the incentives and benefits awarded to them (Sumner, 2006).
- 360-degree feedback system is a method or system that seeks to get feedback from peers, subordinates and seniors (the bosses), concerning specified employee for general evaluation. This method has been embraced in many organizations, as everyone is given an opportunity to evaluate a fellow workmate or his/her senior, and information is collected for analysis before any compensation are done. Here, the opinion of everybody matters and the ideology of working so hard to please only one individual is no more. This system has also proved worth in identification of leaders that best suit the higher levels or positions (Mees, 2004).
HR and compensation
HR plays an integral role in managing and executing compensation practices in accordance to the best interests of the organization. HR best understands the needs of its people and allocates compensations where they best suit.
Understanding the needs of employees helps an organization determine the best way to remunerate or reward employees. This is because some employees prefer intrinsic rewards, while others extrinsic.
What differentiates a successful organization from ineffective one is the value of workforces. This is because their labor force is an exact reflection of the entire organization. Therefore, a stronger value of an organization is a direct reflection on how the organization is valuable.
I strongly believe, from this point of argument that, it is clear on how human resource is of massive significance, when it comes to the fruitfulness of a firm. In a different but a clear angle, it simply works like a talent acquisition process whereby the best are recruited, maintained and trained to exploit their extraordinary talents.
They are also often engaged to the best interest of everybody and the organization at large, so one cannot under estimate the value of HR, as it is, to some level, the backbone of an organization. One can imagine an organization that exists without Human Resource; it could be a complete “nightmare.”
The organization would hire untalented individuals to work on certain crucial levels of the organization. Eventually, this could jeopardize the company’s effort of achieving greatness by not meeting its desired goals.
Allen, L. A. (1973). Professional Management: New Concepts and Proven Practices. Berkshire, UK: McGraw Hill.
CBSR. (2003). Best People Practices: The Integration of Values into People Practices. Vancouver. Web.
Thornton, G. (2008). Recruitment and Retention: The Quest for the Right Talent. Web.
Maidenhead, Chartered Institute of Personnel and Development (CIPD). (2002). Corporate Social Responsibility and HR’s Role. Web.
Mees, A. & Bonham, J. (2004). Corporate Social Responsibility Belongs with HR. Canadian HR Reporter. Web.
Society for Human Resource Management (SHRM). (2007). 2007 Corporate Social Responsibility: United States, Australia, India, China, Canada, Mexico and Brazil: A Pilot Study. Retrieved from: https://cphr.ca/
Strandberg, C. (2004). Staffing CSR. Canadian Co-operative Association March 2004 Concern for Community Newsletter. Web.
Sumner, J. (2006). Engaging Employees in Corporate Responsibility: How the World’s Leading Companies Embed CR in Employee Decision-making. London, UK: Melcrum.