Managing Human Resources

Imagine starting a business: What would be your top concern? Typically, business founders start by focusing on the product or service they will offer to meet a need. A focus on producing and selling a product is an obvious way to get a business off the ground. But when it works, continued success requires more and more people to run the business. A company’s success requires skillful human resource management (HRM), the policies, practices, and systems that influence employees’ behavior, attitudes, and performance.

Human resources is sometimes seen as a necessary expense, rather than as a source of value to organizations. Economic value is usually associated with capital—cash, equipment, technology, and facilities. However, research has demonstrated that HRM practices can be valuable. Decisions such as whom to hire, what to pay, what training to offer, and how to evaluate employee performance directly affect employees’ motivation and ability to provide goods and services that customers value.

By influencing who works for the organization and how those people work, human resource management therefore contributes to basic measures of an organization’s performance, such as quality, profitability, and customer satisfaction. Organizations need the kind of resources that will give them sustainable competitive advantage. Human resources have these necessary qualities:

Human resources are valuable. High-quality employees provide a needed service as they perform many critical functions. Human resources are rare in the sense that a person with high levels of the needed skills and knowledge is not common. An organization may spend months looking for a talented and experienced manager or technician. Human resources have no good substitutes. When people are well trained and highly motivated, they develop their abilities and care about customers. It is difficult to imagine another resource that can match committed and talented employees.

Effective management of human resources can form the foundation of a high-performance work system. This implies an organization in which technology, organizational structure, people, and processes work together seamlessly to give an organization an advantage in the competitive environment. Maintaining a high-performance work system may include the development of training, recruitment, and rewards.