Attracting and retaining the right employees has always been a key ingredient in growing a business. But with a survey finding that ‘competition for talent’ is the biggest challenge for business leaders in Singapore in 2018, there’s a greater need than ever to introduce effective human resource (HR) management.
So, what is human resource management, and how can you introduce it in your organisation?
A basic human resources definition would emphasise responsibilities around recruiting and training employees, paying staff and organising benefits, resolving conflicts, and ensuring compliance with labour laws. You do not need to have a fully-fledged human resource department to carry out these activities – you might choose to do them yourself or outsource to a specialist partner.
However, many businesses are starting to see HR as about more than just recruitment and admin. With the right approach, human resource management can help you grow your business sustainably, avoid staffing crises and improve profitability.
Let’s look at how your business can implement an HR strategy which will set you up for success.
What is the function of an HR department?
Traditionally, HR departments were responsible for the essentials of recruitment and payroll. Many businesses are now outsourcing or automating these routine HR functions, as the role of a modern HR department expands to include higher value activities – related to company culture or legal compliance – and human resource strategy.
Let’s look at the essential human resources functions below, before exploring how you can get more value out of HR:
- Recruitment – This involves defining job specifications for a vacancy, advertising the position, interviewing candidates and helping with new employee orientation
- Training – Working with staff and managers to choose training opportunities which will help staff improve their skillset and benefit the business
- Employee development – Use staff surveys and performance reviews to help identify employee strengths and weaknesses and resolve problems
- Drive company culture – The human resources department can help organise staff events and provide internal training on the company’s values and acceptable behaviour
- Conflict resolution – From disciplinaries to complaints of bullying, this is one of the key HR functions
- Compensation and benefits – This includes payroll, benefits, sick pay, paid leave and bonuses
- Compliance with labour law – Your HR team will revise your HR policies to make sure you are compliant with all the latest labour laws from the Ministry of Manpower
While these responsibilities are still at the heart of what an HR department does, leading companies are adopting human resource planning to maximise the benefits of their in-house HR teams.
What is Human Resource Planning (HRP)?
Human resource planning (HRP) is a process set-up by a business that connects its human resource needs with its overall strategy. This process ensures that the HR department understands the goals of the business, which help the organisation to make better decisions and prepare for resource requirements in advance, rather than reacting to staffing situations the moment they arise (which can often be too late).
Here are the six essential steps for human resource planning:
- Understand organisational and departmental objectives
Your HR department should regularly liaise with other business units to help understand what their goals are.
For example: Your marketing team are planning a major new campaign in South East Asia – but you realise they haven’t clearly communicated this to the sales team who will almost certainly be inundated with customer enquiries from many different countries.
- Complete inventories of current human resources
Next up, you should create an inventory of your current resources. Compile a list of job titles, skills, performance and their current capacity to take on more work. Tools like Sage 300 People can help you create this kind of report in a matter of seconds.
For example: You review how many members of your sales team are currently available, what products they know about and what languages they speak.
- Forecast demand and supply of human resources
Estimate how your current list of resources maps to organisational plans. How many different resources will be required, and at what position?
For example: You look at the data from past campaigns your company has launched and work out how much time your sales team spent talking to new leads. You then project this forward to estimate the effects of the new campaign on sales staff capacity.
- Estimate manpower gaps
Compare demand and supply for your resources and identify any gaps which need to be filled – either from outside the organisation, or by retraining staff.
For example: You employ only one salesperson who can speak Thai, despite a quarter of the marketing budget being spent in Thailand – you realise you have a manpower gap.
- Formulate your HR plan
Whether you need to hire hundreds of new resources, or make one of your offices redundant, your HR action plan will explain the rationale and steps for doing so.
For example: A few weeks in advance of the campaign launch, you begin the recruitment process for Thai-speaking salespeople, so you have time to train them up.
- Monitor the plan’s progress
Monitor your human resource plan: is it having the desired effect?
For example: After the launch of the marketing campaign you do get a lot of interest from the Thai market as predicted. By talking to the head of the sales department, you can find out if the new hire is closing enough deals, or if they have cost more than the value they’re bringing in.
Using HR metrics to measure success
Investing in an HR function can bring huge benefits to your business. But how do you know if it is achieving what you want? HR metrics help you monitor the impact your HR team is having on your business objectives.
Here are some of the most common HR metrics:
- Cost per hire: how much do you pay in recruitment or advertising fees?
- Time per hire: how long does it take to get a new employee onboard?
- Employee turnover rate: how often do staff leave the company?
- Length of employment: how long do people work for you on average?
- Health and safety: have you failed any workplace safety tests?
- Employee satisfaction: are your staff happy?
Every organisation will be different, so the HR metrics you choose will be specific to your business objectives. By choosing two or three metrics you can consistently monitor, you can understand how the HR function is performing and identify areas for improvement.