Importance of Human Resource Management in Business

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HRM (human resource management) is a term used in reference to the coherent and strategic approach that an organisation in question uses for purposes of managing the people in such an organisation. Given that individuals in an organisation are regarded as an organisation’s most valuable asset, and owing to the vital role that they play in helping an organisation to realise the set objectives, there is a need therefore to ensure that they are well managed (Armstrong, 2006, p. 5). Accordingly, HRM within an organisation entails the recruitment of a workforce, allocation of duties and responsibilities, training and development of the human resource, use, maintenance as well as the compensation of employees for services rendered to the organisation, in line with their job description, and according to the requirements of an organisation.

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Within an organisation, HRM professionals are charged with the responsibility of ensuring that an organisation, along with its human resource remains quite competitive in the market. As opposed to assessing the activities of their competitors, HRM professionals in an organisation are mainly concerned with whether or not their human resources are competitive (Ulrich, 1996, p.8). Consequently, they are in a position to recommend measures that would ensure that the workforce remains competitive (Menefee, 2002, p. 2). HRM techniques coerce an organisation’s managers to specifically state their goals with the intention of ensuring that the workforce understands and executes them. In addition, it is the responsibility of such managers to give an organisation’s workforce the resources that they require in order to fulfil various assignments with success. For this reason, the proper practicing of HRM techniques indicates the overall operating practices and goals of an organisation. In addition, HRM has also been regarded as playing a crucial in organisational risk reduction. Within an organisation, HRM assist in workforce planning, recruitment, and orientation of a new workforce as well as in their training and development. The issues of employee compensation and time management are also the concerns of HRM, in addition to staff performance appraisal.


The ultimate goal of human resource management is to ensure that the organisation is able to enhance its overall productivity in its area of trade (Power, 2004, p. 396). This is in addition to helping the organisation maximize its profit margin due to improved sales. When employees of an organisation are educated on its policies of operation, this leads to better organisational governance. In this case, HRM helps an organisation to achieve its strategic goals. The human resource management in any organisation has its eyes set on enlarging such an organisation’s market share and hopefully, become the leader in the market. Consequently, it is important for the human resource management to ensure that they recruit the best employees, introduce them to an effective induction process, offer training and development opportunities, and motivate them an attractive remuneration package, to counter turnover rates. It is only after an organisation manages to fulfil these requirements for its human resource that it can now hope to attain its goals.

From a theoretical point of view, human resource management aims at assisting an organisation to achieve its strategic goals. In order for an organisation to attain its set goals, it needs to attract human resource and, retain them, in addition to ensuring that they are managed in an effective manner (Armstrong, 2006, p. 18). HRM can therefore be viewed as a link between on the one hand, employees and on he other hand, the organisation. It is important that an organisation is first able to identify its employees’ needs, before understanding and assessing the role that they play in an organisation, with the intention of harmonising these functions. Therefore, HRM plays a significant role by enabling employees to become loyal to their organisations. In addition, HRM is important in an organisation because it helps to lower the rate of turnover of employees within an organisation, by matching their needs with the overall strategic goals of the organisation. Moreover, HRM is also charged with the responsibility of also attracting new employees to the organisation, by offering terms of employment that are competitive. One way in which an organisation can ensure that the rate of employee turnover remains low, is by way of training and development of the workforce. In this case, the HRM department in an organisation ensure that the organisation’s workforce attains employee development. In order to achieve these goals, it is the role of HRM to not only train, but also develop the organisation’s workforce.


Existing literature indicates a correlation between on the one hand, a successful business and on the hand, an effective human resource management in an organisation. Accordingly, several studies recognise the significance of the activities of human resource, and the role that hey play in shaping either the success or failure of an organisation. Elements of human resource are important in ensuring that a company attains success. The success and survival of businesses bears a correlation to its human resource. Bamford, Dean and McDougall (1996, p. 469) undertook a research study in 1996 whose findings revealed that the acquisition by an organisation of competent human resource played a significant role in ensuring the failure of success of such an organisation in question. This is because the practices of human resource determines or influences how well an organisation manages to develop and offer services or products to the market. Although differences exist amongst small and large firms in terms of the number of their human resources, nonetheless, the main issues of human resources appears not to be affected by the size of the organisation. Nonetheless, Chandler and McEvoy (2000, p. 4) have noted that several studies have endeavoured to recognize and authenticate the positive practices of human resource in organisations as they affect small firms. The study revealed that human resource capacities and size impacts on the success or failure of an organisation. Specifically, such elements of human resource as employee recruitment, retention as well as motivation were noted to impacts greatly on the success of a business. However, the authors noted that small firms are usually challenged in fulfilling these elements, in comparison with the bigger firms.

The theory of HRM holds that a competitive workforce, as opposed to the performance of systems and machines in an organisation is fundamental for the success of a business entity. However, when organisations fails to effectively harness the energy, talent as well as the motivation of their human resource, such an organisations fails to attain the desirable competitive edge in the market (Legge, 2004, p. 214). This is because it is the proper harnessing of the competencies possessed by human resource that enable an organisation to accomplish their strategic goals, in addition to increasing its overall competitiveness and value in the market. Sadly, there are companies that have instead sought to invest more in machines and systems, at the expense of their human resource. Nurturing the talent and competencies of a workforce is important, not just for purposes of improving their morale, but also to increase their job satisfaction and by extension, their productivity.

Findings and analysis

In an organisation, human resource management is always faced with various changes, to meet the increasing demands and needs of the firm and more importantly, those of the market. In a bid to remain competitive and still attain its outlined strategic goals, an organisation endeavours to institute various changes within its human resource department. For example, an organisation may opt to engage their employees in training and development initiatives to enable them assume higher-grade task that will result in improved product/service quality (Ferligoj, Prasnikar, & Jordan, 2004, p. 509). The young and new employees may also be provided with the necessary training to become competent in their various fields of training. In addition, an organisation may need to raise its performance standards and efficient from time to time, to gain a competitive advantage in the market. The necessity for a company to meet such legislative requirements as safety and health standards could also result in the institution of changes amongst its human resource. Depending on the strategic goals that a firm has projected, it may deem it appropriate to alter the mode of payment to its employees from permanent for example, and instead seek to engage them on a contractual basis. This may be occasioned by the need for performance appraisal and increased accountability for the organisation. In such an instance, it becomes necessary for an organisation to ensure that it communicates such developments to the human resource in good time.

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Moreover, there is a need to ensure that the employees are fully aware of how the changes might impact on their employment and the ensuing employment benefits (Smit, 2006, p. 11). For instance, many organisations are today engaging their employees on performance-based contracts of employment. Consequently, employees have to attain certain targets set out by the management, in order for a renewal of their contract to be considered. In such a case, there is a need to inform them beforehand, so that in case an employee fails to reach the target and the contract is revoked, the human resource management is not faced with a legal tussle. Likewise, competition within the market has become very stiff and as a result, organisations have resorted into new ways of motivating their employees to achieve more, in a bid to help the organisations increase its revenue. Therefore, there are an increasing number of organisations that have now pegged the payment of their employees on commission basis, as opposed to fixed wages. When developments of this magnitude are being implemented in an organisation, it is the role of the human resource management to ensure that employees are fully informed.

Conclusions and Recommendations

In order to ensure the success of an organisation, it is necessary to first establish a sound environment and framework that will ensure that the competency of the human resource is developed periodically, as the need arises. Organisations of today are faced with the need to remain competitive in a market full of competitors. One way through which an organisation can remain ahead of the pack in the market is through an effective human resource management. When an organisation effectively manages its workforce-its most valuable asset- it is more likely to remain competitive. Therefore maintaining a competitive workforce and by extension, organisation, is a leading role of the human resource management. It is also a sure way through which an organisation can attain its strategic goals. Since many organisations have now recognised the important role played by human resource management, many have since sought to concentrate most of their resources towards the recruitment, orientation, training and development of the most competent human resource.

Sadly, the competitive nature of the businesses today have led to human resource departments instituting drastic changes in the organisation, all of which are geared to helping the organisation remain competitive. For instance, an increasing number of organisations are now engaging their employees to performance-based contracts of employment. In addition, many firms have resulted to paying their human resource on a commission basis, as opposed to fixed income. This is an indication of the development in terms of the different roles of human resource management. Nonetheless, it is important to note that business strategies, new technology management systems and complicated process are all futile in the absence of a competent human resource. Accordingly, the onus is therefore on the human resource management to ensure that employees are exposed to training and development programs that will enhance their levels of competency, in effect ensuring that the firm attains competitiveness in the market.

Reference List

Armstrong, M. (2006). A Handbook of Human Resource Management Practice (10th Ed.). London: Kogan Page

Bamford, C. E., T. J. Dean, & P. P. McDougall. (1996) “Initial founding conditions and new firm performance: A Longitudinal Study Integrating Predictions from Multiple Perspectives.” Frontiers of Entrepreneurship Research: 465-479.

Chandler, G. N., & Mcevoy, G. M. (2000). Human Resource Management: TQM and firm performance in small and Medium-Size Enterprises. Entrepreneurship: Theory and Practice, 25(3-5).

Dessler, G. (2008). Human Resource Management. (11 Ed.). New York: Prentice Hall Publishing.

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Ferligoj, A., Prasnikar, J., & Jordan, V. Competitive advantage and human resource management in SMEs in a transitional economy. (2004). Journal of Small Business Economics, 9(6): 503-514

Legge, K. (2004). Human Resource Management: Rhetorics and Realities (Anniversary Ed.). Basingstoke: Palgrave Macmillan

Menefee, M. L. (2006). The Role of Human Resources in the Success of New Businesses. Southern Business Review, 1-8. Web.

Power, D. (2004). The comparative importance of human resource management practices in the context of business to business (B2B) electronic commerce. Information Technology & People, 17(4): 380-406

Smit, Martin E.J.H. (2006). HR, Show me the money; Presenting an exploratory model that can measure if HR adds value. Boston, Mass.: Harvard Business School Press

Ulrich, D. (1996). Human Resource Champions. The next agenda for adding value and delivering results. Boston, Mass.: Harvard Business School Press.

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