How can we use HRM to optimise employee performance and drive profits?
According to inc.com magazine:
“The responsibilities of a human resource manager fall into three major areas: staffing, employee compensation and benefits, and defining/designing work. Essentially, the purpose of HRM is to maximize the productivity of an organization by optimizing the effectiveness of its employees.”
Human Resource Management – Encyclopedia – Business Terms | Inc …
Other definitions are similar, so what do you use HRM for in your business?
Why do so many businesses, directors, owners and general managers seem to use HRM simply to comply with workplace law?
In the words of one business owner, I recently spoke with: “If you talk about Human Resources, I switch off, there is nothing sexy about it, but if you talk about driving profits through your existing team without spending a cent more on advertising, now that, is sexy and I am listening.”
Ugh! That is the point of Human Resources Management (HRM), to ensure employee engagement and drive profits into the business. It seems lost in translation! Many, it seems, miss the point of Human Resources Management. It is, as the definitions all state: “to optimize the effectiveness of a business’s employees, which would lead to great profits!”
What might be going wrong here with HRM?
It appears many businesses’ and the people in them, have lost site of the point of Human Resources Management tools, ‘to optimise the team and drive business profit’. Too much emphasis is on following workplace law with policies and procedures and contracts. Not enough emphasis is on what will empower employees to drive profits. It is logical, to have engaged employees results in better performance, and better performance will drive profits.
What can we do better in HRM?
Place the emphasis back on the point of HRM which is to optimise the employees to drive profits in business and grow. Break down each part of HRM with an emphasis back on optimising growth and empowering the employees to drive profits.
Link position descriptions to profit as part of the HRM:
Position Descriptions (PD’s)should focus on the core skills and competencies needed to achieve results in the role they, not just the tasks involved. Also, as businesses change over time, these PD’s need to adjust. Further, an agile business needs adjustment to achieve results. The tools used to direct and instruct employees need to be agile to allow for changes in direction and focus.
Return on investment through good HRM practices:
As a business owner myself, I hire people to achieve outcomes in return for the money I pay them. It makes sense to view an employee as an asset and service provider just like any other supplier I use. Therefore, employees position descriptions need to be in detail about how I expect to see a return on investment. Outlining what key parts of their role are related to bringing a return to the business is a vital part.
Conducting regular performance plans and review (PPR’s) to improve performance is part of HRM:
Performance Plan and Review (PPR’s) tools need to focus on achieving results not just in terms of profit but also on how behaviour. Equal emphasis on the behaviours necessary to continue the business growth and keep it on track with the mission, vision and values must be as important as the profit drivers.
Setting Key Performance Indicators (KPI’s) is traditionally on the hard numbers relating to profit. However, just achieving key performance indicators (KPI’s) is not enough. Ensure the behaviours map to the business mission, vision and values by also measuring behaviours used to achieve the KPI’s.
For example, having an all-star sales person is great. However, is not sustainable or desirable if they are achieving their star status by lying to customers, fudging their figures or disrupting the rest of the team. Consequently, having regular reviews of both the KPI’s and behaviours to achieve them is vital.
Driving innovation through feedback is part of HRM:
Some of the most innovative businesses have specific human resources management initiatives to aid their employees to be innovative. A simple change in approach to Performance Reviews allowing them to be two-way discussions can help drive innovation. Going one step further and making them performance Plan and reviews will drive further opportunities for collaboration. This in turn drives innovation and creativity.
Even the team members that are not doing so well have information to help you improve your business. Rather than just telling them their performance is not good, ask them what they think and what they can do to improve. After analysing figures and conducting trend analysis a discussion with employees is likely to give invaluable insights.
In conclusion on HRM and its role in every business:
As you can see from the above points, human resources management tools and techniques, can drive business growth and optimise employees to deliver profits. Is your business using them to drive profits or micro manage? If you are not placing the emphasis in the right place with your HRM tools you are not driving growth in the business.
These are just a few of the ways any business, small, medium or large can use HRM to engage their employees and drive profits. There are many more. We regularly write articles about HRM best practice so check our blog for more helpful tips.
If you would like to check if your business is optimising your employees using your HRM tools to drive profits and growth get in touch to see what we can do to support, you.