How does effective human resource management help a business achieve its goals?
Explain the human resource management cycle and evaluate strategies for motivating and retaining employees.
The HR cycle of acquisition, development, maintenance and separation, plus motivation theory and employment relations.
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What HRM is
Human resource management (HRM) is the function that manages the relationship between a business and its employees to achieve organisational goals. Because labour is often a major cost and the source of skills, service and innovation, effective HRM directly affects productivity, quality and competitiveness.
The human resource cycle
HRM is often described as a four-stage cycle.
Acquisition covers workforce planning, job analysis, recruitment and selection. Recruitment can be internal (promoting existing staff, which is cheaper and motivating) or external (bringing in new skills and ideas). Selection uses tools such as interviews, testing and reference checks to choose the best applicant.
Development means improving employee capabilities through induction, training and performance appraisal. Training can be on-the-job (cheaper, job-specific) or off-the-job (broader, away from the workplace). Development raises productivity and helps employees progress.
Maintenance keeps valued staff engaged and is about retention. It includes remuneration (wages, salaries, bonuses), benefits, recognition, workplace health and safety, and meeting legal obligations. Strong maintenance reduces staff turnover and the costs of replacing people.
Separation is the ending of the employment relationship. It may be voluntary (resignation, retirement) or involuntary (redundancy, dismissal). It must be handled lawfully and ethically, including correct notice, entitlements and fair process.
Motivation
Motivation is the internal drive that influences how much effort employees put in. Several theories explain it.
Maslow's hierarchy of needs argues people are motivated by progressively higher needs: physiological, safety, social, esteem and self-actualisation. Once a lower need is met, the next becomes the motivator.
Herzberg's two-factor theory separates hygiene factors (pay, conditions, job security) that cause dissatisfaction if poor, from motivators (achievement, recognition, responsibility) that actively drive satisfaction. Improving hygiene factors only removes dissatisfaction; true motivation comes from the motivators.
Practical motivation strategies include financial rewards (performance pay, bonuses, share schemes) and non-financial rewards (job enrichment, flexible work, career development, recognition and a positive culture). The best mix depends on the workforce and the business's resources.
Employment relations
Employment (or industrial) relations is the management of the relationship between employers and employees. In Australia this is shaped by the Fair Work system, awards, enterprise agreements and the National Employment Standards. Effective relations rely on communication, fair processes and resolving disputes through negotiation, mediation or arbitration. Stakeholders include employees, unions, management and employer associations.
In an exam, link each HR strategy to a measurable benefit such as lower turnover, higher productivity or fewer disputes.