Importance of Human Resource Management in Happy Holiday Ltd - Case Study Example

IMPORTANCE OF HRM IN HAPPY HOLIDAY LTD This report presents the importance of human resource management in Happy Holidays Ltd which is a service based organization. Human resource planning, recruitment, selection, rewards, and compensation techniques for employee management, developmental needs of teams and individuals are being discussed. Differences between personnel and human resource management are also being discussed Introduction It is important to understand about management before focusing on human resource management. Management involves setting objectives, and allocating and using available and scarce resources in effective and efficient ways to achieve them. Human resource management is the management of organization’s workforce that requires the presence of the workforce, which invites human resource department’s activities in the field of recruitment, selection, compensation, appraisals, and training and development (Kok, 2003). Human resource management is crucial in all sorts of organizations and when comes to service sector it becomes more critical. Without HRM, organizations are not able to build productive teams of professionals that are necessary for profit maximization, market capitalization, and image building. It involves all areas of managerial functions (planning, organizing, staffing, directing, and controlling) and operative functions (procurement, development, compensation, industrial relation, maintenance, motivation, and integration), and advantageous for the establishment of specialist divisions to serve customers with expert services. Human resource management is equally valuable in small, mid-size, and large organizations because good practices of human resource help management in attracting and retaining the best employees in the organization, which cost less and benefit more. It helps managers to select the right people into the new job that can use the latest technology for the development of the organization; alerts organizations to the sorts of employees that are required through its planning function. With the competitive environment and enhanced services, organizations are needed to be more competitive, and these factors caused to increase the importance of HRM because only by having good HRM practices company can meet the future challenges and can fulfill the shortage of managerial talent (Kumar, 2010). Behind every successful company, human capital plays a significance role. HRM is the strategic management of human capital that collectively or individually contributes in the achievement of organization’s strategic goals. HRM techniques enable organizations to overcome from challenges and improve organizational culture, quantitative goals, cognitive and qualitative aspects. Human resource management department is responsible, not for staffing, development, training, and motivation only but also include activities like getting people, keeping them, preparing and stimulating them (Ali, 2013). The role of HRM is more important for a service-based organization than a product based organization. Human resource offers the services directly to the consumers in a service based organizations. Thus, human resource plays significant role in satisfying the customers and in enhancing the profitability of the organization. Therefore, HRM role is increased in the service sector; for the detection of service quality, managers have to create double climate but different in nature like a climate for employees and climate for service. The managers have to focus on fulfilling the requirements of employees. This allows the managers to increase the satisfaction level of the employees so that they can work more productively for the organization. The second focus of the managers should be on improving the activities through which customers can perceived that their needs and desires are being met. It has been identified by many studies including Wilkinson (2009) that HRM practices improves the service quality hence customer satisfaction (Wilkinson, 2009). The objective of this report is to inquire the importance of human resource management practices and their possible affect on” Happy Holiday Ltd” that is a service organization and responsible to provide the best holiday services at a competitive price. Critical Analysis Happy Holiday Ltd is a small organization with 90 staff in 10 shops across England. These shops are liable to provide holiday services such as information related to the best places that are good for holidays, providing travel services, and tour guides. It is a small service organization, and for effective and efficient working, and therefore the organization must have human resource department. Addition of this department will not cost the organization than its long-term benefits. Human Resource Planning HR planning is vital for the success of the organization. It is the component of strategic human resource planning. The main purpose of HR planning is to compare the current human resources with its goals to the potential needs of an organization. Moreover, the organization can accordingly identify the competency and skills gaps and consequently the management can develop plans in order to fill the gap to meet those goals. Human resource planning forecast the areas where organization will face shortage or surplus of human resources and will manage accordingly, but this is not a limit (Jackson, Schuler and Werner, 2011). Steps that are part of human resource planning are the assessment of human resource, demand forecasting, supply forecasting, matching demand and supply, and action plan. HRM does internal and external environmental analysis for the assessment of human resources; through these analysis managers are able to analyze the company’s strength, weaknesses, threat, and opportunities. It assess the demand and supply of HR through demand forecasting, managers determine the future requirements of human resource in term of quality and quantity that will meet the personnel requirement need of Happy Holiday Ltd and organization will not have to waste its time in searching effective people at the time of requirement. Supply is another side through which HR planners are able to estimate future internal and external supply sources of HR; for example, internal sources include job enlargement, promotion, and so on. External sources of HR supply include recruitment of new and fresh candidates. Matching supply and demand is one more step of HR planning through the assessment of HR future demand and supply; HR planners bring supply and demand at equilibrium level and if they find any access then take steps to reduce the staff by laying-off, early retirements, and termination. This will prevent Happy Holiday Ltd from spending extra money on excess and undeveloped people that will allow the organization to spend available money on other requirements (training of existing people and investment on new ideas) in order to make the organization more efficient and effective. The last step of HR planning is execution of designed plan that includes recruitment, selection, positioning, socialization, training and development, etc. Following these steps are done by the controlling and evaluation of human resource performance in order to make sure that HR planning is corresponding to the policies and objectives of HR (Kleynhans, 2006; and Bernardin, 2008). Recruitment and Selection Recruitment and selection is one of the major and initial functions of human resource management. HR manager designs the strategies and formulates plans for recruiting, hiring, or selecting the right king of people. These are two different functions of human resource management. In recruitment, HR managers design process for attracting the pool of talented people for employment and encourage them to apply for openings in the organizations. It is a positive process of attracting people and reaching the right audience in order to fill the vacancies (Leopold, 2002). HR manager formulates specific criteria to hire the best candidates according to the job description and requirements. By formulating this criteria, the management can analyze the qualification and expertise of the candidate and then compare it with the qualities and expertise required for the job. The purpose of this process is to provide organization verities of options. The next step after recruitment is the selection. Selection involves numerous steps, and through these steps, applicants are screened and selected for the position. The purpose of selection is to choose the right person for the right position from the pool of available applicants. These processes enable Happy Holiday Ltd for the selection of people that have right abilities and skills to meet the target job’s requirements. Selection process reduces the risk of wrong candidate selection because it is better not to hire someone if wrong. Right selection of employees improves the customers’ satisfaction, increase the service delivery and its quality, and enhance the image of organizations that lead to profit maximization. These mentioned HRM strategies can be critical in improving the performance and productivity of Happy Holiday. These strategies can also play a critical role in retaining and motivating the employees as well as in hiring the best talent. Selection has a great impact on productivity of organization and its financial performance, and investment in these functions is money well spent. Recruitment and selection will enable the organization to have intelligent workforce that will not cause to take much time in service delivery and will provide competitive advantage (Nanyobi, 2013). Developmental Needs HRM must consider the learning and developmental needs of teams and individuals within an organization. Developmental needs of individuals and teams include effectiveness of skills, use of competencies, high potential and knowledge for the growth of team, individual, and ultimately for organization. For the success of any organization, it must have people with greater confidence who can take initiatives, can find solutions, and must have problem solving skills. Self-sufficient staff is an indispensable asset and source of competitive sustainability for an organization. An organization’s competitive advantage based on differentiation and this differentiation based on knowledge, skills, and motivation of the workforce. HRM identifies the current skills of the workforce and recognizes the potential areas of their development. Teams and individuals always required training and development sessions for continuous improvement, and human resource management department through training and development helps teams and individuals to cope up with change and encourage them for the management of change. The performance of service organizations like “Happy Holiday Ltd” is solely dependent on employees. Individuals and team’s performance is based on that how well they are trained for their duties. HRM develops strategies to deal with change and improves an individual or teams’ effectiveness in practice. For the success of the organization, people must have effective communication skills, collaboration skills, and business management skills. Through skilled people, service organizations can survive successfully in such a tough and competitive environment, and that will cause to boost the profits of Happy Holiday Ltd. Training develops the attitudes, knowledge, and skills of an individual in order to make a team, individual, and organization effective (Aguinis and Kraiger, 2009). Employee Management Techniques People are the assets of an organization and key for organizational success. Adequate management of people can lead an organization towards effective service deliveries that enhance the image of organization in the market and help to advance its earnings. Positive management of employees helps the promotion of employee retention, engagement, and development. In contrast, inadequate people management can be a reason of organization’s failure due to lake of motivation, information, training, internal communication, coordination, cooperation, and defined responsibilities. Human resource management is responsible for many things, but the key is the management of employees that are the source of service organizations’ profits. Therefore, for the management of employees HRM utilizes different techniques and methods that begin with determining the requirement of employees. HRM uses training and development, mentoring, compensation and rewards management, performance appraisals, personnel relation management and other people management techniques. Through recruiting, HRM attracts large pool of people from which organization can easily make the choice, through selection HRM fills organization with required staff that is aware of new methods and fulfill the defined criteria through training and development improves their interpersonal skills. Managers use mentoring techniques, for encouraging employees to improve their learning and skills for their personal development that will help employees in their career building and will benefit organization in return. Through compensation and reward system HRM department motivates employees to do the hard work, by performance appraisal managers evaluate their performances and through personnel relation management establish intimate relation among employees and employer in the interest of organization (Price, 2007; and Henderson, 2011). All these basic tools and techniques will prevent Happy Holiday Ltd to appoint non-serious and uncommitted candidates and will provide engaged, committed, and developed employees who will increase the profit and reduce the cost of Happy Holiday Ltd in the long run. Personnel V/S HRM It is significant to understand the differences between personnel management and human resource management. Previously, these both terms were considered as the same. However this is not the case. Personnel management deals periodically with regular day-to-day problems; it has a short-term perspective and reactive in nature. The job design is typical and organizational structure is based on hierarchy and vertical integration tendency, pays are based on positions. In personnel management sophisticated recruitment practices are used for senior staff, training is given to non-managerial staff and development is limited to the fast track candidates and top-level of management. In contrast, human resource management deals with routine issues and integrates with other functions of management. HRM is proactive in nature so it will allow “Happy Holiday Ltd” not to face any issue. It seeks the employee’s willing commitment; job design is based on team, organizational structure is flexible and a high degree of outsourcing is done. It provides market based remuneration that is based on the team or individual performance and payments are based on the contribution that will encourage employees to give their best to “Happy Holiday Ltd.” By implementing appropriate recruitment and selection strategies, Happy Holiday Ltd. can attract the best talent for the organization. By recruiting the best talent, the organization can train the employees and further enhance their skills. Thus, it will help the organization to attract more customers as the employees will provide them quality services. The success is based on the reduction of HR cost through hiring appropriate candidate, but maximum utilization of human resource is considered for long term (Henderson, 2011). Conclusion The role of HRM techniques and strategies cannot be neglected in any organization. In service based organization, the practices and strategies adapted are decisive in the success of the organization. Therefore, HRM strategies and practices are essential for the success of Happy Holiday Ltd equally as for other organizations. By properly implementing these strategies, the organization will be able to motivate the employees using performance evaluation system. Moreover, the organization will be able to hire the best talent available. All these techniques will help the organization in satisfying the customers in a better way. Appropriate recruitment and selection procedure will reduce the risk of wrong selection and this process will allow “Happy Holiday Ltd” to reduce the training cost, spending on unproductive employees. Therefore, the organization will be able to reduce the cost of services, and this will be provide competitive advantage to an organization. HRM constantly observes the needs of employees that are required for organizational progress and prepares strategies accordingly. It trains employees to deal with change and prepare them for change management, and by providing or preparing multi-talented people HRM enhances the competitiveness and financial sustainability of the organization. It takes proactive actions due to which Happy Holiday Ltd will not need to suffer from potential looses. Employee turnover is a significant cost, unwilling employees hurt the image of organization and for the motivation, retention, and engagement of employees with organization, HRM uses reward and compensation techniques. These techniques are based on contribution that encourages employees to contribute at their best. After having look at the benefits of HRM “Happy Holiday Ltd” can easily recognized that bringing HRM in organization may cost organization for short-run but will give immense benefit in long run and will help organization to increase its profit. Therefore, Happy Holiday Ltd must have HRM department for the success of different shops placed in England. 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