The Significance of Human Resource Management in Organisations

The report highlights the significance of Human Resource Management (HRM) in organizations, discussing the differences between personnel and HRM. It also explores the functions and regulatory aspects of HRM, including recruitment and selection processes, evaluation, motivation techniques, and employee turnover. Furthermore, the report emphasizes the importance of exit interviews and suggests that employees should be given a chance for improvement before termination.

HUMAN RESOURCE
MANAGEMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Difference between Personnel and Human resource management..................................1
1.2 Functions of HRM............................................................................................................2
1.3 Role and responsibility of line manager...........................................................................3
1.4 Legal and regulatory framework in HRM........................................................................3
TASK 2............................................................................................................................................4
2.1 Need for HR planning and its importance........................................................................4
2.2 Stages in planning human resource requirements............................................................4
2.3 Comparison of Recruitment and selection process..........................................................5
2.4 Effectiveness of recruitment and selection process in both organisations.......................6
TASK 3............................................................................................................................................6
3.1 Link between motivation theory and reward....................................................................6
3.2 Process of job evaluation and factors determining pay....................................................7
3.3 Effectiveness of reward in different context....................................................................8
3.4 Methods to monitor employees performance...................................................................8
TASK 4............................................................................................................................................8
4.1 Reasons of cessation of employees..................................................................................8
4.2 Employees' exit procedure................................................................................................9
4.3 Regulatory framework for employee cessation..............................................................10
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

LIST OF FIGURES
Figure 1: Functions of HRM............................................................................................................2
Figure 2: Source of recruitment.......................................................................................................5

INTRODUCTION
Human resource management (HRM) is termed as managing human capital in an
organisation. This is one of the foremost functions in every small to big enterprises to keep
employees motivated and structured. This department indulges in making policies and guidelines
of company and also to maintain discipline and smooth working (Hendry, 2012). Here, a report
is presented on HRM with the firm Posh Nosh limited, which is serving in fast food business.
Cited firm has 10 outlets in London and has a flat structure. So, this report with application of
HR functions in mentioned organisation will help to understand the HR concepts easily.
TASK 1
1.1 Difference between Personnel and Human resource management
Personnel Management HRM
Belongs to traditional concept focussing more
on governance of employees.
Implies modern concept with wide approach
for making business strategies.
Involves regular functions like attendance
making, payrolls, recruitment and selection,
welfare schemes, etc.
Deals in routine functions with strategic roles
like goal setting, motivating employees,
communication building, fair trade practices,
etc.
Employees are considered as a medium to
utilize and achieve specific targets of
organisation.
Employees are taken as a useful asset for
achieving organisation's vision and mission.
Work is divided according to specialisation of
employees for meeting desired outcomes.
Encouragement is given to do work as a team
with more learning spirit.
Decision is always taken by the top
management.
Employees are allowed to take part in decision-
making.

The above differences clearly states the importance of HRM over personnel management
(Armstrong and Taylor, 2014). Cited firm should go for this approach, as it is beneficial for
employees and useful for maintaining work culture in organisation.
1.2 Functions of HRM
HR has three major functions and these are in form of managerial, operative and advisory
(Boxall and Purcell, 2011). Posh Nosh limited should go for some of these important functions
for maintaining proper working of business. Some of them are as below: Managerial Functions: The human resource department plays a vital role in performing
basic managerial functions. These functions are planning, organising, directing, staffing
and controlling. These four sub-functions of HR cover all aspects of organisation. These
aspects distinguish it from other functions of firm as accounting, marketing etc.
(Volunteer Management – Staff Section. 2014).
 Operative functions: Operative functions of HRM are particularly related to those
responsibilities, which are necessary to keep pace with managerial functions. These can
be seen in form of recruitment and selection, job analysis, salary making, training and
development, performance appraisal, motivation, etc.
Figure 1: Functions of HRM
(Source: Volunteer Management – Staff Section)
 Advisory functions: HR manager is expected to play the role of advisor as well in case of
handling employee’s grievances or any suggestions on planning or expansion of venture

(Bratton and Gold 2012). Manager's expertise will help in making good decisions for
employees and also in formulation of plans for organisation.
By performing these major functions, HR manager of mentioned firm will have a proper
idea of organisation's structure and can provide assistance if there is any inadequacy.
1.3 Role and responsibility of line manager
Line manager aids HR in performing main roles of advisory, operative and managerial
functions. Cited firm has to maintain good link between both managers by giving some roles to
line manager. These roles has been discussed below:
 Assisting in recruitment: Line managers tell the manager the actual number of
employees required in any concerned department (Guest, 2011). Besides this, they assist
in conducting recruitment and selection process of candidates according to qualities
required for post. Mentoring: Employees are under direct supervision of line managers, hence they can ask
for any kind of technical or non-technical aid, in case of some issues. If particular issue is
major, then manager can take that case to HR. Thus, chances of disturbances become low
and proper work culture will be maintained.
 Goal setting for employees: Line manager has the responsibility of allotting jobs to
employees according to their efficiency and ability (Wright and McMahan, 2011). Some
standards are also set with deadlines so that workers do their job on time with more
efforts.
1.4 Legal and regulatory framework in HRM
There are some legal aspects, which are necessary to be exercised in Posh Nosh Limited
to create healthy environment. Some acts, which HR manager has to take care in mentioned
ventures are: Equal pay act, 2010: This act was made to provide every employee equal payments for
same work done. This will remove differences in wages distribution on the basis of men,
women, disable person or any other criteria. Employment rights act, 1996: This act works on the basis of employment contract made
during appointment of employee. So, both employer and worker is bound towards that
contract. In case of breach, both parties have right to take action accordingly.

 Food Safety act, 1990: As aforesaid organisation is involved in food chain industry, it
becomes very necessary for manager to follow this act. Company will have to make sure
that food they are serving is of good quality and not damaging health of customers.
Further, any advertisement of food done for marketing purpose, should not be false or
misleading for the clients.
TASK 2
2.1 Need for HR planning and its importance
An effective HR planning reflects growth and development of every organisation. It helps
in knowing current position of resources available and give way to plan for future (CHUANG
and Liao, 2010). Said organisation needs to develop HR for overall growth of business. Few
importance are as follows: Assessing manpower need: Manager has to track continuously the need of staff in
organisation and supply it as soon as possible. Methods used to draw attention of
applicants for job, should attract right candidates so that vacancies can be filled up fast
with potential workers. Retention of employees: Job switch is more in restaurants and hotel industry as compared
to other businesses. So, it is the responsibility of HR to retain potential employees in firm
as losing them is a big loss for company (Guchait and Cho, 2010). For this, venture need
to adopt policies which satisfies workers and give a sense of job security.
 To assess training need: Timely training of employees is essential to make their
knowledge up-to-date. With changes occurring in environment, manager has to assess
need for training of workers and make them familiar with alterations.
2.2 Stages in planning human resource requirements
Aforesaid organisation need to go with five stages planning process and the description
for the same has given down under: Analysing organisational objectives: Firm has to first determine their core objectives,
which they aim for a time period. HR manager of Posh Nosh Limited has to design and
collect all the required resources accordingly in order to conduct planning of human
resources (Chand, 2016).

 Forecasting demand and supply: Manager's next job is to forecast correct demand and
supply of manpower required. They can take help of both internal and external source for
matching demands with proper supply. After that, gaps should be analysed for observing
if there is imbalance in workforce requirement. Action plan: Comparing demands and supply effectively, it will show the position with
surplus and deficit of employees in organisation (Kehoe and Wright, 2013). Status of
deficiency should be meet out by filling vacant position and surplus position with
attrition of less potential employees.
 Follow up: Implementation of action plan is done at this stage to finalise the process of
planning. Employees are allotted jobs according to their skills and qualifications.
Further, surplus employees can be transferred to other departments or arrangements
should be done for their attrition process by the manager.
2.3 Comparison of Recruitment and selection process
Figure 2: Source of recruitment
(Source: Tang and Tang, 2012)
For better understanding of recruitment and selection process, procedure of Posh Nosh
limited company is compared with Hilton group of hotels. Hilton is a hospitality organisation
and has number of branches worldwide.
Hilton is a large firm as compared to Posh Nosh limited, so the procedure of recruitment
and selection is also different from one another. Firm uses both internal and external sources of

recruitment as per their requirement. For internal hiring, manager use methods such as transfer,
promotions etc, for filling vacant positions. But when post requires any special skill which is not
available internally, company use to advertise vacancies on websites, newspapers, magazines etc.
Recruited candidates have to go through further processes of selection like written tests, physical
tests, interview rounds with HR and Director of company. At last, candidate who passes all these
tests is selected for job on the basis of scores gained, with offer letter.
However, in Posh nosh limited, which is a small venture most of the recruitments are
done internally. Besides transfer and promotions, referrals given by existing employees are
considered. For selection, a direct interview is taken and applicant is selected on the basis of
presentation and other required qualifications as per the post.
2.4 Effectiveness of recruitment and selection process in both organisations
In Posh Nosh limited, I have been a part of selection process. I made sure to identify best
skills out of all applicants came for interview. The scope was limited for selection process
because only internal source was used for the procedure. So, I was trying to select the best talent
for venture which will suit at the position. Besides this, special care was given to reduce the
chances of any favouritism as most of the candidates were from referrals of existing employees.
In case of Hilton group, recruitment and selection process is quite lengthy and difficult.
Good thing about this is it has wider pool of candidates available as both internal and external
source of recruitment used. Applicants have to pass through different tests and personal
interviews which helps in finding right talent for the post. Besides this, it is also necessary for the
firm to choose right medium of advertisement so that right candidates are attracted towards
organisation.
TASK 3
3.1 Link between motivation theory and reward
Conceptual meaning of motivation is understood as a factor which increases the feeling
to work better among employees in organisation. Motivation can be done by financial or non-
financial methods depending on individual that which source help them to get motivated.
Herzberg has given a motivation theory in which he consider non-financial methods as
motivating factors (Tang and Tang, 2012). He gives two factor theory in which one is Motivator

and another is Hygiene factor. Motivators are challenging tasks, more job responsibility, feeling
of importance in company etc. while hygiene factors are good working conditions, job security,
vacations etc.
On other hand, people work to earn good and if they are paid well, then they are
motivated to do better. So, for those individuals money act as motivating factor rather than non-
monetary factors. For instance, increment in salary, bonus, incentives, etc.
So in both situations, type of reward does not matter whether it is financial or non-
financial. Motivation is necessary to continuously inspire and boost their morale for doing the
job in a better way with extra efforts. Mostly employees on higher level get motivated by non-
monetary factors while lower level employees get motivated by money benefits (Gruman and
Saks, 2011).
3.2 Process of job evaluation and factors determining pay
Job evaluation is a process of comparing various jobs in organisation with one other so
that value of each job can be determined. Evaluation done for every job decides the pay structure
of work. Process of job evaluation is explained further according to which Posh Nosh limited
should go ahead.
To conduct job evaluation process, manager should define it to employees so that its
significance can be known by them. After this, a team is set up who will do the whole procedure
including HR managers. They will select the jobs to be evaluated and will move further by
selecting the method for evaluation (Chiang, Chow and Birtch, 2010). Here, manager can select
any two method of evaluation for cited firm that is analytical or non- analytical. Analytical
method includes factor comparison and point rating method while job ranking and job
classification come under non-analytical method.
Besides this, mentioned venture has to take care of factors that determine pay scale.
These factors are- specialisation of labour, experience, profit and loss of business and
Seniority of employees. All these factors should be considered by HR to determine right pay
structure.
3.3 Effectiveness of reward in different context
Organisations use different reward systems for motivating employees according to their
motivating factors. Every reward has different effect on every individual as few of them are
motivated by monetary rewards while some with non-monetary (Ployhart and Moliterno, 2011).

Employees who are on higher position like to have non-monetary benefits as they already
earn high salary. So they prefer to have promotions, recognition, higher responsibility etc. These
methods boost their performance as they feel their position as challenging and more responsible.
On contrary, lower level staff consider monetary benefits instead of non-financial one.
Getting pay raise, bonus, incentives, etc. work as motivators for them. By this, they pay more
efforts towards their job.
Thus, Posh Nosh limited should also consider these points before rewarding employees
of organisation so that workers can be motivated in a right way.
3.4 Methods to monitor employees performance
Aforesaid organisation can use different methods to supervise performance of employees
which are as under: Direct observation: It is the simplest method in which manager has to observe employees
during working hours (Crook and et.al, 2011). By this way, manager will get exact
information about worker's performance instead of getting this info from other
supervisor. Performance standards: In this method manager can set some target to be achieved by
workers at a given period of time. After completion of time, performance will be
measured in terms of quality and effectiveness against standards fixed beforehand.
 360 degree appraisal: This method involves a process in which feedback are collected
for employee by his/her manager, colleagues and subordinates (Kehoe and Wright, 2013).
Based on this feedback, performance of worker is rated to determine reward.
TASK 4
4.1 Reasons of cessation of employees
In case of Posh Nosh limited, workers may cease to work with organisation due to
following circumstances:
 Bad working conditions
 Improper motivation techniques
 Conflicts with co-workers
 Work-life imbalance
 Less growth opportunities (Barney,Ketchen and Wright, 2011).

Mentioned organisation should consider these points and try to overcome problems by
preparing action plan against such probable turnovers. Some steps that may be taken in this sense
are:
 Provide good working conditions with drinking water facility, restrooms, proper lightings
and other required facilities to employees.
 Timely evaluation of performance and rewarding workers by identifying their right tool
of motivation.
 Maintaining a good and healthy work environment to reduce the chances of conflicts
between employees (Farndale, Scullion and Sparrow, 2010).
 Following flexible work schedules so that workers can keep balance between personal
and professional life.
 Giving training to employees for new techniques and other innovations to make them
competent with current situations.
4.2 Employees' exit procedure
The process of employee cessation is more formal in Hilton group of hotels as compared
to Posh Nosh limited. Former company gives a proper notice to employee of his/her exit from
organisation. A due time is given so that arrangement of another job can be done. Along with
this, a proper reason is told which might be due to employee's poor performance, work related
conflicts, company's wind up etc. (Armstrong and Taylor, 2014). One chance is given to worker
for presenting clarification and, if succeeds then management can take other decision. Further,
all due salary and payment is also cleared at the time of cessation with proper exit interview.
On the other hand in Posh Nosh, exit procedure is not like this. Employee is given a
formal intimation about cessation prior 15 days of dismissal. All due payments are cleared and a
formal exit interview form is made to be filled by employee.
Exit interviews are an important part for every organisation (Guest, 2011). Posh nosh
should take a proper exit-interview because it helps in knowing shortcomings of company.
Further, dismissed employee may give any suggestion which might be helpful for the
organisation.
4.3 Regulatory framework for employee cessation
Before retrenchment of employee HR manager must take care that any law should not be
violated due to such dismissal. Every worker has a right to know the reason of termination and if

it is not reasonable, any legal action can be taken by him/her. Moreover, employer should
arrange for proper intimation of cessation so that employee can make oneself prepared for it
(Guchait and Cho, 2010) A formal letter can be sent to worker with proper reason of termination
by employer. Before dismissal, proper exit interview should be taken to have any important
suggestion. Apart from that employees can also be given a chance for improvement once before
the termination.
CONCLUSION
The present report shows the significance of HRM in every small and big organisations.
The following report made clear the differences between personnel and Human resource
management with its functions and regulatory aspects. Further, comparison in recruitment and
selection process of two organisation made the concept and knowledge of HRM very clear. It
also helped in learning evaluation process, motivation techniques and reasons of employee’s
turnover with proper solutions. Moreover, report helped in knowing importance of exit-
interviews and things to be taken care before cessation of employees.

REFERENCES
Journals and Books
Armstrong, M. and Taylor, S., 2014. Armstrong's handbook of human resource management
practice. Kogan Page Publishers.
Boxall, P. and Purcell, J., 2011. Strategy and human resource management. Palgrave Macmillan.
Bratton, J. and Gold, J., 2012. Human resource management: theory and practice. Palgrave
Macmillan.
CHUANG, C.H. and Liao, H.U.I., 2010. Strategic human resource management in service
context: Taking care of business by taking care of employees and customers. Personnel
Psychology. 63(1). pp. 153-196.
Gruman, J.A. and Saks, A.M., 2011. Performance management and employee engagement.
Human Resource Management Review. 21(2). pp. 123-136.
Guchait, P. and Cho, S., 2010. The impact of human resource management practices on intention
to leave of employees in the service industry in India: the mediating role of organizational
commitment. The International Journal of Human Resource Management. 21(8). pp. 1228-
1247.
Guest, D.E., 2011. Human resource management and performance: still searching for some
answers. Human Resource Management Journal. 21(1). pp. 3-13.
Hendry, C., 2012. Human resource management. Routledge.
Kehoe, R.R. and Wright, P.M., 2013. The impact of high-performance human resource practices
on employees’ attitudes and behaviors. Journal of management. 39(2). pp. 366-391.
Tang, T.W. and Tang, Y.Y., 2012. Promoting service-oriented organizational citizenship
behaviors in hotels: The role of high-performance human resource practices and
organizational social climates. International Journal of Hospitality Management. 31(3). pp.
885-895.
Wright, P.M. and McMahan, G.C., 2011. Exploring human capital: putting ‘human’back into
strategic human resource management. Human Resource Management Journal. 21(2). pp.
93-104.
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Online
Chand, S., 2016. Steps in Human Resource Planning (explained with diagram). [Online]:
Available through: <http://www.yourarticlelibrary.com/human-resources/steps-in-human-
resource-planning-explained-with-diagram/32358/>. [Accessed on 29th September 2016].
Volunteer Management – Staff Section. 2014. [Online]: Available through:
<http://www.disability-resource.org.au/volunteer-management.html>. [Accessed on 29th
September 2016].
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