People are essential to the success of any
organization. HR professionals play a pivotal role in how
successful an organization is. And good Human Resource Management is essential
for businesses of all sizes. Hi, I'm Erik from AIHR, and in this video
you'll learn what Human Resource Management or HRM is, how it originated during the two
world wars, its key activities, how successful HR professionals make an impact on their business,
and some trends that we're seeing right now. However, before we start, smash that like
button and make sure to subscribe so you don't miss out on any valuable HR insights. *MUSIC* Before we get into HRM activities, let's start
with a definition. Human Resource Management is the management
of people to help them perform to the best of their abilities and, as a result, achieve
better performance for the organization. This is summarized in a great quote by Stephen
Covey: "An empowered organization is one in which individuals have knowledge, skills,
desires, and opportunities to personally succeed in a way that leads to collective organizational
success." A human resource is an individual employee,
and human resources is what we call the set of people who make up the workforce in an
organization. Another common term you might hear is human
capital. This refers to the economic value of an employee's
experience and skills. Human capital was introduced into the mainstream
in 1928 when the English economist Arthur Cecil Pigou wrote that "Organizations can
invest in material capital, which are buildings, tools, and machines, as well as in human capital." We now know that investing in human capital
pays off. Organizations with employees who have relevant
knowledge, skills, and experiences are more successful than organizations that don't. Organizations are also more successful if
they're able to hire the right people, successfully onboard them, fairly reward them, and continuously
optimize their performance. The realization that human capital increases
the success of organizations led to the creation of the modern HR department, which in turn
is in charge of Human Resource Management. How did HRM get to where it is now? Let's take a look at a brief history so you
can get a better idea of why we do what we do in HRM today. HRM started as personnel management, which
became relevant during the two World Wars. The wars had a tremendous impact on the way
we worked. Since most young men were drafted into the
army, women started to participate in work serving in the armed forces or working in
factory jobs. Because some men were afraid that this would
cause women to lose their femininity, some factories gave female employees lessons in
how to apply makeup. I bet you didn't think that that was ever
part of an HR job description. During the World Wars, organizations also
introduced assessments like IQ testing to predict performance, and implemented an increasing
number of social policies. Personnel management during and after the
war was focused on compliance and creating work efficiency. In the decades that followed, personnel management
became increasingly important and became involved in everything related to staffing: from hiring
and firing to administrating benefits, collective bargaining, and determining salaries. In the mid-80s, the term Human Resource Management
was introduced as a way for the organization to implement policies that would make the
organization more successful. While personnel management focused on creating
efficiencies, HRM promised to go beyond that and actually make an impact on the business. This move was reinforced by a growing amount
of research that found that investments in HRM practices, like proper training and competitive
compensation for employees, would increase the organization's financial performance. The consequence of this was that HRM became
less administrative, and instead worked alongside line managers. Day-to-day people management became part of
the manager's role, while HR started to integrate with the business and focus on strategic people
issues like talent acquisition, compensation, and retention. Leading organizations would implement HR policies
that were collaborative and that were aligned with the organization's goals. Citibank appointed the HR director to the
corporate board, and in other companies like Hewlett Packard and WH Smith, the group HR
director became fully involved in formulating corporate strategy. This integration of HRM with business strategy
was called strategic Human Resource Management. That brings us to today, where HRM has evolved
into one of the cornerstones of the modern organization. Good people practices can make an organization
many times more successful than its competitors, meaning that HRM occupies a strategic spot
in an organization's business model. And just as a reminder, if you're enjoying
this video so far, you know what to do. So what exactly is involved in Human Resource
Management? HRM actually encompasses a long list of activities. I won't give you the whole list, but let's
dive into seven of the most important HRM activities, before I explain what some of
them have to do with hygiene. The first HRM activity is recruitment and
selection. These are the most visible elements of HR. I think we all clearly remember our first
job interview. The goal here is to recruit new employees
and select the best ones to come and work for the organization. You might be quite familiar with the most
common selection methods like interviews, assessments, reference checks, and work tests. Performance management is another key activity. The goal here is to help boost people's performance
so that the organization can reach its goals. This happens through feedback and performance
reviews. Another key aspect of managing performance
is succession planning. The goal here is to build a talent pipeline
so that when strategic roles open up, there is talent waiting to take them on. Then there is culture management. HR has a responsibility to build a culture
that helps the organization reach its goals. A governmental organization that's over a
century old may have a very different company culture compared to a technology startup. Different organizational cultures attract
different people, and cultivating an organization's culture is a way to build a competitive advantage. Another important HR activity is learning
and development. Its purpose is to help an employee build skills
that are needed to perform today and in the future. Many organizations have a dedicated l&d budget. This budget can be used for training courses,
coaching, attending conferences, and other development activities. A difficult challenge for HRM is to distribute
a limited learning budget to all employees. This requires tough choices. The HRM activity that makes employees perk
up is compensation and benefits. Comp & ben is about rewarding employees fairly
through direct pay and benefits. Benefits include health care, pension, holidays,
daycare for children, a company car, a laptop, and other equipment, and so on. Creating an enticing package for employees
will help keep them motivated and keep them with the organization. Where comp & ben is about keeping individuals
happy, employee relations management is about keeping employee groups happy. Employees and employee representation groups
are key constituents of the organization, and so they need to be effectively managed. This includes engaging in collective bargaining
and interacting with labor unions and work councils. On the more technical side of HRM is information
and analytics, which involves managing HR technology, and people data. Most HR data is stored in a human resource
information system or HRIS. I'm sure you're familiar with yours if you
work in HR, and I'm very sure you have a love-hate relationship with it. These systems often include an applicant tracking
system to track applicants, a learning management system, a performance management system, as
well as tools for automation, and dashboard functionalities that provide insights into
HR data and KPIs. HR data management involves gathering high-quality
data that can be accessed by HR professionals using HR dashboards. This helps them to become more data-driven
and create more strategic impact. There are many other tasks and activities
that HR does. Let me know in the comments down below which
ones I didn't mention. One of the difficulties of Human Resource
Management is that it is often seen as administrative and nonstrategic work, the way it was in the
60s, 70s, and 80s. This leads to a major challenge: HR professionals
are not included in strategic decision-making. In other words, HR lacks a seat at the boardroom
table. This means that the people aspect of business
decisions is not always fully considered when companies make big company-wide decisions. One of the reasons this is happening is that
HR professionals spend too much time on non-strategic activities. Let me explain this. HRM activities are categorized into two groups. These are hygiene factors and strategic differentiators. Hygiene factors are maintenance factors that
should be performed at a minimum level. Just like personal hygiene, people will notice
when you smell fresh and have brushed your teeth, but they will notice when you forgot
to take a shower. Many HR activities follow a similar rule. If HR doesn't know how many people are working
in the organization today, how many people left the organization last year, or fails
to keep a labor union happy, people will notice. However, if HR does all of these tasks properly
and on time, it is not really noticeable, but it keeps people satisfied. Traditionally, HR has focused on a lot of
these hygiene factors, pigeonholing itself into an administrative role rather than a
strategic one. Strategic differentiators, on the other hand,
are factors that help HR build a competitive advantage for the organization. For example, an organizational culture that
is optimized for performance, a selection process that helps to select only the best
of the best, or an onboarding process that makes sure that people are up to speed as
soon as possible. They are always for HR to differentiate itself
and make a strategic impact on the organization. A mostly administrative HR departments focus
on hygiene factors. However, a strategic HR department is able
to both take care of these hygiene factors, while also creating a number of strategic
differentiators that help boost organizational performance. HR organizations that are able to do this
help their organization be more successful. The field of Human Resource Management has
never changed at a faster pace. Today, some of the challenges we're seeing
include an aging workforce that characterizes many Western nations. This brings challenges such as sustainable
employability, but there's also a need to upskill or re-skill part of the workforce
whose skill set was more relevant 10 years ago. At the same time, globalization is opening
up local labor markets and enabling companies to tap into a global market. They don't need to limit themselves to the
talent within their city or their country. Ever since the pandemic, these global workers
can work fully remotely as well, gradually making the physical workspace a thing of the
past. The types of contracts companies offer have
also changed with the increase in gig work. This has disrupted the traditional employment
contract and enables organizations to become more flexible. Another major future trend is due to the increase
in the impact of data and analytics. HR professionals are now required to build
skills they traditionally weren't very good at. Not many HR professionals needed to access
dashboards or have a deep understanding of HR technology a few years ago. Automation is also driving digital transformation
and is threatening to partially automate many of the more administrative HR jobs. Not only does this mean that the external
environment is changing, but so are the skills required for the HR professional. All of this creates an exciting environment
in which HR can be reinvented and become a more strategic and impactful business function. A final trend is the emergence of task and
industry-specific human capital. Until now I've presented human capital as
something static with a fixed value. However, not all knowledge, skills, and experiences
are equal. If someone has a lot of experience working
in the automotive industry, for example, they will be able to contribute more in a job in
a similar industry. The same goes for task-based skills that they
have developed. HR can help the organization differentiate
by matching assignments to people with prior relevant experiences, as they will perform
better. This is another way in which Human Resource
Management can help the organization deploy its people in an even smarter way to create
business impact. I hope you enjoyed this video on the basics
of Human Resource Management. You have learned what HRM is, some of its
history, some of its key activities, and some of the trends that will impact the future
of HRM. What HRM trends Do you see coming up in the
future? Let me know your thoughts in the comments
down below. If you found this video helpful, don't forget
to give it a thumbs up and make sure to subscribe so you don't miss out on any HR insights. And if I sparked your curiosity, check out
the courses at the Academy to innovate HR, the link is in the description. I hope you have an absolutely brilliant day. Bye bye.