What Effect Does Management of Human Resources Have on Profitability?

 

The strategic, cohesive, and integrated approach to employment, growth, and well-being of employees within a company is known as human resources management. Employee performance, attitudes, and behaviors are influenced by policies, practices, and procedures. Because it handles so many crucial procedures, such as hiring and firing, performance management, training and development, labor relations, health and safety, HR planning, etc., human resources management is a vital component of any organization's strategy. It connects all of these ideas, and if it works well, it can have a significant impact on the path the business is taking overall and the success of its goals, objectives, and plan (Warech&Tracey, 2004).

Recruitment and Retention

Organizations which are required to grow in the market have to be able to attract a superfluous labor force. HR specialists will be the ones whose job it will be to look for candidates that identify with the organization's culture and values, besides having all the necessary job skills and skills development. Hiring people who has a good match with the company enhances not only their ability to innovate but also, improve teamwork which gives a great working environment. Besides, those people who are culturally close to the company and its main mission are more willing to get immersed in their work and devote themselves to it, and that eventually will contribute to the company’s level of output and performance (Glynn, 2023).

The other side of the coin, the high turnover rates of workers may have a negative influence on the profitability of an organization as well. Rarely would it be cost-efficient to retain an employee when someone from outside is available at even half of the salary that the former had. Additionally, the deficiency of experienced staffers can also bring about delays for project implementation, disturb the workflow, and reduce total production. The costs of replacing an employee are high and can go from 16 % up to 213 % of their annual salary, depending on the responsibility and qualification of the employee as conducted by the Centre for American Progress. Such expenses cover the loss of time during the changeover period and the expenses arising during recruiting and training (Jones, n.d.).

Source: https://youtu.be/PFoY7bK2eLA?si=tIdIogzlpsJUwm4u

Engaging and Uplifting Employees is Crucial

Vital factors that can affect the efficiency and income of a given organization are employee loyalty and their active engagement. Those individuals display not only dedication, productivity and creativity at work, but are also greatly involved in the aspects of their jobs being motivated and engaged. The Human Resource programs that focus on developing, motivating, and involving employees are notable elements that help to build a good culture and the organization's progress.

To begin with, employee engagement, which is described as how well staff members understand their jobs and feel like a part of an organization through the connection and dedication, they have is very important. Motivating just people, the consequence is the presence of employees who are passionate about what they do, identify strongly with the company's goals, and also are prepared to go beyond the requirements to attain their good performance goals. A facilitation of constructive communication, staff getting perceptive criticism, and contributing to the making of significant decisions is among of the Human Resources strategies that aim at enhancing staff participation. Companies can make such a culture of work, that will activate workers and cause them to work at their best, when employees are asked for their feedback, recognized for their efforts and provided with tools to make a change (Gallup 2024).

Make a Business Plan on Workforce and Productivity

Strategic workforce planning is all about the well-being of the organization whose goal is placing the right employees at the right places and strengthening their skill sets to contribute to meeting the business goals. Efficiency in staff management, succession planning, and HR forecasting are done to increase worker’s performance and productivity levels. According to McKinney's research, the key factor in increasing production up to 25% is having an effective staff plan (McKinsey, 2023).

Reference

Glynn, S.J. (2023) There are significant business costs to replacing employees, Center for American Progress. Available at: https://www.americanprogress.org/article/there-are-significant-business-costs-to-replacing-employees/(Accessed: 28 March 2024).

Warech, and Tracey. “Evaluating the Impact of Human Resources: Identifying What Matters.” Vol.45, no. 4, 2004, doi:10.1177/0010880404266247.

Gallup, Inc. (2024) State of the global workplace report, Gallup.com. Available at: https://www.gallup.com/workplace/349484/state-of-the-global-workplace.aspx(Accessed: 28 March 2024)

Lewis, N. (2024) AI adoption will cause workforce reorganization, Welcome to SHRM. Available at: https://www.shrm.org/topics-tools/news/technology/ai-adoption-will-cause-workforce-reorganization

Jones, K.B. et al. (2024) Current job openings, Center for American Progress. Available at: https://www.americanprogress.org/about-us/jobs/ (Accessed: 29March 2024)

What is productivity? (2023) McKinsey & Company. Available at: https://www.mckinsey.com/featured-insights/mckinsey-explainers/what-is-productivity