Human resource management (also known as human capital management) is the process of effectively utilizing and developing a company’s human resources to achieve both organizational and personal goals of the staff. This is done through the application of economic, organizational, and socio-psychological management methods.
The field of human resource management falls under the jurisdiction of HR departments, and the management process is primarily structured around the goals of the company’s development. However, it must also take into account the personal ambitions and aspirations of employees. Therefore, the tools used are quite extensive, encompassing various methods—from economic and statistical to philosophical and psychological.
The foundation of this activity is the employees (human capital) of the company. People create companies, set organizational development goals, determine the direction of work, develop strategies, and perform functions to achieve planned results. Personnel is used by all companies and is the central element of any organization. Because of this, it is necessary to create a separate program for the development and management of employees to ensure that their personal goals align with the company’s goals.
Personnel management is a system of knowledge related to shaping and directly influencing individual employees and the workforce as a whole, with the goal of aligning their interests with those of management. A company’s activities are always associated with establishing bilateral relationships—organizational-economic, socio-psychological, legal, and other types, which regulate business activity within the company.
As personnel management has emerged as a separate area of activity, specialists have developed specific methods for organizing work with employees. Personnel management methods are ways of influencing the management object, carried out to coordinate their activities during the functioning of the company.
How to Manage?
There are three main groups of methods:
- Administrative: This involves the implementation of a labor organization system where adherence to labor discipline becomes an essential aspect of maintaining bilateral relations between the employee and employer. This is achieved through direct influence, expressed in the issuance of administrative acts, with sanctions imposed for non-compliance.
- Economic: The basis of motivation here is material incentives. This is an indirect management method but remains the foundation of managerial influence.
- Socio-psychological: These are social management mechanisms, which involve regulating relationships within the team, forming groups, creating a neutral psychological climate, and more. The complexity of this method lies in its lack of time constraints and the non-mandatory nature of actions.
The third group, socio-psychological methods, is the most specific, so let’s focus on it in more detail. The key point here is understanding that the foundation of any activity, including work, is the functioning of the human psyche, such as thinking, imagination, attention, etc. The group of socio-psychological methods influences these mechanisms to create a desire in the employee to work in line with the company’s goals.
These methods include:
- Formation of small groups and teams: It is important to understand the desired outcome of the small group. Based on the specific task, a compatible group is created. There are two types of compatibility: psychological and socio-psychological. The first involves a group of people similar in psychological type, while the second involves a group of people with different but complementary behaviors.
- Humanization of labor: Introducing elements of creativity into the work process, overcoming the monotony of labor (e.g., office color schemes, background music).
- Psychological motivation: Forming motives for achieving significant results:
- Persuasion: Logical influence on the employee’s behavior.
- Suggestion: Targeted influence on the employee’s psyche.
- Imitation: Influence on willpower through personal example.
- Involvement: Integrating the participant into the team to manage the company.
- Trust: Emphasizing the positive qualities of the employee.
- Coercion: Direct influence that forces the employee to act in a certain way against their own will.
Competition: Effective but Forgotten
Another significant mechanism of personnel management is competition. This method was first applied during the industrialization period in the USSR. Later, Western managers and psychologists studied the phenomenon of mass participation in competitions and concluded that this approach is effective and relevant even today.
The key factor noted by researchers is that in the 20th century, due to the mechanization of production, labor ceased to be seen as participation in creating something “with one’s own hands.” Economists concluded that the primary motive for work became earnings. However, they were mistaken, as further practice showed that wages are a necessary but insufficient condition for motivation. Therefore, 20th-century entrepreneurs had to “invent” another way for workers to feel their own significance—namely, by using the human drive for competition. It is important to note that this method is only effective when the employee’s salary is at or slightly above the market average. Moral stimulation does not replace material incentives but rather enhances their effectiveness.
Competitions must be conducted correctly, considering the following factors:
- Introducing several production parameters.
- Creating a transparent system for summing up results.
- Consistently and systematically evaluating results.
The logical conclusion of the competition is career advancement. Therefore, competitions are advisable when there is an upcoming vacancy that should be filled from within the company’s existing workforce.
Talent Management: Finding and Retaining
At the current stage of HR development, a new direction in personnel work organization is emerging—talent management. This term refers to an integrated approach to managing various HR processes, including recruiting, hiring, quick adaptation, training, performance management, leadership development, and succession planning. Talent management also involves systematically attracting, identifying, developing, engaging, retaining, and mobilizing high-potential individuals.
The main components of the talent management system include:
- Attraction and selection of candidates.
- Individual career planning.
- Evaluation.
- Succession planning.
- Organizational development through personnel policies.
- Performance management.
- Development of team and individual work.
- Employee retention.
Using a talent management system is suitable for companies with a clear vision of their development strategy and an understanding of the necessary set of employees who will contribute to achieving their goals through their activities.