The importance of human resource management is often debated within new companies. In many cases, for early stage companies, the last thing they think about is people. The idea of spending money on “human resources” is a pipe dream.
In many entrepreneurial ventures, to even call it human resource management is a stretch. Whatever you call it, dealing with your people issues is often overlooked and can have a dramatic effect on your business.
We understand the importance of human resource management which is why we developed a section called “People” as part of our entrepreneur training program specifically dedicated to helping you develop the skills to hire and manage the people involved in making your business successful.
What is Human Resource Management?
Human resource management is very important. It is the aspect of your company that deals with employee recruitment, training, performance, and overall employee satisfaction. According to a famous quote by Richard Branson, founder of the Virgin group of companies;
“Clients do not come first, employees come first. If you take care of your employees, they will take care of the clients.”
This is the philosophy of the Virgin brand which has been wildly successful and has disrupted multiple industries across the world.
Human resource management has more of an effect on the performance of your company than you might imagine. Putting processes in place that help an early stage company maximize its scarce resources through the implementation of good people processes can have a dramatic effect on your business.
The Importance of Human Resource Management
Why is human resource management so important? To answer this question let us have a look at your company from the perspective of your employees and customers.
To succeed in business in this modern age you need to be adaptive, competitive and have skilled staff with great ideas. If your company culture stinks, you cannot keep or attract the top talent you need to stay competitive.
Without top talent or good training, your customers will most likely receive an average customer experience while your competitors are going above and beyond by offering great service and luring your customers away from you.
When it comes to recruiting, having the right people in your company to deal with hiring the top talent is very important, but also more important is having the best culture and benefits in your company that will look attractive to prospective new employees.
Important Human Resources Processes To Have In Your Company
When it comes to human resources management, it all starts with who you hire and how you decide whether they are right for your company. Your hiring process is very important because a bad hiring decision is going to cost your company a lot in terms of time, effort and money.
The Hiring Process
The entrepreneurial hiring process often consists of “I get a good feeling from this person. My gut tells me that they would be good to work with.” The first hires you make are some of the most important.
Your gut feeling is not enough. You have to improve your hiring skills to give you the best chance of success – try some of these techniques to improve your chance of making good hires:
- Rely on Proven Tools. There are tools and procedures to help you choose the best candidate; Use background checks, check references, dig into personal and professional detail and use personality tests. There is no shortage of real tools to help you.
- Use Outsiders to Interview. People are often too anxious to bring on resources to be objective about a candidate. Ask a colleague or advisor who has little to do with your business, but plenty of business knowledge, to interview finalists. They are much more likely to be objective than you are.
Employee Benefits
If you think you are too small or too early into business to offer benefits you are wrong. Going without benefits initially can boost your bottom line in the short term but it will have an effect on your business in the years to come.
When you give employees the benefits they value they’ll be more satisfied, miss fewer workdays, be less likely to quit, and have a higher commitment to meeting the company’s goals.
Benefits like health insurance, paid time off and retirement benefits will go a long way to keep staff motivated and attract new top talent to your business.
You should also ask what kind of benefits your current staff would like to see which will allow you to make an informed decision about what to provide.
Training and Employee Development
Properly run start-ups place a great deal of emphasis on recruiting and the interview process in order to build their talent base. Unfortunately, often the investment in people stops there. There are a few core reasons why it shouldn’t and should extend to ongoing training efforts to unlock talent:
- Productivity. A few hours of training can improve various functions that lead to improved productivity. Teaching employees to use a system, make a better presentation or understand a financial model can pay for itself in droves.
- Improve Communication. Being on the same page and speaking the same language is the key to have a consistent message to customers, investors, vendors, and other employees.
- Mechanism to Impart the Founder’s Knowledge. Too often, the essence of the business remains lodged in the founder’s head. This makes it more difficult to bring in new people or facilitate current people taking the reins on pieces of the business. Training forces this knowledge transfer to the benefit of everyone.
- Performance Management. If you don’t train your people, you establish no basis for performance management. As a result, performance management in your company will be sloppy and inconsistent.
Why Is Human Resource Management So Important?
The importance of human resource management cannot be questioned. It is the difference between an average company and a great one. It is the difference between average customer experience and an awesome one.
Having the right human resource management processes in your company will set your business up for long-term success.
If you would like to learn more about how to improve your human resource management, enroll in our training program and start getting all the answers you need.