The essay has been prepared to determine the extent to which it can be agreed with the statement ‘Human resource management deals with people not profits’. Throughout the study of human resource management it is learnt that human resource management is nothing but managing people who work for an organization in order to attain organizational goals, more precisely, make profits (profitable organization) or serve people (not for profit organization) .
That is why it is likely to think that human resource management deals with only profit and in this process people are used as a media- meaning if all other units working inside the organization are held constant, the way to gain organizational goal starts from human resource management to profit through the effective use of people. But in reality the scenario is just the other way around. Assuming all other organizational units’ activities to be constant, the way to achieve organizational goal starts from people to profit through the effective use of human resource management.
So HRM works as the means to gain organizational goals by dealing directly and only with people not profit. The essay highlights the emergence of HRM, some of the key concepts and issues to support the fact that human resource management deals with people not profit. The essay will also highlight how human resource management deals with people in not for profit organization as well to support the above discussion. Human Resource Management (HRM) is the function within an organization that focuses on recruitment of, management of, and providing direction for the people who work in the organization. About. com,2000). Interestingly enough the concept of this definition may have been created in current times, however its existence goes a few centuries back. HRM has virtually evolved from the 1700’s and is now practiced throughout the world. But what caused HRM to appear in organizations? Let’s take a brief insight on how and why HRM was implemented. In the 1700’s, there were only local workshops which consisted of blacksmiths, carpenters, craftsmen etc. as organizations cease to exist. The population consisted of rich people with power as well as poor people with no power at all.
Orders for products would be given to the local workshops in return for money but at times the rich would not maintain the agreement to cut back on expenses. Hence the poor people lacking power were incapable of living in justice. As the years went on, organizations began to fold and the common folk were employed as laborers. Evidently, the rich people with power who owned the organizations and structured compensation for laborers that didn’t let them make a proper living so that they could enjoy more profits.
Due to such unfairness the laborers created a union (representative workers in an industry) that would go against the organization policies resulting in strikes, violence, etc. With the advent of "labor unions" in the 1790's, the power in the hands of the employees multiplied considerably and increased at a rapid pace by the 1800s and furthermore in the 1900s( Khilawala, R. 2009) . To solve these problems the union leader would meet with the owner of the organization to negotiate.
A solution came forward and the HRM system was implemented in the organization to handle the issues of the employees. The troubles between the employees and employers regarding the circumstances of work created the HRM system. Therefore history explains itself that if profits were the only goal of the organization then the organization couldn’t run properly as HRM is needed to satisfy the emotions and feelings of employees. In recent times HRM has the same weight as the other departments and in some companies it has more.
Human resource management deals with people issues from the moment they are recruited till the time they no longer work for the organization . HRM deals with areas such as appraisal, training and development, remuneration, dealing with employee groups such as unions, employment law, pensions and so on. It also deals with issues such as motivation, commitment, teamwork, job satisfaction and similar issues. All these which are considered as HRM’s core components, directly deals with people rather than profit.
For instance, dealing with ethical issues and implementing rules to stop unethical acts and discrimination strongly correlated with employee job satisfaction and sense of safety. Both are important for low turnover and less absenteeism by the employees. Again proper performance appraisal, remuneration, incentives, benefits and compensation plans which concerns with creating equity between employee input and output, directly relates with employee commitment, morale, productivity and involvement.
Training and development and career management provides the mean for increasing employee abilities and skills, thus the chances that employees will be able to get a better and more desirable future regarding their career. Recruitment, selection and induction provides the chances for new as well as existing employee and applicants to seek for opportunities, show their competence and achieve personal goals. So it can be said that whatever HRM does, whether it is implementing a law against discrimination or providing benefit plans to the employees, it does for the employees, by the employees and with the employees.
It means that when HR department of an organization praises the efforts of one of its employees, it does so to increase the worker’s intrinsic reward so that he or she gets motivated to achieve his or her personal goals and through that organizational goal as well. The HR department should have skipped doing all these activity concerning employee betterment and focus on profit making. But it does not as the primary concern of HRM is people nor profit. It might be felt reasonable to say that everything that is done by HRM eventually ends up in resulting a profitable event for the organization.
That is why it can be said that HRM deals with profit not people. Well it is true that everything that any unit of an organization (profitable) does eventually results in profitability but here the argument is whether HRM deals with people or profit, not what the ultimate result of HRM activities is. And from the discussion in the prior paragraph, it can be said that whatever HRM does directly affects the people inside and outside the organization and depending on the outcome resulting from that effect, an organization gains profit and so on.
As dealing with people comes first in this entire procedure, it is fair to say that HRM deals with people not profit. Until now various reasons has been shown to represent how HRM activities in profit seeking organizations deals with people rather than profit. HRM is not sole province of profit seeking organization and even nonprofit organizations need to do certain HR related activity. This essay would be incomplete without examining that whether HRM activities in nonprofit organizations deal with people or not.
Nonprofit organizations differ from profit seeking organizations along several dimensions: their governance structure, their incentive structure and their reliance on volunteers. These unique features warrant special consideration. (Agnes ; Ian, 2006). In nonprofit organizations, there is little room for significant financial rewards, therefore they rely on the goodwill and dedication to the cause, of both their paid workers and volunteers. (Agnes ; Ian, 2006). As nonprofit organizations are not built for seeking profit, this is why it is quite evident that the HRM activity of nonprofit organizations does not or can not deal with profit.
They deal with people and their voluntary activities in order to achieve their goal of serving the society as well as the human being. Any formal organization having a vision and mission -- either commercial or social, has an established human resource (HR) set-up to run and look after the HR needs. Once the human resource is on board, then the matters and issues relating to their orientation, job responsibilities, placement, compensation and benefits as well as equipping them with the needed skills by bridging the skill gap for effective and efficient performance of the associates are taken care of, by the HRM functions. Masroor,2008). Skilled, committed and talented workforce are considered as competitive advantage and helps an organization sustain in this cut throat competitive business world. Moreover competent workforce can not be bought, it takes years and lots of resources to build one. Despite technology advancing in leaps and bounds, it is people who make organizations a successful one. People use processes and machines to deliver products and services. People deal with suppliers and customers. If people fail in these activities then the organization fails.