Importance and Limitations of HRM

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Importance of HRM: A Detailed Discussion

Business management requires several aspects to be taken care of in order to gain profits. One such important department of management that has a significant contribution to the growth of an organisation is human resource management. Let us have a look at the importance of HRM and how it helps in the expansion and development of a business. 

The basics of human resources management should be well known by all the managers of an institution. It is essential because it helps the manager understand how to handle people in a better way. The knowledge about HRM is therefore highly essential for successful operation in a business setting and most importantly for effective management. However, there are also certain limitations in human resource management which have been discussed below. The following article is all about the importance and limitations of HRM. 

Importance of Human Resource Management

In simple words, Human Resource Management (HRM) is a management function that helps line managers to select, hire, train and develop employees for an organization. The following constitutes the core of HRM:

  1. An organization is not mere brick and mortar, inventories or machinery. It is people who make it run. 

  2. HRM involves acquiring, training and developing, maintaining and remunerating best talents for an organization.

  3. HRM’s decisions relating to employees must be integrated. 

  4. Decisions should influence the effectiveness of the organizations which is manifested in the form of good-quality products and services.

  5. HRM functions are not restricted to business entities only. These are applicable to education, recreation, healthcare, etc.

HRM aims to achieve justice and efficiency in terms of management as stated by Indian Institute of Personnel Management regarding the importance of performance management in HRM. This means that there should be a certain amount of coordination and understanding between employees which is only achieved by efficient management of the team by the human resource management department. Such coordination among employees enables an organization to have a smooth flow of operations and promotion of healthy work culture. Further, they also build a comfortable work relationship by working together. 

The importance of human resource management in an organization is in laying down strategies that not only benefit the future objectives of the company but it also attracts the interest of the employees. Such management is required for all kinds of organisations, big or small so that they can generate the optimum amount of productivity from these satisfied workers which ultimately contributes to gaining profit for the organisation. This also states the importance of HRM planning. Therefore, it can be stated that the achievement of objectives by HRM is based on strategies that facilitate a company’s employees in achieving their collective goals. 

Explain the Importance of Human Resource Management 

The significance of human resource management is myriad. The most important role of HRM is to manage people in an organization. It helps in development, utilisation, acquisition and most importantly maintenance of human resources. It is an oriented approach of involving the employees in the operations of the company by elevating their performance standard with the right activities and approach. This not only helps in the individual growth of the employee but also helps in the growth of the organisation. The importance of HR management lies in the fact that it is getting increasingly popular, having a significant contribution towards producing a team of experts and maintaining them. Here lies the significance of HRM and the importance of the HR department. 

Limitations of HRM

Like any other management functions in an organization, HRM also has its limitations. There is no denying the importance of HRM in the organization but many times, it fails to fulfil the objectives of the enterprise by hiring the wrong person for the wrong job role. Also, the job of HR is largely non-quantifiable; hence, the cost and ROI associated with it cannot be calculated accurately. 

The five major limitations of human resource management are as follows:

  • It has originated recently. So, the domain is still evolving.

  • It often receives little support from the top management. 

  • Non-availability of information is a constraint. 

  • Improper actualisation

  • Developmental programmes are often inadequate. 

The future of all business organizations cannot be predicted because it largely depends upon financial, technological, political and social factors. If any of these factors are affected, the future of the business is likely to get affected. This means that there is a certain amount of uncertainty, difficulties of surplus staffing, expense and time. To know more about the limitations of HRM, one can refer to the solved questions on limitations of HRM. 

FAQ (Frequently Asked Questions)

1. What is the importance of HRM?

Ans. There is numerous importance of HRM for the development and effective operating of an organisation. The HRM department produces employees who can withstand the change in the working environment. They are the ones who keep pushing the employees towards reaching the goal of the company and also helps in retaining them. 

2. What is the importance of strategic Human Resource Management?

Ans. The strategic human resource management enables the effective communication and management of the employee. The employees work towards the collective goal of the company by the motivation of the HRM. Incentives, targets, increase in opportunities and wages, looking after the physical and psychological well-being of the employee, etc. are all part of the strategies made by the HRM department to achieve the goal of the company.

3. What is the most important role of the HRM?

Ans. The most important role that the HRM plays is in recruiting candidates who have the required set of potential in achieving the objective of the company. The process of staffing is an important step for the HRM department. Therefore HRM is important for the growth of a company, despite its limitations.