HRM: What is and why HRM systems are necessary

HRM in English and in Russian

The English abbreviation of "HRM" designates "Human Resource Management" that is literally translated as "management of a human resource". Synonyms of this term in English-speaking literature are also "HCM" ("Human Capital Management", in transfer  — "human capital management") and "WFM" ("WorkForce Management", in Russian  — "labor control"). In Russian-language texts the term "personnel management" is, as a rule, applied though "human resource management" and "human capital management" also meets.

A HRM system is understood as the automated end-to-end system of personnel management. In comparison with traditional automation systems of personnel records and payroll calculation of a HRM system have advanced functionality. HRM systems consist of a broad set of business processes and analytical opportunities allowing to conduct in full "history" of employees from employment, payroll before planning and development of career.

When HRM systems are necessary

HRM systems are one of the major corporate applications used in the companies of all sizes and in all industries. Need for implementation of HRM systems is defined by such requirements, critical for successful business development, as:

• Expenditure management: Expenses on compensation are one of the largest expensive articles. According to Forrester Research (HRMS Q4 2008) 36.4% of the total amount of expenses are the share of their share in the USA on average. HRM systems are used for planning and expense optimization.
• Effective management of business processes. HRM systems are supported by a set business of HR of processes: adoption of personnel solutions, maintenance of records about employees in current status, payroll, development of schemes of motivation and so forth. Increase in efficiency at accomplishment of these tasks happens due to providing direct access to employees (Employee self-service) and managers (Manager self-service) to information necessary to them.
• Respect for all precepts of law regulating relationship of the worker and the employer. Use of HRM systems allows to resolve competently difficult questions, to implement flexible settlement schemes of the salary and personnel document flow.
• Increase in value of a human capital. Despite an economic crisis very few people will argue on the value of a human capital as a corporate asset. The companies with strong control function by personnel will focus attention on "high-quality" growth of employees, developing incentive programs and schemes of motivation.

"Qualitative" functionality

Except accounting (personnel records, the staff list, document flow, a time recording and holidays, pension and military accounting, etc.) and settlement (salary, tax payments, allowances and deductions, etc.) the circuits processing quantitative data, the similar systems also include the HR circuit as such intended for work with qualitative indexes of personnel. The HR circuit provides automation of such functions as motivation of personnel, maintaining "profiles of employee competences", "management of career", performance appraisal, training management (advanced training), distance learning, efficiency analysis of personnel, the analysis of compliance of the employee of a post, requirements planning in personnel and movements of personnel, formation of a talent pool. Also, it provides "self-service of personnel" (remote access of employees, including via the Internet, to credentials about them with a possibility of correction of a part of them) and also support of the HR portal in the Internet, with the publication and operational data-refresh on vacancies, news of the company, registration of the summary completed in the on-line mode, the automated analysis of these summaries and selection of potential candidates to a position  , etc.

The lion share of control functions by labor resources came from the western practice, but, for example, advanced training is not exotic for domestic management tradition personnel, and formation of a talent pool in general is borrowed from the Soviet methodology. Nevertheless, still on most domestic enterprises these functions are used not completely or are not demanded at all though interest in them constantly grows.

Main objectives of HRM systems

HRM systems allow to solve two main objectives: arrange all accounting and settlement processes connected with personnel; and to reduce the losses connected with departure of employees. The effect of the solution of the first task is rather obvious and consists in elimination of double entry of data, their data in uniform base with a possibility of the complete analysis and generation of the reporting, an emergence exception of "dead souls", timeliness and correctness of calculation and salary accrual, tax deductions  , etc. But it can achieve also by means of normal automation systems of personnel records and payroll calculation. Importance of the solution of the second task is not always adequately estimated by domestic top managers. According to American Management Association, the losses connected with replacement of the employee lost by the company can be from 30 % to 150 % of his annual salary, depending on the level of his knowledge and skills. Considering that, by some estimates, the costs connected with personnel make about 36 % of revenues of the large companies, the staff turnover appears a serious problem which can significantly worsen indicators of overall effectiveness of the organization.

Thus, it is possible to call HRM systems, in a sense, "CRM systems on the contrary", attracting and holding not buyers, but own staff of the companies. Certainly, methods are applied absolutely others here, but the general approaches are similar.

HRM systems allow to solve two main objectives:

• arrange all accounting and settlement processes connected with personnel;
• reduce the losses connected with departure of employees.

The effect of the solution of the first task is rather obvious and consists in elimination of double entry of data, their data in uniform base with a possibility of the complete analysis and generation of the reporting, an emergence exception of "dead souls", timeliness and correctness of calculation and salary accrual, tax deductions, etc. But it can achieve also by means of normal automation systems of personnel records and payroll calculation. Importance of the solution of the second task is not always adequately estimated by domestic top managers.

Analysts of Molga company select the following with problems of a HRM system:

• attract, hold and motivate the best personnel;
• reach implementation of strategic objectives of the company, breaking into them to the level of each employee;
• implement development and training of personnel potential according to the purposes of the company and its divisions;
• perform strategic planning of organizational changes and create budgets;
• to timely make effective decisions, based on the exact and comprehensive information analysis;
• with low costs and optimum to perform accounting functions in the field of personnel management.

Considering that according to American Management Association, the losses connected with replacement of the employee lost by the company can be from 30% to 150% of his annual salary, depending on the level of his knowledge and skills, the staff turnover appears a serious problem which can significantly worsen indicators of overall effectiveness of the organization.

Thus, it is possible to call HRM systems, in a sense, "CRM systems on the contrary", attracting and holding not buyers, but own staff of the companies. Certainly, methods are applied absolutely others here, but the general approaches are similar.

See Also

• HRM system