Human Resource Management

A basic economics class might initially identify factors of production, traditionally noted as “land, labor and capital”. The various combinations of these factors when properly managed result in output that organizations provide to customers. The output might be a physical product (e.g., automobiles, computers, soap) or a service (e.g., transportation, medicine, law, education). In some cases physical products (e.g., airplanes) are created by one industrial sector (e.g., manufacturing) to allow a second sector to provide a service (e.g., transportation). 

With respect to physical products, most U.S. producers are privately held, whether individual proprietors, partnerships or corporations. There are large service industries that are dominated by governmental or not-for-profit organizations; however, even in this case there are many examples of for-profit entities. For example, education is both public and private. With respect to private entities, some are for-profit as well as not-for-profit. 

Notwithstanding the varieties of output and manners in which organizations are constructed to produce physical products or services, in every case there is some combination of land, labor and capital that is required for success. Even Bill Gates’ initial efforts that eventually resulted in Microsoft, Inc. required “land” (his parents’ garage) and “capital” (the few dozens of dollars to purchase office supplies and other materials). He, of course, provided the “labor”.

Human Resource Management (HRM) is that portion of the managerial responsibility that is responsible for combining labor with other factors of production. In order to accomplish that task, those responsible for the human resource function must understand the interaction of labor with the other factors. For example, someone hired to work in a family’s corner grocery store quickly understands that it exists but in one location. Its footprint would likely be a small fraction of an acre. Walmart’s HRM function must consider thousands of locations, some of which exist on dozens of acres of land. Also, no HRM practitioner can effectively recruit and hire without understanding the capital circumstances facing the organization. Those circumstances will define who might be recruited and selected, how they will be trained, compensated and the manner in which performance will be managed. 

Human resource management has also varied over time. As the function has evolved it has not only created new responsibilities, but has shifted responsibilities between and among different entities within the same organization. For example, line managers (those responsible for producing a product or service) at one point were primarily responsible for making hiring decisions. Presently they at least share that responsibility with a Human Resource Management Office, and in some cases can be heard complaining that they (the line managers) are without a major role in the process. 

The tension between HR and other organizational stakeholders has resulted in examples of humor that may or may not represent a bit of truth. Take a look at the link below. You decide! 

Video 1: The Ant Story