Staff as an ASSET or a COST 1.4.1
In terms of approaches to how management view human resources, a popular distinction is made between treating staff as an asset ("soft" HRM) and treating them as a cost ("hard" HRM).
Staff as an Asset (SOFT HRM)
▪ Treats employees as the most important resource in the business and a source of competitive advantage.
▪ Employees are treated as individuals and then needs our plan accordingly.
▪ Employees are treated as individuals and then needs our plan accordingly.
FOCUS = Concentrate on the needs of the employees - their roles, rewards, motivation etc
Staff as a Cost (HARD HRM)
▪Treats employees simply as a resource of the business.
▪ Strong links with corporate business planning - what resources do we need, how do we get them and how much will they costs
▪ Strong links with corporate business planning - what resources do we need, how do we get them and how much will they costs
FOCUS = Identify workforce needs of the business and recruit and manage accordingly ( hiring, moving and firing)
KEY FEATURES TO SOFT AND HARD HRM
SOFT HRM
- Strategic focus on longer-term workforce planning
- Strong and regular two way communication
- Competitive pay structure, with suitable performance-related rewards (e.g. profit share, share options)
- Employees are empowered and encouraged to seek delegation and take responsibility
- Appraisal systems focused on identifying and addressing training and other employee development needs
- Flatter organisational structures
- Suits democratic leadership style
- Seen as an approach that rewards employee performance and motivates staff more effectively
- However, be too "soft" and when all the employee benefits are added up, the cost of the workforce may leave a business at a competitive disadvantage.
HARD HRM
- Short-term changes in employee numbers (recruitment, redundancy)
- Minimal communication, from the top down
- Pay - enough to recruit and retain enough staff (e.g. minimum wage)
- Little empowerment or delegation
- Appraisal systems focused on making judgements (good or bad) about staff
- Taller organisational structures
- Suits autocratic leadership style
- Might result in a more cost-effective workforce where decision- making is quicker and focused on senior managers.
- But, a genuinely "hard" approach might expect to suffer from higher absenteeism and staff turnover and less successful recruitment.
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