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Human resource management is about how you recruit, train, develop and motivate the human resources in your company. It doesn’t just focus on your employees. But, it also emphasizes the relevant systems, policies, and programs to support success across your business.
How do you manage it all? Experts break down the possible approaches into two:
- Hard human resource management (hard HRM)
- Soft human resource management (soft HRM)
What is hard HRM?
Hard HRM focuses on managing similarly to other resources such as machines and equipment. It emphasizes how you can recruit, control and optimize employees to maximize your profits.
Under the hard HRM approach, your number of employees frequently changes as you change personnel according to your needs. When they are worth it, you keep them. If they don’t, you fire them. You use the reward-punishment system as a performance appraisal mechanism.
Besides, because you are focused on profit, a low salary is normal. And, you invest less in training and empowering your employees.
This approach also relies on a traditional leadership style with less transparency. You see employees easy to set up and placed anywhere according to your needs. There is little or even no room for them to actively participate in making more strategic decisions.
Advantages of hard HRM
The main advantage of hard HRM is greater control over the business. You have the freedom how to organize, grow and develop your company. For example, you determine how work processes within the company are organized. If you do it well, it can lead to an orderly process without too many interruptions. You are more flexible in making key decisions such as reorganization.
In addition, because you do not involve the active participation of employees, decision-making can be faster. You make the final decisions about what is good and bad for the business. This approach is important in some cases, for example, in reorganizing a business to respond to a changing business environment. As a result, your company can be more responsive and flexible in allocating human resources according to your demands.
In addition, you can take more cost-effective measures to maximize profits. That’s because you have great control over your spending.
Disadvantages of hard HRM
The hard HRM approach increases dissatisfaction and frustration among your employees. They think of themselves as machines that you can use as you please. In addition, less competitive salaries, passive participation, and less empowerment demotivate them.
It all leads to a decline in morale among your employees. As a result, some do not like working and decide to leave. As a result, it increases the employee turnover rate.
The next effect is the high cost of recruiting. You have to recruit new employees to replace those who left. Due to high turnover, you will do this more often, increasing your costs.
What is soft HRM?
Soft HRM views employees as assets. They flow economic benefits to your company. So, to benefit from them, you don’t just hire the best. But, you also develop and motivate them to work hard and be loyal to your company.
You focus on long-term planning to empower employees to accommodate strategies and achieve future targets. For example, you develop training and professional development before assessing which performers are well and which do not. Besides making them more flexible in responding to your changing demands, it can also motivate them.
In addition, you offer a competitive salary and bonus package as a reward for employees. How competitive is your offer? It requires you to rely on benchmarking with other companies in your industry.
With all that, you are not relying too much on the reward-punishment system to increase your employees’ productivity. Instead, they have been motivated and are adequately compensated, making them enthusiastic and loyal to the company.
Lastly, this approach requires a democratic leadership style in which you actively involve employees to grow your business. For this reason, soft HRM requires more transparency than hard HRM.
Advantages of soft HRM
Loyalty and higher motivation are the main advantages of soft HRM. That’s because you provide competitive salaries and bonuses. In addition, you also empower them better through training, development, and active participation. As a result, they are proud to work for your company because they feel more valued.
Higher motivation leads to higher productivity. Your employees are eager to do their daily work. You can encourage them to create a Kaizen-like culture (continuous improvement) here.
High satisfaction also reduces employee turnover. They feel at home working in your company, so they are reluctant to switch. Thus, it reduces your need for new recruits, which in turn saves your costs. Moreover, it also reduces training costs as training existing employees is cheaper than training new ones.
Not only does it impacts low employee turnover, but high satisfaction also increases your chances of recruiting qualified candidates. Your employees spread positive information about why working for your company is the right choice. So, more talents are willing to apply in your company.
Disadvantages of soft HRM
Slow decision-making is a weakness of soft HRM. If the business environment requires you to adapt quickly, it can hurt your company. You are not fast enough to reorganize the business to adapt. As a result, your competitiveness may decrease and competitors one step ahead to become more competitive.
Also, because you rely on democracy, you need more feedback from your employees. Unfortunately, not all of them are of high quality. So, you have to allocate more time to sort out what is best and what is not. In the end, appropriate decisions are not made when they are needed.
Then, office politics can make decision-making even worse. Your employees may be more concerned with what is best for themselves than your company.
Another drawback is that you have to spend more. You have to spend more money to pay compensation and provide training. Therefore, it requires you to wisely calculate the benefits and costs – how many dollars you get from high employee productivity and how many dollars you spend on them.
