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Human resources management (HRM) refers to the management of people in organizations. The objective of HRM is to maximize employees' contributions in order to achieve optimal productivity and effectiveness, while simultaneously attaining individual objectives and societal objectives. Strategic HRM involves linking HRM with strategic goals and objectives to improve business performance and develop an organizational culture that fosters innovation and flexibility. In more and more firms, the HR department is becoming a strategic partner, playing a role in strategy formulation and execution.

Five activities required of HR managers and other line managers who are responsible for HRM are to formulate policies and procedures; offer HR advice; provide HR services; ensure compliance with HR policies and procedures, and employment legislation; and serve as a consultant and change agent.

Research studies have established a link between effective HR practices, employee performance, and the bottom line, if properly implemented and accompanied by a supportive culture and climate. HR has been found to affect profits, new-venture success, and almost half of the differences in market value between companies.

Internal environmental factors influencing HRM include organizational culture, which consists of the core values, beliefs, and assumptions that are widely shared by members of the organization; organizational climate, which is the prevailing atmosphere; and management practices such as the shift from traditional bureaucratic structures to flatter organizations where employees are empowered to make more decisions. A number of external factors have an impact on HRM, including economic factors, labour market issues, demographic trends and increasing workforce diversity, technology, government, and globalization.

The three stages in the evolution of management thinking about workers are (1) scientific management, which focused on production; (2) the human relations movement, in which the emphasis was on people; and (3) the human resources movement, in which it was recognized that organizational success is linked to both.

HR challenges in the twenty-first century include developing and implementing corporate strategy, improving productivity, increasing responsiveness to change, improving customer service, and building employee commitment.

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