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.

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

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

1. Strategic focus on longer-term workforce planning
2. Strong and regular two way communication
3. Competitive pay structure, with suitable performance-related rewards (e.g. profit share, share options)
4. Employees are empowered and encouraged to seek delegation and take responsibility
5. Appraisal systems focused on identifying and addressing training and other employee development needs
6. Flatter organisational structures 
7. Suits democratic leadership style

Is it the best approach?

• 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

1. Short-term changes in employee numbers (recruitment, redundancy)
2. Minimal communication, from the top down
3. Pay - enough to recruit and retain enough staff (e.g. minimum wage)
4. Little empowerment or delegation
5. Appraisal systems focused on making judgements (good or bad) about staff
6. Taller organisational structures
7. Suits autocratic leadership style

Is it the best approach?

• 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.