Human resource management is concerned with attracting, developing, and maintaining the human resources an organization needs. Its environmental context consists of its strategic importance and the legal and social environments that affect human resource management.

Attracting human resources is an important part of the HRM function. Human resource planning starts with job analysis and then focuses on forecasting the organizations future need for employees, forecasting the availability of employees both within and outside the organization, and planning programs to ensure that the proper number and type of employees will be available when needed. Recruitment and selection are the processes by which job applicants are attracted, assessed, and hired. Methods for selecting applicants include application blanks, tests, interviews, and assessment centers. Any method used for selection should be properly validated.

Organizations must also work to develop their human resources. Training and development enable employees to perform their present job effectively and to prepare for future jobs. Performance appraisals are important for validating selection devices, assessing the impact of training programs, deciding pay raises and promotions, and determining training needs. Both objective and judgmental methods of appraisal can be applied, and a good system usually includes several methods. The validity of appraisal information is always a concern, because it is difficult to accurately evaluate the many aspects of a persons job performance.

Maintaining human resources is also important. Compensation rates must be fair compared with rates for other jobs within the organization and with rates for the same or similar jobs in other organizations in the labor market. Properly designed incentive or merit pay systems can encourage high performance, and a good benefits program can help attract and retain employees. Career planning is also a major aspect of human resource management.

If a majority of a companys nonmanagement employees so desire, they have the right to be represented by a union. Management must engage in collective bargaining with the union in an effort to agree on a contract. While the contract is in effect, the grievance system is used to settle disputes with management.

Two important new challenges in the workplace include the management of knowledge workers and issues associated with the use of contingent and temporary workers.