I think basically its a matter of hiring better people, less number of people, getting more work from them and acquiring them by spending least amount.
Ofcourse you have to do a balancing act so the result is maximised from the HR management exercise from a point of generating profits, building loyalty in the workers, and getting the most out of them.
I am no expert on this & maybe there are more points I am not aware of.
To an organization, employees are a resource that they need to manage -- just like anything else.
Human resources management reduces costs by streamlining costs related to employee management. For example, the costs of integrating a new employee (one of the most expensive parts of hiring) can be streamlined by well defined HR policies and procedures.
The human resources department can put together an "employee welcome" package that includes all the necessary documentation and procedures "Who do I see about getting my network password?" etc. This will reduce the time it takes for the employee to be productive.
Also, human resources involves other things -- such as benefits management, legal procedures, training and development, etc. etc. All these lead to more productive workers (if I don't have to go outside to a lawyer's office to find out what my contract says, or how to figure out my benefits -- then I can use that time to work).
In order to understand recursion, one must first understand recursion.
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Signal > Noise
The single most important thing to remember about human resources is that they're human. Yes, they are a 'resource' and, as such, they have some of the same costs associated with them as any other resource (costs of acquisition, maintenance etc.), but because they're human they need motivation.
People only ever do what they're motivated to do. Motivation can come from many different sources - money, job satisfaction, fear, pride etc. - but the best long-term employees will be the ones with the greatest motivation.
Positive motivation works best too. Negative motivation can work (i.e. do this or you're sacked!) but generally you're unlikely to get as good a return as when you use positive motivation.
You can (and many companies do) run a workforce without any attention to motivation and companies will often still be successful, but one wonders how much more successful they'd be with a highly motivated work force. It's sometimes the way to get that extra 10%.