Human resources refers to both the people working for an organization and the department responsible for managing the life cycle of each employee. But if someone mentions human resources in a work setting, more often than not they are referring to the human resources (HR) department.
In this article we will talk about the crucial role played by HR in an organization as well as whether you should have an internal or external HR team.
Human Resources Defined
Human resources is responsible for recruiting, onboarding, training and managing an employee from their job application to final severance. This end-to-end management of employees includes strategies for payroll and benefits administration, upskilling, establishing positive workplace culture, optimizing employee productivity, handling employer-employee relationships, employee termination and more.
Human resource management should not be confused with workforce management, which focuses on strategic planning for the direction of an organization’s growth and not on the day-to-day supervision of employees.
The Role of Human Resources
Every business wants to do right by its employees, but business considerations often throw a wrench into this good intention. The human resources department is there to formulate policies that strike a balance between employer and employee interests.
The modern human resources team has moved beyond the legacy responsibilities of payroll and benefits administration, severance handling and postretirement relations. Now it encompasses designing strategies to acquire the right employees, ensure employee retention by addressing their challenges, manage employee separation, handle compliance and legal issues, and stay on top of the HR industry trends.
Recruitment
Human resources is responsible for filling the vacant positions within an organization. The recruitment process typically includes creating and posting job descriptions, accepting applications, shortlisting candidates, organizing interviews, hiring and onboarding. Each of these recruitment steps involves designing the workflow and executing it in a way that ensures they hire the best candidates. Many teams rely on recruitment software to help automate these processes.
Compensation and benefits administration
Handling employee compensation and benefits is an important part of human resources responsibilities. Besides payroll management, it includes travel and expenses, paid vacation, sick leaves, retirement, health and other benefits.
Talent Management
Recruitment is an expensive process and therefore it is important to ensure that the new hires remain with the organization for as long as possible. Employee training and development, whether it is a new hire or an old hand, in consultation with the managers is the responsibility of HR.
To this end, HR departments use talent management to design various employee motivation, loyalty and retention programs. Career development, mentoring, succession planning and interdepartmental transfers are crucial ways of ensuring employee retention.
Other Responsibilities
Covering everything an HR department handles would take a full article of its own, but here are a few more of the most common responsibilities of a modern-day human resources department:
- Designing workplace policies: HR is responsible not only for hiring people but also for ensuring that the workplace is conducive to optimal functioning. They ensure this by designing workplace policies in consultation with senior management.
- Legal compliance: The human resources department must be aware of the latest laws that affect the employees as well as the organization.
- Employer-employee relationship: The human resources department is responsible for managing people in a way that the relationship between the employer and the employee remains cordial at all times. This becomes especially important for manufacturing units where labor laws come into play as well.
- External factors: HR also needs to keep track of external factors that are not in its control but definitely affect the organization and its employees. For instance, the use of technology, global developments, social media networking, the rising popularity of hybrid work models, etc.
- Diversity, equity and inclusion (DEI): If you want your business to succeed, you need to embrace policies and programs that promote DEI. Designing strong recruitment policies is a good place to start but HR must carry this forward by helping all stakeholders develop a DEI mindset.
Internal vs. External Human Resources
Depending upon the size and needs of your business, you can have an internal human resources department or outsource it. However, keep in mind that only some parts of human resources, such as payroll, benefits administration, recruitment, onboarding, legal compliances, etc., should be outsourced. Designing strategies to manage human resources should be kept internal to the organization.
External human resources can be cost-effective for small teams as you get better capabilities and easier access to experts. However, you still need to have a small human resources team of one to two people internally to help design the necessary policies and ensure that the external human resources team is meeting all your specifications.
Ultimately, whether you employ an internal human resources team or an external one depends upon your needs and budget.
Bottom Line
Human capital is the most important resource of any organization and it must be treated with love, care and respect. As an employer, it’s your responsibility to put in place a human resources team that helps you attract the best talent in the industry, keeps them satisfied and ensures an excellent relationship that results in driving business growth.
Frequently Asked Questions (FAQs)
What are the best HR software solutions for small businesses?
What are the major functions of HR?
A human resources department holds many roles but these are seven of its major functions:
- Recruitment
- Workforce training and development
- Payroll and taxes administration
- Benefits administration
- Employee-employer relations
- Employee severance management
- Regulatory compliances
What is human resource management (HRM)?
The strategic model for recruiting, onboarding, training and managing an employee from their job application to severance is called human resource management. It includes designing policies to enhance company culture, employee productivity and the overall employer-employee relationship.
How do I ensure HR compliance?
Proper documentation of policies, thorough training and following HR news for changing regulations can help HR leaders stay up to date on their responsibilities and help all employees follow policies and regulations and avoid misconduct.