Human resources (HR) is the division of a business tasked with finding, recruiting, screening, and training job applicants while also administering employee benefit programs.
HR plays a pivotal role in helping companies navigate a fast-changing business environment and the escalating demand for high-quality employees in the 21st century.
Key Takeaways
- Human resources (HR) is responsible for the recruitment, screening, and training of job applicants.
- HR departments manage employee compensation, benefits, and terminations.
- Human resource management (HRM) focuses on advancing an organization’s workforce, aiming to improve the overall organization.
- HR departments must stay updated with laws affecting the company and its employees.
- Many companies outsource traditional HR administrative duties to outside vendors.
Understanding Human Resources (HR)
The concept of human resource was first introduced by John R. Commons, an American institutional economist, in his book “The Distribution of Wealth” published in 1893. However, it wasn’t until the 20th century that HR departments formally began addressing issues between employees and employers.
An HR department is indispensable to any business, irrespective of its size. It seeks to maximize employee productivity and safeguard the company from potential workplace issues.
Key activities involve managing compensation and benefits, recruitment, retention, employee terminations, and ensuring compliance with laws relevant to both the company and its workers.
Key HR Activities
The following are six core activities HR must adeptly manage to contribute value to a company:
- Managing and utilizing people effectively
- Tying performance appraisal and compensation to competencies
- Developing competencies that enhance individual and organizational performance
- Augmenting innovation, creativity, and flexibility necessary to maintain competitiveness
- Implementing new methods in work process design, succession planning, career development, and inter-organizational mobility
- Managing the integration and application of technology through improved staffing, training, and employee communication
HR Management Strategies
Emerging in the 1980s, strategic initiatives within HR aimed at addressing the impact of employee-related issues on long-term business success. This collective approach is known as Human Resource Management (HRM), which encompasses the broad management of employees along with the organization’s culture and environment.
An HR department embracing HRM strategies typically takes a proactive role in enhancing its workforce, suggesting improvements, methods, and business solutions to management.
For example, Google adopts a comprehensive approach to employee relations through its HR department. It offers benefits like on-site wellness centers, meals and snacks, fitness facilities, massage programs, and ergonomic support. For Google, a happy employee equates to a productive employee.
In 1901, National Cash Register Co. (now NCR Corp.) established one of the first personnel departments, managing wages, workplace safety, and employee concerns—laying the groundwork for modern HR departments.
HR Outsourcing
Since the mid-20th century, many companies have outsourced traditional HR administrative functions to concentrate on more strategic roles that add substantial value.
Outsourced functions may include:
- Payroll administration
- Employee benefits management
- Recruitment
- Background checks
- Exit interviews
- Risk management
- Dispute resolution
- Safety inspections
- Drafting office policies
Contemporary tools, including recruitment software, enhance the HR department’s efficiency, granting them more freedom to focus on activities that add greater value.
The Role of Human Resources
A human resources department is dedicated to the recruitment and retention of employees within a company. It is responsible for hiring and firing, training, managing employee relations, and overseeing benefit programs. Employees approach HR with questions regarding their roles, concerns, and grievances.
What Is Human Resource Management (HRM)?
Human Resource Management (HRM) is a strategic method of managing company employees, the work culture, and work environment to promote optimal efficiency and productivity. HRM often involves applying metrics to measure workforce performance.
The Five Major Functions of Human Resources
Several critical responsibilities fall under an HR department, but five major ones are:
- Recruiting, hiring, and onboarding new employees
- Handling employee compensation and benefits
- Providing job/career development opportunities
- Resolving work-related issues faced by individual employees
- Crafting policies that influence the company’s working environment
The Bottom Line
A company’s HR department navigates the entire life cycle of an employee, from recruitment to onboarding, training, and finally, termination or retirement. HR must also keep track of industry trends and regulatory changes to maintain compliance.
Increasingly, HR departments concentrate on human resource management by investing strategically in initiatives to enhance the workforce’s effectiveness. Eventually, these improvements cultivate a more positive, loyal, and productive workforce benefiting the entire company.
Related Terms: HRM, Recruitment, Employee Training, Workforce Development.
References
- John Rogers Commons. The Distribution of Wealth. A.M. Kelley, 1963.
- Google Careers. “Benefits at Google”.
- David G. Collings, Hugh Scullion, and Paula M. Caligiuri. Global Talent Management, Chapter 5. Routledge, 2019.
- Fast Company. “Welcome to the New Era of Human Resources”.
- University of Washington, Paul G. Allen School of Computer Science and Engineering, Course Web Service. “Outsourcing: Past, Present and Future”, Page 3 (Page 6 of PDF).
