Human Resources Management

Human Resource Management (HRM) is the function of a business or other organization that deals with managing the organization’s personnel.  HRM involves the recruitment and day to day management of the company’s staff.  It is carried out by the Human Resources Department of a business.

The goal of HRM is to increase the effectiveness of a company’s employees which in turn increases the business’s overall effectiveness.  More effective businesses earn more profits with less wasted time and resources. Effective HRM improves the company’s direction and utilizes employees to work towards the company’s goals.  Even as the business environment changes, this purpose is unlikely to change. 

Human Resource Terms

There are a few different terms used in when discussing human resources that can be confusingly similar: “human resource management” “human resource department” and “HR.”  The three terms are commonly used interchangeably but not always. As noted above, Human Resource Management is the function within a company of managing the people within the company. The Human Resource Department is the department in a company that carries out the Human Resource Management Function for the company. “HR” is just an abbreviation for “human resources.”  Human Resource Management

Human Resource Management Involves Many Functions

HRM encompasses many functions within a business. HRM deals with the hiring and firing of staff.  It also deals with managing employees on a day to day basis. HRM works on big picture roles like managing workplace culture, employee benefits, morale, and planning workforce education and training. HRM also involves work on the individual level. For example, HRM involves resolving individual disputes, answering employee questions, and administering planned trainings.

The human resource department fulfills its functions in a variety of ways. It provides the business’ personnel with tools, training, services, and oversight that it needs. It also oversees how teams are built to ensure they inspire employee engagement and productivity. HR departments also plan events and actions that develop the company’s culture and establish the company in the community. You will frequently find HR departments involved on committees dealing with charitable events and employee family friendly events.

Human Resource Managers

The responsibilities of a Human Resource manager fall into three major areas: staffing, employee compensation and benefits, and defining/designing work. They oversee the recruitment process for locating, vetting, and hiring new employees. Human Resource managers also handle efforts to retain and continue to train and develop top employees.  

Human resource managers serve as a link between management and employees by handling questions, interpreting and administering contracts and helping resolve work-related problems.

Human Resource managers advise top executive managers on organizational policy matters, such as equal employment opportunity and sexual harassment, and recommend needed changes.

Sometimes businesses will outsource part of their human resource management to third party suppliers and vendors. The following are some common human resource functions that businesses outsource: payroll, background checks, employee health and other insurance benefits administration, training like discrimination training, hiring for temporary or seasonal positions, and writing employee handbooks and policies and procedures.

The Human Resource Management Field is Evolving

For years, business’s human resources department was considered a less important function than its other departments. However, thanks in part to numerous research studies, there is a growing understanding about how important HRM is to a company’s health and ability to grow. Small businesses are included in the group that has begun to recognize the importance of HRM.  Small business don’t have as much human resource work but they their own unique staff management concerns that impact the business.

Changing technologies have had a substantial impact on the field of HRM in the past few years and technologies impact is likely to continue to force changes in HRM. New technologies that related to electronic communication and information transmittal have changed the business landscape and with it, the workforce landscape. For example, working remotely has become a very normal aspect of employment.  Even employees who don’t work remotely full-time often have at least occasional work-from-home days. Working from afar and communicating electronically is becoming the norm. These changes are challenging human resource professionals to adapt. Guidelines, policies, and processes require revisions to keep up with these changes. 

Changes in organizational philosophies and typical organization structures have also required changes in HRM. Companies are leaning more and more towards flatter management structures. These structural changes require human resource departments to modify job descriptions and promotion systems, among other things.

A third major change that is requiring associated changes in HRM is expanding market globalization. This has expanded the competition for companies generally and has expanded competition for jobs. Some companies have been able to leverage this competition to obtain higher talent levels for lower pay. 

Other changes impacting HRM include new management theories being adopted, health insurance legislation that is uncertain and ever changing, and demographic changes like the rapidly expanding Spanish speaking population in the United States. 

Modern Expectations of Human Resource Departments

The modern expectations of human resource departments and its employees are very high.  Human Resources is now largely considered a key player in making strategic decisions for the company and with it comes responsibility to make recommendations to the company’s owners and high-level managers regarding how human resources can be used to solve problems and grow the company.  This new role is more strategic and data based than HR departments of the past that were more administrative in nature.

Employees within HR now face more pressure to demonstrate their value to the company.  They do this by helping protect the company from adverse legal action or employee discord that undermines productivity.  It is truly a balancing act!

Core Responsibilities of Human Resource Departments

Human resource management requires the development of business as a whole and the people that operate it. Human resource department responsibilities can be broadly divided into three categories: management of individuals, organizational development, and career development.

On the individual side, human resources is tasked with helping employees grow and increase their contributions to the organization. It involves duties like training and employee evaluations.

Organizational development responsibilities include tasks like hiring and incorporating human resource considerations into the company’s business plans and strategies. Managing career development matches individuals with the jobs and career paths within the organization that fit their knowledge, skills, and goals.

Within these three broad areas, there are many more specific duties like staffing and associated planning, workforce utilization, employee performance reviews, employee education and development, and maintenance of the workforce:

● Staffing and Staffing Planning. Human resources staffing responsibility starts with figuring out what jobs the company needs performed and the description for each job.  It also involves filling these positions when they become open through recruiting and hiring.  During this process, the human resources department vets the candidates for the roles.  Effective human resource departments will often have a pipeline of talent they can draw from when positions become open rather than scrambling to fill a role at the last minute.

● Workforce Utilization & Management. Another key function of Human Resource Management is the organization, utilization, and maintenance of a company's workforce.  This involves developing a company structure that uses the company’s hires in the best way where individual employees are in the position that best uses their unique skillset.  Another of utilization and management that is sometimes overlooked is managing workers health and safety. Human resource staff help implement state and federal health and safety laws and train employees to comply with them.

● Employee Performance Reviews. An important component of managing human resources is ensuring that employees are making valuable contributions to the business and helping resolve the issue if they are not.  Employee performance reviews are a way that human resources, with the help of supervisors and other staff, determines whether employees are living up to their potential.

Reviews usually have a written and a conversational component where the employee is given honest feedback on their performance including honest positive and negative aspects.  Reviewing performance help the organization decide on rewards like pay increases and bonuses and identify areas for improvement.

● Worker Development. Developing the company’s workforce is a vital responsibility of human resources. Human resource staff identify training and educational needs and determine how to meet them.  They may develop training presentations themselves or hire third-parties who are knowledgeable on a topic to come in and teach educational courses to the business’s staff.  Training organized by HR ranges from orientation programs to legal compliance training on discrimination laws.

Structure of Human Resource Departments

The role of the Human Resources Department impacts every single department and individual within a company.  For this reason, it is important for the HR department to have a central place in the company’s structure where it has open communication channels with all aspects of the company.  It is particularly important for the HR department of a company to have ready access to the company’s higher-level decision makers.  The decision makers and HR should work in harmony.

The best internal structure for an HR department varies depending on the business size, type and organizational philosophy. Many companies organize the department around the clusters of people to be helped - different employee development groups for each department are necessary to train and develop employees in specialized areas, such as sales, engineering, marketing, or executive education. Most companies still put all HR department employees in a single centralized location from which they perform all functions. This may change as workplaces evolve.

Guiding Principles of Human Resource Management

People are “human resources” – they are a business’s most valuable asset.  Without them, a business cannot succeed.  Personnel policies and procedures that contribute the business’ goals and plans increase its success. Hiring and training of employees should take the company’s goals and needs into account. By shaping the business’ culture and increasing cooperation among its personnel, human resource managers contribute the company’s effectiveness.

Human Resource Management for Small Businesses

Small businesses have different human resource needs from large multi-national businesses.  However, they still need human resource management. Even a business with only a few employees has personnel management issues that impact the business’ success. For example, no business wants employees who cheat or cannot adequately perform their job function, however, a small business is hurt even more by such an employee. 

Employee development and competence greatly impact the long-term profitability of a small business. Effective training and development results in benefits like increased employee productivity, less turnover, and more company financial gains overall.

Human resource management for small businesses begins when they begin hiring.  Few small business owners have received training on how to make hiring decisions. Initially, a business owner should review their entire business broadly.  Staff changes are a good time to rethink the entire organization’s structure. Like large businesses, small businesses also need to find employees whose skills match the company’s needs.

In addition to hiring, part of human resource management for small businesses involves creating employment related guides and policies and procedures. Small business consultants urge businesses of all sizes to take the time to create this type of documentation.  Wisely drafted human resource manuals ensure the business owner and his or her employees are on the same page. 

As part of their human resource management strategy, small businesses should take steps to create a healthy, employee atmosphere and to treat all employees the same.  When employees feel they are treated fairly, they do better work with more enthusiasm.  When they don’t, the opposite occurs.

Small business owners who take human resource management seriously and communicate expectations clearly, fairly treat and compensate employees, and provide opportunities for employee training and advancement are increase their likelihood of success while those who ignore the importance of human resource management put themselves at legal risk and are less likely to fully utilize their employees’ skills and capabilities.

If you need legal representation to help you manage the legal aspects of Human Resource Management like developing policies to help prevent employment discrimination lawsuits, post your job on UpCounsel where you can obtain fee information and offers to help from top, licensed attorneys.