The Human Resources department at a business is in charge of everything from hiring and firing employees, organizing and implementing training programs, resolving internal conflicts, determining the pay scales, and everything in between.
Human Resources Role
The Human Resources department is concerned with the specific employees of the company, rather than sales, marketing, or product development. In a nutshell, the Human Resources department of any company works to make sure the employees are the best they can be.
From a managerial perspective, the Human Resources department fills five major roles:
- Executive role – The HR department are specialists in areas that encompass the management of employees.
- Audit role – HR inspects other departments to make sure health & safety policies, and training are being enforced aligned with the company’s HR policy.
- Facilitator role – HR helps other departments reach their goals that the company has laid out. This typically means developing training programs, and making sure different departments can work together efficiently.
- Consultancy role – HR advises managers how to approach and solve specific issues professionally. This usually means resolving personal disputes with managers and employees.
- Service role – The HR department is also responsible for raising awareness of the main mission of the company and any new corporate policies. This means they are usually responsible for most mass internal communications.
There are also major HR activities that managers face in the day-to-day activity at work. These activities may vary in different organizations and may be responsibilities of not only HR managers, but other managers as well. Most of the day-to-day actions revolve around hiring, training, compensation, and employee reviews. The most common activities are:
- Choosing and hiring employees – The HR department oversees setting job qualifications and sifting through résumés and choosing the most qualified candidate for the interview.
- Paperwork & orientation – HR makes sure that the newly hired employees fill out several forms to get them ready to start the job such as the W-4 and I-9, and introduces the new employees to the other workers in the organization.
- Training & development – HR trains the new employees, which may involve hands-on training or just handing out a manual. The actual training exercises are usually conducted by the manager to whom each new employee reports, but the HR department is responsible for maintaining “best practices” and general training regarding corporate norms. HR also sets up training for existing employees to improve their skills in their job.
- Compensation – HR determines the best compensation package for the organization that best fits their employee’s needs. Compensation includes; salary, 401k plans, vacation, personal time, and benefits.
- Performance appraisals – HR managers develop these forms to determine the percentage amounts of raises each employee should receive. This paperwork serves as a review for the employee and allows them to know their strengths and weaknesses.
- Safety & health – All HR departments must ensure that the work environment is safe. HR responsibilities in this field depend on the type of company that they work for. An HR manager in an accounting firm will do less of this, but an HR manager in a welding business might do this more. Also, the HR manager in a small business is usually responsible for posting safety procedures in the office.
- Managing legal issues – HR must ensure that the organization does not partake in any discriminatory acts. The Equal Employee Opportunity Act (EEO) is a law that all HR departments should be aware of because it states that companies should not discriminate based on ethnicity, race, disability, or gender.
These Human Resource activities help organizations achieve their goals of having an effective and profitable business as well as recruiting and maintaining a core staff to work for the company. It is important that HR keeps employees motivated in the workplace, both with the help of motivational techniques such as promotions, pay increases and bonuses, but also conducting reviews of training and continuing education.
Building Human Resource Requirements
Human Resource Planning is a process that identifies current and future HR needs for an organization to reach its goals. HR Planning serves as a link between HR management and the overall business plan of the company while developing a strategy that assists in the organization’s goals. The major responsibility for Human Resource Planning (HPR) is to ensure the best fit between employees and jobs while being able to meet short-term challenges.
To determine Human Resource requirements, there is something called a Needs Analysis.
A Needs analysis is a valuable technique that focuses on how a product addresses the needs of a human consumer. In Human Resources, this needs analysis is used to determine training needs for an employee to not only help them grow as a worker, but to also help the company grow. By determining these training needs, an organization can decide what specific knowledge and skills are needed to improve the employee’s performance in the company. The 4 main methods are:
- Surveys – Surveys focus on specific areas of performance deficiency and can be given by management or an outside party. A written questionnaire allows an employee to answer anonymously, freely and truthfully, while the questions are targeted to specific tasks.
- Observations – This is when employees are watched at work, which can give HR enough information on how the employee works and how well they work.
- Interviews – Interviews involve talking to each employee an evaluating their work and how well they do the work that it assigned to them. This is a decentralized and democratic approach in training because it allows the employee to give their opinions.
- Customer comment cards – This is when customers serve as a major source of information as to how well the employee does their job. Secret shoppers may partake in this method and can indicate to management what each employee needs to work on.
The needs analysis is a crucial activity in the training and evaluation process, as it allows HR to separate the strong employees from the weak ones. This, in turn, is used to compensate the best employees, and identify how to improve training and best practices to improve overall efficiency.
Internal Vs External
Human Resources are usually internal, which means they operate inside the company for the employees that work within the organization. For example, Apple headquarters has its set of Human Resources, and each individual apple store within the country (and world) usually has its own smaller HR department.
However, some companies, usually smaller businesses, will outsource some or all of their Human Resources to an outside company. This is known as “Outsourcing”.
Outsourcing occurs in a business when they want to reduce costs by having a third party complete specific job functions such as manufacturing, customer service, or Human Resources.
Outsourcing Human Resource Planning occurs when a business instructs an external supplier to take risk and responsibility for HR functions and performs these tasks for the business. There are two main reasons why a company looks to outsource their human resources:
- Smaller businesses may not necessarily be big enough for a full-time human resources department, so contracting an outside firm may be cheaper than doing all HR in-house.
- Specialized HR firms are generally very up-to-date on any changes with laws/regulations, such as new labor laws, subsidies, and other changes.
This allows the internal resources to focus on the strategic operations of the business. HR outsourcing is great for small companies to transform and get expertise without hiring extra personnel with high salaries. When HR is outsourced, it minimizes the businesses risk because labor laws change regularly and it can be difficult for the employer to be up-to-date with the new laws.
On the other hand, the impact on the actual employee relationships can be murkier. As an advantage, it can help businesses manage employee performance because the outsourcing firm is a truly unbiased source of information, which can help cut through entrenched management attitudes and practices.
As a disadvantage, it becomes more difficult for the HR department to have a direct personal relationship with any employees. This is problematic because outsourced HR firms will be less effective with employee recruitment and training than in-house HR departments, since the outsourced HR is less familiar with the overall business strategy and corporate vision. Because of this, very small companies tend to outsource their Human Resources, while more companies bring the HR department in house as they grow. This lesson is part of the PersonalFinanceLab curriculum library. Schools with a PersonalFinanceLab.com site license can get this lesson, plus our full library of 300 others, along with our budgeting game, stock game, and automatically-graded assessments for their classroom - complete with LMS integration and rostering support!
This lesson is part of the PersonalFinanceLab curriculum library. Schools with a PersonalFinanceLab.com site license can get this lesson, plus our full library of 300 others, along with our budgeting game, stock game, and automatically-graded assessments for their classroom - complete with LMS integration and rostering support!Learn More