Human resource management is a job sector that has expanded rapidly in recent years, but it is still fairly overlooked by many SMEs. While human resources is not a revenue-generating role – and is often outsourced rather than being recruited in-house – it still has an ability to boost and manage employee satisfaction and retention. But how does human resources do this?
In this article, we outline the role of HR, how it helps with business success, and many other things that make human resource management vitally important, especially in growing SMEs.
[ez-toc]
What is human resource management?
Human resource management is, as the name implies, management of employee relations, safety, health etc. Some of the duties include handling paperwork adjacent to staff, payroll, hiring, firing and conflict management. A HR will act a middleman between the higher and lower rank employees within a company, seeking resolution to issues and strengthening ties between workers. Effective communication and employee engagement are two of the main ways in which a company can see higher productivity rates, up by as much as 20%, according to a Harvard University study named HR Practices and Job Satisfaction.
The adage that “a happy worker is a hard worker” originally came through HR thought and development and has changed the way a lot of successful businesses treat their staff. In modern business, the idea that your employees are an “internal customer” has led to strengthening good company culture and productivity.
What are the specific roles within human resource management?
The best place to start when questioning the value of HR is by looking at what HR executives are trained to do. Within their field are many job roles broken down into specific functions, such as the following:
- HR Managers – A HR Manager oversees all HR functions within an organisation, responsible for developing and implementing human resource strategies for existing employees and the selection/recruitment process of new employees. They support current and future business needs by developing employees, engaging, and preserving the “human capital” (the economic value of a worker’s experience and skill).
- HR Executive – An executive has various roles, assisting in the talent acquisition and onboarding process, providing support throughout the employee lifecycle, and implementing HR programmes that cause a conflict-free workplace culture.
- Training and Development Executive – These executives identify and assess future and current employees’ training needs. They draw a plan for effective communication and training employees.
- Compensation and Benefits Manager – This role within the human resources department revolves around summarising compensation packages, ensuring competitive pay and creating employee benefits. Benefits and compensation play a huge role in modern business, acting as a reward and incentive to push yourself whilst at work. A study by McKinsey and Company named The Role of Compensation and Benefits in Employee Retention and Performance found that benefits help increase employee engagement by 30%, 25% decrease in turnover rates, and 20% increase in overall organisational success.
HR Departments may have their own specialised or unique roles based on business needs. In general, there is a lot of crossover within any one human resource department, and HR career paths may not be as linear as in other industries.
How does HR add value? The importance of HR to a company
Staffing
HR Professionals use their connections to find the greatest recruits for your specific business, allowing you to bypass the sorting of job board applications etc. They will make checks to ensure employees fit within your specific company culture, ensuring they can settle in without conflict.
During the staffing process, your HR team will also do research into competitor businesses to assess competing salaries and benefits. The right research will also enable your HR department to know where to find the right talent.
Performance Management
Your employees are your company’s most important resource. An HR professional understands this and ensures through performance management that employee productivity stays high. They look at an employee’s qualification, experience, motivation, stimulation and interest – ensuring that motivation remains high and employee performance is consistent.
Human resources management will make consistent checks to analyse the health of the company, work culture, work-life balance etc. If there are issues, the HR executive may make recommendations to the management to iron out or resolve any issues. This can be done via team-building exercises, continued professional development (CPD), office facelifts and other benefits/perks.
When staff feel valued enough that they are invested in by their employer, their job satisfaction goes up and so does their productivity. As job satisfaction improves, employee-customer relationships improve too.
Legal Advice
HR looks to ensure both the company and the employees are protected, by fair treatment of employees and ensuring that those higher-up the chain of command function in a manner that is in line with laws and regulations.
Laws change over time, and the HR Function relies on keeping up to date with them. This makes them an authority in the eyes of many managers. Through their knowledge and ongoing interest in business legal requirements, HR teams can help eliminate the risk of lawsuits from potential employees, employees, and customers.
Long-term planning and strategic thinking
At heart, HR Professionals are strategists. They use their specialist knowledge to create an overview of the company, identifying potential problems and ensuring solutions are within reach. A dedicated HR professional is a huge positive for a company and is this is why many HR roles exist as managerial roles.
The complexity of managing employee relations and other issues only grows as a business does. This is why ensuring someone who is dedicated to ensuring cohesion and cooperation within the business is important.
Strategic outcomes are brought about not only by an expert but one who is constantly in communication with your company. For their services to cause a competitive advantage for your company, they have to know it like a manager would.
If you have been considering outsourcing HR, remember that an outsourced HR executive will not have any of the insight into your company and staff that an in-house HR employee has. You will lose valuable input from an expert by failing to keep an HR executive on staff.
Employee Positioning and Employee Relations
Within most businesses, jobs change. Effective HR management is crucial in handling these job transformations and employee positioning. Job roles and responsibilities can expand, shrink, or simply outright change. HR allows for this shift to be as smooth and beneficial as possible when the change is intentional and handled well. Badly handled job transformations can be problematic for business, as they may interfere with an employee’s own life and work development goals.
Without an active HR presence, businesses that grow and neglect the aspects we’ve talked about in the article are likely to find themselves in one of two positions:
- Stagnation – Staff will stagnate. Roles will become restrictive and prohibitive. There will be limited room for growth for staff which also means limited growth for the company, likely leading to staff turnover. You must know what drives your employees, why they want to work for you, and what they want out of their future.
- Lack of Focus – Roles will become too fluid and certain jobs will start to get neglected. There will be too much freedom for staff to adapt their job roles or challenge themselves and the business will suffer because the jobs that are perceived as boring will likely go undone.
A proactive HR department will see where jobs need to be developed and where people need to be challenged or trained. It makes a lot more sense for people to be moved and have their roles expanded within a company than it does to hire someone new, as this increases the value of each employee and cements them within the company. It takes a trained HR person to identify needs and find creative ways to fill gaps and facilitate this, however.
Some of the benefits for your business of internal growth are:
- Employee Engagement – Engaged employees who expect job development and a positive career trajectory, resulting in better productivity, creativity, and enthusiasm.
- Cost Effectiveness – Save money on unnecessary recruitment by using people within the business. Not only does this increase the individual value of each employee, but also maximises efficiency.
- Development of Skills – Creative development that allows the business to grow into gaps in the market naturally. Keeping employees on top of their raft makes them more likely to understand and act upon industry trends as they occur.
- Process Efficiency – Identification of unnecessary or outdated procedures that can then be removed to ensure more streamlined work.
- Happier Workers – Happier workers result in happier customers and managers, as well as higher levels of productivity.
- Overview of Company Needs – Planned progression which prevents important jobs from being neglected while employees are trying new areas of interest, ensuring that development happens and improves the business rather than detracts from it.
- Business Reputation – Improved job satisfaction which makes your company more attractive to future employees and allows you to draw from a wider talent pool for future recruitment
This shift is not automatic, but if you trust your HR team, they can be invaluable in bringing about these changes in your business. HR can efficiently and successfully rebuild business processes, redesign organisational structures, map and model competencies for better job matches, and strategise long-term development plans.
Conclusion
Overall, Human Resource Management is beneficial across the board. It allows a company to ensure its workers are happy, productive, and loyal whilst also increasing productivity and working towards becoming leaders within an industry.
The most important resource a company has is the employees themselves. Having HR management involved protects them, and you, and ensures employee development and happiness.
