It’s often said that people are an organization’s greatest resource. Yet, until fairly recently, human resource management was not considered as critical to success as other business operations, like marketing, finance or sales. This notion has been largely altered by new technology, globalized markets, and changes in organizational hierarchies. Today, business leaders place greater emphasis on hiring the right people and keeping them engaged.

What is human resource management?

Human resource management involves creating personnel policies and procedures that support business objectives and strategic plans. Central to this mission is fostering a culture that reflects core values and empowers employees to be as productive as possible.

Human Resource Management

What are the functions of human resource management?

HR functions can vary depending on industry, businesses size and the types of workers employed. In most cases, the primary objectives are to acquire and cultivate talent and improve communication and cooperation among workforce members. Other key human resource management functions include:

  • Job analysis
    Determining the skills and experience necessary to perform a job well makes it easier to hire the right people, determine appropriate compensation, and create training programs.
  • Workforce operations
    Delivering health and safety policies, responding to employee grievances, working with labour unions, and other operations, can all help support regulatory compliance.
  • Performance measurement
    Evaluating performance is important because it not only fosters employee growth through constructive feedback, but also serves as a guide for raises, promotions and dismissals.
  • Incentive programs
    Recognizing achievements and rewarding high performers with bonuses and other perks is a proven way of motivating employees to take ownership of business objectives.
  • Professional development
    From orientation to advanced educational programs, employee training serves to improve productivity, reduce turnover and minimize supervisory needs.

What are the responsibilities of human resource management?

HR professionals generally are tasked with creating and administering programs that improve workplace efficiency and employer-employee relationships. Within this broad assignment are several different, but critical responsibilities, such as:

  • Staffing
    Staffing a business or an individual department requires several key steps. Hiring managers must first determine how many new employees the budget can support, then find and interview qualified candidates, and finally, make selections and negotiate compensation.
  • Developing workplace policies
    When a new or revised policy is needed, HR professionals typically consult with executives and other managers, write the supporting documentation and communicate it to employees. Policies may cover vacations, dress codes, disciplinary actions, and other types of workplace protocol.
  • Administering pay and benefits
    In order to attract and retain talent, compensation must meet industry standards and be comparable to what other employees in similar roles are being paid. Creating such a fair pay system requires careful consideration of an employee’s years of service with the business, experience level, education and skills.
  • Retaining talent
    Compensation isn’t the only thing that retains talented employees. HR managers may need to proactively address issues with workplace environments, organizational culture and relationships between employees and supervisors.
  • Training employees
    When employees develop new skills, they tend to be more productive and satisfied with their job. Some of the training programs typically run by HR departments include team-building activities, policy and ethics education, and on-the-job instruction and skills, e.g. how to run a machine or computer program.
  • Complying with regulations
    Laws that affect the workplace – whether they’re related to health and safety, discrimination, or accessibility – are constantly evolving. HR professionals are required to keep up with these changes and notify the rest of the organization in support of compliance.
  • Maintaining data privacy
    Safety in the workplace means protecting not just the physical health of employees, but also their private information. To minimize workers’ compensation claims and data breaches, HR must implement security measures and ensure that all federal, provincial/territorial, and union standards are met.

Why is human resource management important?

Human resources is an essential area in any organization as it is responsible for managing critical aspects that contribute to the organization's success. These include talent acquisition, employee retention, and risk management. Mishandling this complex field can lead to a lack of structure in the organization, thereby hindering its growth and success. This can result in high employee turnover rates, low morale, and compliance issues. Therefore, an HR department with experienced leadership is highly beneficial for an organization to mitigate these drawbacks and lead to higher levels of employee satisfaction and productivity.

Human resource management and small business

While human resource management is important to all businesses, the stakes may be higher for smaller organizations. For example, one incompetent person in an organization of 10 employees can be much more detrimental to a business than one incompetent person in an organization with thousands of employees. To improve their people processes, small business owners generally can:

  1. Assess current operations to determine if new hires are needed or if existing employees and production methods can be utilized more effectively.
  2. Take an active role in the recruitment process and write job descriptions that match prospective talent to business needs.
  3. Create an employee handbook or an official document that clearly outlines company policies.
  4. Provide continuing education opportunities as needed by specific regions or industry.
  5. Maintain a work environment where employees are treated fairly and can be productive.

HRM systems and software

Faced with rising numbers of contract-based workers and increasingly complex regulations, HR professionals have turned to HRM software to help them keep pace with changing workforce environments and people management needs. This technology is available with a variety of options to suit businesses of any size. Basic systems may offer recruitment services, payroll and benefits, while more robust solutions tend to include talent management, international compliance support and advanced analytics.

Why use a human resource management system (HRMS)?

HRMS are designed to meet the core needs of HR and turn basic administrative functions into critical enablers of business value. With the aid of these people-centric, data powered solutions, HR managers may be able to:

  • Eliminate costly redundancies
  • Make data-driven decisions
  • Improve their hiring processes
  • Manage people more effectively
  • Optimize workforce productivity
  • Engage and retain employees
  • Maintain regulatory compliance

How to choose a human resources management solution

Finding the right solution often requires a strategic evaluation process, such as the following:

  1. Identify what the organization would like to accomplish, change or improve and how technology can help achieve those goals.
  2. Ensure that the HRMS can keep pace with the rapidly changing regulatory and statutory requirements in all applicable jurisdictions (local, provincial, federal, international, etc.).
  3. Prioritize security and know exactly how sensitive data will be stored, transferred and backed up.
  4. Look for implementation models with a change management strategy that will get the HRMS up and running efficiently.
  5. Address stakeholder questions, concerns and objections to drive widespread HRMS support.
  6. Ask about service plans to manage the hundreds of post-payroll tasks necessary for compliance.
  7. Inquire into the vendor’s financial history and investments in innovation.
  8. Get outside-in perspective by looking at peer reviews, industry analyst feedback and product demos.

Examples of HRM software

Business leaders and HR professionals who are looking for software to help them accomplish more with less resources generally have three options available to them:

Why choose ADP for your human resource management needs?

ADP’s HR management solutions automate and streamline key needs so that HR professionals can focus more time on their people and less on paperwork. We offer basic and customized packages with some of the following features:

  • Easy-to-use dashboards that turn data into  trusted insights
  • Workflows that are designed for compliance and industry standards
  • Preconfigured new-hire templates for a simplified onboarding process
  • Self-service and mobile apps so time-sensitive tasks can be performed quickly
  • Industry-recognized security to help safeguard sensitive information

Learn more about ADP Workforce Now® HR Management →

Frequently asked questions about HRM

What is human resource management and its functions?

Human resource management is the strategic approach to nurturing and supporting employees and ensuring a positive workplace environment. Its functions vary across different businesses and industries, but typically include recruitment, compensation and benefits, training and development, and employee relations.

What are the three major roles of human resources management?

The job of an HR manager can be broken out into three major roles:

  1. Administrator
    Running payroll, writing job descriptions, creating workplace policies and procuring benefits packages are typical of HR administration.
  2. Change manager
    HR professionals must monitor regulations and communicate policy or procedural changes with employees to help support compliance.
  3. Personnel manager
    Managing people entails resolving conflicts, overseeing training and development, and fostering employee engagement.

What are the five main areas of HR?

HR professionals perform many activities in the pursuit of employee well-being and organizational stability, but their responsibilities generally lie within five main areas:

  1. Recruitment and staffing – identifying talent gaps, acquiring applicants, arbitrating contracts, maintaining ethical hiring practices
  2. Compensation and benefits – determining pay scales, approving raises, negotiating benefits packages
  3. Training and development – onboarding new hires, making educational opportunities available
  4. Compliance and safety – monitoring legislative changes, implementing safety measures, processing workers’ compensation claims
  5. Employee relations – resolving employee conflicts, addressing harassment or abuse allegations, working with union leaders

What are seven functions of HR?

Over the years, HR has evolved from a personnel department engaged largely in administration to a strategic partner that works closely with management teams on organizational development. The seven key functions today include:

  1. Strategic planning
  2. Recruitment
  3. Training and development
  4. Compensation and benefits
  5. Policy creation
  6. Employee and labour relations
  7. Risk management

What is HR compliance?

HR compliance means keeping an organization from violating the growing number of employment laws enacted by federal, provincial and local governments. This responsibility requires HR professionals to monitor and understand regulatory requirements, enforce policies, classify workers correctly, practice fair hiring practices and provide a safe work environment, among other tasks.

This guide is intended to be used as a starting point in analyzing an employer’s HR obligations and is not a comprehensive resource of requirements. It offers practical information concerning the subject matter and is provided with the understanding that ADP is not rendering legal or tax advice or other professional services.