Human Resource Management: Its Importance and Role

What’s it: Human resource management is the business function dealing with people within a company. It is responsible for identifying needs, recruiting, selecting, and training the right staff. It also develops a motivational system to help retain staff and encourage them to work productively. Other roles are managing employment contracts, compensation, industrial relations, and occupational safety and health.

The main goal is to hire, develop and retain employees. Thus, the company has the best talent to carry out value creation activities and achieve its goals. This function falls under the human resources department (HR department).

What is the difference between human resource management and personnel management?

We might equate human resource management with personnel management. The terms may be used interchangeably.

However, there is a difference between the two terms. Human resource management has a broader meaning, not only dealing with administrative tasks related to recruitment, training, and compensation. But, it is also about maximizing their professional potential and participation in achieving the company’s goals and targets.

Personnel management adopts the traditional approach to managing individuals within a company. It equates them to machines and tools, which can be shaped and used according to company needs.

In contrast, human resource management takes a more flexible approach and views them as assets, which flow economic benefits to the company. It not only teaches them to achieve company goals but also ensures they enjoy doing their jobs and tasks.

Why is human resource management important?

Resource management plays a vital role in a company. It works on both sides. On the one hand, it ensures the company has and retains the best talent to support its goals. In addition, it seeks to maximize their abilities, skills, and knowledge and obtain the greatest economic benefits. On the other hand, it also maintains the motivation and morale of the employees, so they are motivated and proud to work in the company.

This function is not only concerned with recruitment, training, and compensation. It is broader, including managing and building composition, diversity, culture, and routines within the company. Together with the knowledge, abilities, and skills inherent in individuals, they represent intangible assets and form the company’s core competencies, which are difficult for competitors to imitate. As a result, these core competencies ultimately support the company’s competitive advantage.

Conversely, it is difficult to grow according to plan when a company does not have or can retain its talent. For example, the company may find it difficult to execute strategies and plans when staff turnover is high and some key staff leaves. Competitors then recruit them and empower them more effectively, threatening its competitiveness.

In addition, managing human resources is also vital to maintaining productivity and costs. For example, high turnover can increase costs because training existing staff is usually cheaper than finding, recruiting, and training new staff.

Then, human resource management is also not only about how companies utilize their people. But, on the other hand, it’s also about making sure they enjoy working for the company. As a result, they feel spending time in the company is the right choice. And, of course, it requires companies to develop a comfortable work environment, motivation, and compensation accordingly.

Finally, human resource management also plays an important role in resolving disputes before they arise, whether related to interpersonal relationships or related laws and regulations.

What are the responsibilities of human resource management?

Human resource management is responsible for several functions such as recruiting, training, appraisal, promotion, termination policy, occupational health and safety, and industrial relations.

Recruitment

This function is concerned with identifying and filling skills and staff gaps in all positions by company needs. It requires specific tasks such as identifying talent gaps and the company’s need for new employees, attracting potential candidates to fill related positions, screening applicants, and selecting the best.

The HR department staff thoroughly examines jobs within the company to determine the need for new employees. First, they map out which positions are vacant and related aspects such as responsibilities, duties, salary and hours worked, qualifications, or skills required in those positions. Then, they describe what qualities, skills, and qualifications applicants must possess.

Advertise job vacancies and carrying out the selection process is the next task. At this stage, the human resources staff screens application forms, conducts interviews, and negotiates employment contracts and salaries with candidates.

Training

Employees may need new knowledge or skills to work effectively in their current roles. The human resources department facilitates this.

Although training costs money, it is important to increase employee productivity. And it also encourages their satisfaction in their current role. Employees may think the company appreciates them because it provides ample opportunities for training, creating a sense of pride in working for the company.

But, in other cases, employees may leave the company after having adequate skills and knowledge post-training. Or, they ask for a higher salary, if not met, they leave the company. And the company must anticipate negative effects like this, for example, through career development.

Training can take several types, including induction training to help new employees adapt quickly and efficiently to their new roles or cognitive training to enhance employees’ brainpower. Others are behavioral training to improve employee interpersonal skills such as communication and negotiation.

Performance appraisal

Employee appraisal is related to measuring how well employees are doing. In other words, it is a company mechanism to evaluate an employee’s job performance. In this case, their performance is assessed using related criteria and compared with the predetermined targets and objectives.

The appraisal becomes important for other aspects, including determining bonuses and promotions. When an employee exceeds the target, they are eligible for a bonus or promotion to a higher position.

Promotion

The human resources department also handles tasks such as promotions. They also prepare succession planning for upper management. All of these require preparation and planning, including those related to the company’s work processes and career paths. 

In many cases, this department requires cooperation with relevant departments about who is eligible for the promotion. First, they consult with an upper who knows and directly contacts the candidate for the position. Then, they prepare related development or training, if needed, for the candidate to work effectively in the new position.

Dismissal and resignation

Apart from handling recruitment, the human resources department is also responsible for processing employee dismissals and resignations. It could involve several processes. For example, when an employee’s performance is poor, and he or she is incompetent, the department may issue a warning letter once or twice and possibly, provide counseling for improvement. However, if there is no improvement, dismissal is the final decision.

Companies can not arbitrarily fire employees. They must comply with applicable regulations. Thus, they avoid prosecution in the future because they are considered to have unfairly fired employees.

Occupational health and safety

Human resource management also deals with occupational health and safety. This function seeks to prevent or reduce loss or risk in the work environment, resulting in physical damage, injury, illness, or violence in the workplace.

It usually involves cross-disciplinary and aims to encourage a safe work environment. Thus, employees are comfortable doing their jobs, and the company complies with the appropriate health and safety regulations.

Industrial relations

The human resources department manages industrial relations to ensure a harmonious relationship between employees and the company where each has rights and fulfills responsibilities according to the contract. Such relationships are important for reducing disputes and conflicts, which are often costly. For example, a strike results in a loss of revenue because production stops. And on the other hand, if workers are paid time-based wages, they also lose income.

Good industrial relations are desirable. Companies derive economic benefits from their employees and can achieve targets. Meanwhile, employees are motivated to contribute their best and get job satisfaction, increasing their morale and productivity.

What to read next

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• Hard Human Resource Management Vs. Soft Human Resource Management: Pros and Cons
• Human Resource Management: Its Importance and Role
• Human Resource Planning: How It Works and the Challenges
• Human Resources Audit: Importance and How It Works