What Is HR and Why Is It Important?

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Anyone who runs a business knows that employees are their lifeblood—and when the employees are happy, business is good. However, unless you’re a trained human resources professional, it can be tough to fill all of the needs that your people have, from personnel issues to health insurance. That’s where HR comes in.

A select few business owners are able to juggle all of the balls that come with running a successful organization, but most find it challenging to fulfill all of the expectations that come with being “a boss.” If you want your employees to have opportunities to grow and improve while simultaneously meeting your personal business goals, you need human resources and you need help.

What Is Human Resources (HR)?

Generally speaking, human resources, or HR, is the management of employees within a company. It usually describes both the people working for a business as well as the department that oversees the management and development of those same people, specifically related to employee improvement and well-being. In the past, HR only focused on hiring or firing individuals, as well as regular salary or performance reviews. Today, it has been expanded to include a wide range of functions designed to help an organization grow and be a positive work environment for all.

Among other responsibilities, some of the basic functions that most HR departments manage include:

  • Compensation and Benefits
  • Recruitment and Staffing
  • Training and Education
  • Employee Relations

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Compensation and Benefits

Employee compensation and benefits include both wage and non-wage compensation that employees earn or access. HR manages these functions by helping businesses determine the appropriate benefits packages that will attract and retain quality employees while still allowing organizations to save money and grow.

Compensation is an employee’s salary and HR can provide employees and employers with an overview of what is an appropriate salary based on specific jobs, as well as perform annual reviews and give raises when necessary.

Benefits almost always include some sort of health care coverage, but they may also include dental care, retirement accounts, profit sharing and vacation days. While benefits can sometimes feel like a big expense for businesses, they often end up saving an organization money in the long run because employees are more likely to stay, reducing turnover and the cost of hiring new employees.

Recruitment and Staffing

When growing your business, the challenge is to find and onboard motivated workers who fit your needs but who are also willing to learn and grow with you. Recruitment is necessary when you need to hire someone, and it can be hard to take the time to properly recruit without the help of HR management. The entire process involves writing job postings, sorting through applications, conducting interviews, offering someone a job and onboarding that person. HR can handle all of that, including writing contracts and making sure you’ve dotted all your i’s and crossed all your t’s.

HR meeting, training

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Training and Education

Employees need the ability to learn and grow in order to thrive at your company, and training and education can accomplish that. HR can provide any training your workers may need to achieve upward growth, as well as to meet any regulatory requirements. By offering learning and education opportunities, an employer can monitor their employees’ performance to see their strengths and weaknesses. HR can take on that task for you so that you can focus on other issues at hand.

Employee Relations

Unfortunately, there are times when employees may have conflicts with each other or even with you. Disciplinary actions are awkward, but there are circumstances when they are necessary. Human resources often manage employee relations, which may involve firing personnel or offering mediation to resolve conflicts or issues that require a neutral third party. While you should still be involved in these types of matters, it is helpful to have a team who can manage the logistics on your behalf.

Why Is HR Important?

Often, HR is in the background and doesn’t get a lot of recognition. However, it is also necessary for most organizations to run effectively, as most management doesn’t have the time or the desire to handle the majority of HR functions. Productivity is key for almost any business and HR allows productivity to thrive. Still wondering why HR is important? Here are several benefits for businesses of all sizes.

1. Reduces Compliance Issues

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Companies of all sizes are subject to many state and federal rules and regulations, especially surrounding labor and employment issues. Having an HR department can help your organization stay within compliance of these regulations so that you can avoid fines and penalties. If legal issues do arise, your HR team can serve as experts by providing all the documentation you need to protect your business.

2. Improves Employee Retention

A high employee turnover rate can result in financial loss for a business. The cost of hiring and training a new employee is likely more than you’d expect, upwards of 33% of that position’s salary. HR expertise can benefit businesses by reducing employee turnover. This is often due to improved employee benefits packages, created and managed by an HR team, that really knows what it is doing.

3. Helps Secure Top Talent

Most business owners don’t have the time or the know-how to recruit top talent to their companies. HR professionals know where to look and how to attract the top people in your industry. There may be multiple qualified candidates for your job opening, but the best talent can be invaluable to your organization.

4. Provides Stronger Onboarding

Once you have the talent hired, do you have a process for onboarding that is both effective and efficient? HR is essential to this component of staffing your company. Not only can HR help you roll out a warm welcome to new hires, but it can set up your new employees for success and get things rolling from day one. Time is money and taking too long to train someone just wastes yours.

HR team meeting

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5. Promotes Better Relationships

A positive workplace requires building good relationships between coworkers and between management and staff. Your office can come to feel like a second home to your employees with the help of HR. Whether your HR department offers conflict resolution, mental wellness seminars or simply the ability to talk out issues with a trusted confidant, the relationships in your organization will be stronger and more positive.

Human resources may just be the unsung heroes of your company. The behind-the-scenes functions are essential to the success of organizations of all sizes. Whether you need to create and implement a new benefits program, want assistance with recruitment and hiring or need to hand off compliance issues to someone who knows what they’re doing, you’re sure to benefit from HR. Your business is only as good as the people who work for you, and they’ll be more satisfied and less likely to jump ship if you give them access to the tools they need to succeed. Let HR be the glue that keeps your organization connected and functioning at the top of its game.