Business owners have a lot of assets (both tangible and intangible) to keep track of—from intellectual property and inventory to marketing strategies. However, the most valuable asset is often the employees who keep the business running smoothly.
Managing these workers and supporting their growth falls to the human resources (HR) team or individual. The various processes involved in hiring, training, and retaining employees are collectively referred to as human resource management.
What is human resource management?
Human resource management (HRM) is the strategic approach to managing an organization’s workforce to maximize employee performance, keep the company compliant with local regulations, and ensure employees are aligned with the company’s goals. For effective HRM, companies should implement practices such as recruiting top talent, providing ongoing training, fostering a positive workplace culture, and using performance management systems to track employee progress.
Many organizations dedicate an entire human resources department to manage employee relations. A senior HR manager or director typically oversees the HR department. Serving under this human resource executive are human resource managers who interact with individual workers. Their duties may include hiring and training employees, motivating them, fielding concerns, maintaining a strong company culture, and offboarding employees who leave the company.
Why human resource management is important
How does human resource management work?
At its core, HRM is a bridge between employees and the company. HRM works by continuously balancing the needs of the organization with those of its employees. This involves making decisions about staffing, training, compensation, and workplace policies that not only meet legal requirements but also encourage a productive and positive work environment. HRM also plays an important role in navigating the complexities of the modern workplace, addressing challenges such as remote work, diversity and inclusion, and rapidly evolving technology.
Responsibilities and skills of an HR manager
Here are some of the duties that HR professionals fulfill for a business:
Recruiting new employees
Finding and attracting qualified candidates to fill job openings includes creating job descriptions, posting job advertisements, interviewing job seekers, and selecting the most suitable candidates.
Human resources managers often oversee this process along with managers from the specific department that has the opening. Department managers handle technical interviews, while the HR manager handles tasks like verifying previous employment and negotiating salary.
Training new hires
An HR professional may run training programs as part of an onboarding process. These trainings could involve explaining the organization’s mission, corporate culture, security protocols, and business objectives. These trainings may also serve as regulatory compliance measures, since many states require training on workplace safety, worker rights, and (in some industries like finance) laws that govern business practices.
Managing salaries and benefits packages
HRM involves overseeing employee compensation, which includes salary, bonuses, and employee benefits such as health insurance, retirement plans, and other perks. It also ensures that the organization’s employee value proposition (EVP) is competitive in the job market.
Mediating employer-employee relationships
A human resource manager serves as a conduit between workers and their supervisors. They field employee concerns and find resolutions when possible. They also help managers resolve employee-related issues like absenteeism, improper behavior, lack of boundaries, or poor performance.
Abiding by employment laws
Every state has labor laws that protect workers. The human resource management field exists in part to make sure everyone follows these laws. By insisting on compliance and promptly addressing employee grievances, an HR team works to provide a safe environment for everyone at the company.
Managing and tracking performance
Many HR processes serve as personnel management. HR teams may be tasked with motivating employees, boosting workforce productivity, and offering employee performance feedback.
Promoting diversity and inclusion
Human resource management requires cultivating a workforce that represents a wide array of backgrounds, life experiences, and perspectives. HR managers aim to keep this in mind when they recruit employees for new job openings. They also work to ensure that all employees feel heard and empowered within the organization, regardless of their gender, ethnicity, race, or religion.
Facilitating career development
An organization’s employees are more than just human capital; they are individuals with their own aspirations. Many HR professionals view their work as talent management, and as such, they often help productive employees advance their careers by connecting them with professional development opportunities. That may entail recommending them for promotion or offering them courses to learn and grow in their chosen field.
Strategic planning
Strategic human resource management requires succession planning. Inevitably, quality employees will leave their jobs for promotions and new endeavors. HRM professionals anticipate these changes and seek to replace workers without disrupting business operations or upending company culture.
Offboarding
When individual employees leave a company, HR functions as an offramp. HR professionals help departing workers wind down their work, hand over tasks to the right people, and transfer benefits, if applicable. They also make sure the workers return company property and any privileged documents.
How to choose a human resources management solution
Your human resources management solution will impact your entire company, so it’s important to pick one that meets your and your employees’ needs. Here’s how:
Consider your unique challenges
Start by identifying your specific HR bottlenecks and challenges. Consider your industry, company culture, and size when evaluating potential solutions. For instance, a creative agency might prioritize freelance talent management features and project management capabilities, while a manufacturing plant may need robust safety training tools.
Determine the most important features
Focus on core HR functionalities that address your primary needs:
- Employee data management
- Time-off tracking
- Benefits administration
- Performance analytics
- Employee self-service portal
- Mobile accessibility
- Payroll management (if not handled separately)
What core functionalities do you need in an HRM software solution and which would be nice to have? Consider additional features—such as recruitment tools or learning and development modules—that you can add on or get through upgrades as your business grows.
Evaluate the different software types available
There are multiple types of HR software on the market, including:
- Human resource information system (HRIS). Ideal for small to medium-sized businesses looking to consolidate employee data and automate essential HR tasks.
- Human capital management (HCM). Suitable for growing companies needing more advanced features like talent management and analytics.
- Human resource management system (HRMS). Best for large enterprises with complex global workforces requiring advanced features for strategic workforce planning.
Consider how well the solution scales and integrates
As a business grows, robust HRM systems can easily scale to accommodate more employees and additional HR functions without significant disruptions.
Make sure your chosen HR solution can grow with your organization and integrate with your existing systems, such as any accounting software you use or payroll for international workers. Consider software solutions that offer a range of subscriptions so you can scale up as your company grows and pay only for what you need at a given time.
Prioritize the user experience
Look for solutions that offers intuitive interfaces for both HR professionals and employees. Your team will be more likely to use an intuitive system, which will lead to higher adoption rates and more bang for your buck. Many software companies offer demos or free trials, so take them up on those offers to test out the experience before committing to a paid subscription.
Check the security and compliance measures
Verify that the software offers good data protection measures, including encryption and access controls. Make sure it helps you maintain compliance with relevant labor laws and regulations. See what security protocols the software will put in place for employees using it, such as two-factor authentication.
Research the software’s reputation and support
Research potential vendors’ track record, customer support quality, and long-term viability. Read user reviews on software review websites like Trust Pilot and The Verge and forums like Reddit.
Analyze the costs and ROI
Look beyond the initial price tag. Consider the total cost of ownership, including implementation, training, and ongoing support. Evaluate the potential return on investment (ROI) by mapping out key performance indicators (KPIs) such as time savings, cost reductions, and improved data accuracy.
Involve all stakeholders
Include key decision-makers and end users in the selection process. Their input will help make sure the solution you choose meets everyone’s needs. Plus, your team will already have some experience using the software once you decide to get a membership, so adoption should be easy and pain-free.
Create a plan for implementation
Before making a final decision, consider what the implementation process looks like. What kind of support does the vendor offer? Do they provide any help with data migration? What training resources are available? A well-planned implementation is crucial for realizing (and taking advantage of) the full benefits of your new HRM solution.
Benefits of using HRM software
Using human resource management software can speed up and improve your HR practices. Here are some of the key benefits of incorporating specialized software into your HR efforts:
Improved efficiency and automation
HRM systems help streamline everyday administrative tasks like payroll processing, attendance tracking, and benefits management. By automating these routine activities, you can reduce manual work, lower the chances of errors, and free up your HR team to focus on more strategic initiatives like developing employee motivation programs.
Enhanced data accuracy
HRM software like BambooHR helps you keep accurate and up-to-date employee records. This not only helps your business stay compliant with legal and regulatory requirements but also minimizes the risk of mistakes in employee data.
Streamlined recruitment and talent acquisition
HRM software solutions like Workday simplify the recruitment process by automating workflows like réesumé filtering, candidate screening, and offer management. This speeds up hiring and helps you choose the best candidates for your organization.
Employee self-service options
Many HRM systems come with online self-service portals that allow employees to manage their personal information, request time off, and access important documents. This feature reduces the administrative burden on HR staff and encourages employees to take charge of their own HR-related tasks. For example, Gusto allows employees to log their hours and request time off in their own portals.
Efficient onboarding and training
HRM software can make onboarding new employees much smoother by automating paperwork, training schedules, and orientation processes. For example, Atlas is one tool that automates a remote onboarding process so you can hire the best candidates no matter where they live.
Effective performance management
An effective HRM suite often includes tools for setting goals, conducting performance reviews, and providing feedback to employees. This helps create a culture of continuous improvement and development. Lattice, for example, is one such tool that allows hiring managers to set goals and track employee performance.
Cost efficiency
By automating various HR processes and cutting down on paperwork, HRM systems can lead to cost savings and better resource allocation. For instance, you might not need to hire dedicated payroll specialists if your software can automate payroll deductions and processing.
Scalability
As your business expands, a strong HRM system can scale to accommodate more employees and additional HR functions without causing major disruptions to your HR team’s workflow.
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Human resource management FAQ
What skills are required to work in HR?
Working in HR requires a mix of interpersonal and organizational skills. Key abilities include strong communication and listening skills for effective employee interactions, problem-solving skills to address workplace issues, and attention to detail for managing records and staying compliant. It also helps to have a good understanding of labor laws and be able to handle sensitive information with discretion.
What do human resource managers do?
Human resource managers oversee the recruitment, development, and management of an organization’s workforce while ensuring compliance with labor laws.
What is the difference between human resources and human resource management?
Human resources (HR) typically refers to the department or function responsible for managing personnel within an organization. Human resource management (HRM) is the broader discipline and strategic approach to effectively managing an organization’s workforce to achieve its goals and objectives.
What is strategic human resource management?
Strategic human resource management involves aligning HR practices and policies with an organization’s strategic goals and objectives to maximize the effectiveness and contribution of its workforce.
How does someone become a human resources manager?
Typically, a human resources manager will hold a bachelor’s degree in human resources or business administration, but many also hold a master’s degree, such as a master of business administration (MBA). You can also train with an HR certification organization such as the Human Resources Certification Institute (HRCI).
