Human Resources: HR Definition, Role, Types, and Importance

Business owners generally agree on one key element of a successful enterprise: people. No enterprise can succeed in the marketplace without talented, hard-working staff. For this reason, every organization's human resources (HR) function should be committed to promoting workers’ skills, knowledge, and growth.

Human resources can be defined as an internal or external business unit charged with ensuring that a company's employees are equipped with everything needed to excel at their jobs.

The role of human resources affects virtually all areas of the company. Wherever people are involved (which, in business, permeates every department and function), human resources management is a necessary component of business success.

What does HR do? The key functions of HR may include but are not limited to:

• Recruitment and retention
• Employee relations
• Training, learning, and development
• Performance management
• Company culture
• Compliance with employment law

Owners of small and mid-sized businesses sometimes feel overwhelmed by HR demands. Fortunately, many critical areas can be outsourced. Outsourcing HR services may allow an organization to secure a customized HR approach that helps reduce expenses, streamline business functions, and enable companies to meet their operational goals.

What Is Human Resources (HR)?

What does HR stand for, and what is HR in a company context? Human resources offers two mission-critical purposes for a business: (1) Leveraging "people assets" to help an organization succeed and (2) Serving those people in ways that maximize their contributions and productivity within a company.

Your business’s official HR function may take the form of one employee, an entire department, or an external third-party HR solution. It may use certain HR tools and technologies to effectively monitor the recruitment, performance, and law-compliant treatment and payment of the individuals within your organization.

Look to human resources to increase a business's return on investment in its employees. One HR function is to support finding talented individuals who can enhance the company's competitive standing in a crowded marketplace and help ensure the organization still is compliant with local, state, and federal regulations affecting the workplace.

In addition, HR's focus on employee engagement paves the way for higher morale, greater retention, and opportunities for individual growth and development.

What Is Human Resource Management (HRM)?

Human resource management (or HR management) incorporates business strategy with the management of employees, company culture, and the environment in which employees work every day.

To meet these goals, human resource management would include the full spectrum of procedures and policies centered around a company's workforce. This consists of developing and nurturing a workplace culture that mirrors the organization's overall values and mission.

What Does HR Do?

Human resources functions may vary from one business to the next. However, the overall role of human resources encompasses a wide range of services benefiting the organization and its workforce. Key functions include:

• Managing talent (recruitment, onboarding, retention, etc.)
• Managing performance
• Ensuring compliance with local, state, and federal employment regulations
• Administering employee benefits
• Handling employee relations questions and issues
• Helping to build and strengthen company culture
• Leveraging HR technology

In addition to these mission-critical functions, the human resources department is often involved with the executive team in high-level strategic planning.

Why Is Human Resources Important?

If employees are indeed the lifeblood of an organization, it's clear HR plays an essential role in the care and nurturing of the workforce. With HR, there's a consistent approach to attracting and recruiting high-quality talent, fostering internal employee growth, managing payroll, and establishing a healthy, inclusive workplace culture.

Human resources may also handle payroll compliance. Through this department, the company can keep an orderly approach to managing an ever-growing mountain of employee data (attendance, medical leave, vacations, etc.). Accurate record-keeping and documentation, facilitated by state-of-the-art HR technology, helps validate a business's compliance with local, state, and federal employment regulations.

How Does HR Support Employees?

While it should be clear that talent and performance management serve as the underpinning for any company's success, employees themselves benefit from policies and procedures implemented by human resources. For example, HR helps:

• Guide and educate employees on safety in the workplace
• Identify opportunities for personal and professional growth
• Offer continuing education options
• Oversee conflict resolution between co-workers and/or employees and managers
• Train managers to enhance their leadership skills
• Look after employee health and wellness

Employees benefit from HR advocacy on their behalf. Within the broad category of employee relations, human resources helps to prevent experiences of discrimination or harassment; if such incidents occur, HR should be equipped to correct the situation speedily.

Types of Human Resources

While there is no business standard for the “types” of human resources, note that the concept of human resources could broadly refer to any of the departments, functions, or roles associated therein. When you hear someone refer to “HR,” they could be referring to any of the following:

• Functional areas of HR: This refers to the vast array of HR functions, such as employee recruitment, onboarding, and training. Other key functions include benefits administration and performance management.
• Roles with an HR department or organization: Roles and titles may differ from one business to another. Still, in general, HR titles may include Senior HR Manager, HR Generalist, Payroll Supervisor, Recruitment Manager, HR Administrator, and HR Analyst. Sometimes, the roles and responsibilities can overlap and be handled by an individual or an HR team.
• A third-party HR partner: HR can "live" within an organization as an internal department. But other types of location models are effective, as well. Outsourced or third-party providers include a Professional Employer Organization (PEO), Human Resource Outsourcing (HRO), and Administrative Services Organization (ASO). These providers often complement a small business's human resources and payroll administration functions, freeing resources for more strategic purposes.
• A centralized or decentralized approach to HR: Depending on the business, HR models can include a traditional approach or one that emphasizes HR's strategic role within the organization. In some cases, HR can be decentralized, with human resources functions dispersed within different departments.

Human Resources Helps Support Your Employees and Your Business

Human resources is essential to serve and protect a company's workforce. This often takes the form of strategic recruitment and retention and managing the performance of new and veteran employees. HR also plays an integral part in developing and supporting a productive and collaborative culture and assisting with a company's growth.

Proactive human resource management enables business leaders to concentrate their energies on the company's long-term success. Leaders are assured that HR complies with employment laws and regulations, and sophisticated HR technology streamlines functions and operations affecting employees and their contribution to the organization.

In other words, businesses with strong human resources processes (including a third-party provider) are well positioned for future success.