Human Resource Management: Functions and Benefits (2023) - Shopify (2024)

From intellectual property to inventory to marketing, business owners have many assets to manage. Yet, no asset is more important than the workers who make a business function. Managing employees and helping them thrive comes under the purview of a human resources individual or team, and the processes involved in hiring, training and retaining these employees are known collectively as human resource management.

What is human resource management (HRM)?

Human resource management (HRM) is a strategic approach to managing employees. HRM involves the recruitment, selection, training, development, and management of employees. Its primary objective is to maximize the effectiveness of an organization and ensure its employees are well-equipped, motivated, and aligned with the organization’s goals and culture.

Many organizations dedicate an entire human resources department (HR 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

HRM allows businesses to effectively manage their most critical asset—the workforce. Human resources serves as a company’s personnel department, with HR managers playing a pivotal role in talent acquisition, development, and employee retention. HRM promotes employee engagement through effective performance management, compensation, and benefits strategies. It also aids in legal compliance, reducing potential risks and liabilities.

Some human resource management roles exist to promote diversity and inclusion, which can lead to overall employee satisfaction and smooth labor relations. They also help employees adapt to changes in company culture, so that business success never comes at the expense of employee satisfaction.

Functions of human resource management

• Recruiting new employees
• Training new hires
• Managing salaries and benefits packages
• Mediating employer-employee relationships
• Abiding by employment laws
• Performance management
• Promoting diversity and inclusion
• Facilitating career development
• Strategic planning
• Offboarding

A human resource department serves an organization in many ways, from recruiting and hiring employees to employee training and offboarding departing employees. Here are some of the duties that HR professionals fulfill for a business:

Recruiting new employees

A human resources department may be responsible for finding and attracting qualified candidates to fill job openings. This includes creating job descriptions, posting job advertisem*nts, 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 and subject expertise, while the HR manager handles tasks such as verifying prior employment and salary negotiations.

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 about 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 their team.

Performance management

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.

Benefits of using HRM software

• Efficiency and automations
• Data accuracy
• Recruitment and talent acquisition
• Employee self-service
• Onboarding and training
• Performance management
• Security
• Compliance and reporting
• Cost reductions
• Scalability

Using human resource management (HRM) software can significantly bolster your HR practices. Here are some key perks of using specialized software in your HRM efforts:

Efficiency and automations

HRM systems streamline routine administrative tasks, such as payroll accounting and processing, attendance tracking, and benefits management. This reduces manual work, minimizes errors, and frees HR staff to focus on higher-order tasks, like developing strategies for employee motivation.

Data accuracy

HRM software helps maintain accurate and up-to-date employee records. This ensures that the business complies with legal and regulatory requirements while reducing the risk of errors in employee data.

Recruitment and talent acquisition

HRM software can automate the recruitment process, making it easier to post job openings, screen candidates, and manage applicant information. This speeds up the employee hiring process and ensures that the right candidates are selected.

Employee self-service

Many HRM systems offer online self-service portals for employees to manage their personal information, request time off, and access important documents. This reduces the administrative burden on various HR positions and empowers employees to take control of their HR-related tasks.

Onboarding and training

HRM software can facilitate onboarding by automating paperwork, training, and orientation processes.

Performance management

An HRM software suite may include tools for setting goals, conducting performance reviews, and providing feedback to employees.

Security

Many HRM software systems offer robust security features to protect sensitive employee data, ensuring that it remains confidential and secure.

Compliance and reporting

Leading HRM software can generate reports and facilitate compliance with labor laws and regulations. This is crucial for avoiding legal issues and financial penalties.

Cost reductions

By automating various HR processes and reducing paperwork, HRM systems can lead to cost savings and improved resource allocation. For example, you may not need dedicated payroll specialists on staff if your HRM software automates payroll deductions and processes.

Scalability

As a business grows, robust HRM systems can easily scale to accommodate more employees and additional HR functions without significant disruptions.