# Human Resources: Key Roles and Responsibilities in Business

![Human Resources](https://www.investopedia.com/thmb/0mBpzktw7lgu7YKW9y0q9o-HrPw=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/Human-Resources-2ad3f1b88ed448b193e82c9fed171fcd.png)

*— Xiaojie Liu / Investopedia*

## What Is Human Resources (HR)?

The Human Resources (HR) department is vital in steering a company’s recruitment, training, and benefits administration. By fostering a positive work environment and ensuring labor law compliance, HR enhances employee productivity and retention, contributing significantly to organizational success.  

### Key Takeaways

*   Human resources (HR) is vital for recruiting, screening, and training job applicants, as well as managing employee benefits and compliance with labor laws.  
    
*   HR departments focus on improving employee productivity, fostering a positive workplace culture, and ensuring legal adherence, which contributes to overall company success.  
    
*   Strategic human resource management (HRM) enhances workforce capabilities and aligns employee goals with organizational objectives for long-term success.  
    
*   Modern HR practices often include outsourcing traditional tasks like payroll and benefits administration to focus on strategic, value-adding initiatives.  
    
*   Companies like Google illustrate the impact of proactive HR departments by offering comprehensive employee benefits that improve retention and productivity.

## The Evolution and Functionality of Human Resources (HR)

John R. Commons, an American institutional economist, first coined the term “human resource” in his 1893 book "The Distribution of Wealth." However, it wasn't until the 20th century that HR departments began to take shape, formally addressing misunderstandings between employees and employers.

Today, an HR department is a vital part of any business, regardless of its size. The main goal is to boost employee productivity and protect the company from workforce issues.

HR responsibilities include:

*   Managing compensation and benefits
*   Recruiting and retaining employees
*   Handling terminations
*   Maintaining compliance with any laws that may affect the company and its employees  
    

These tasks help keep the workplace productive and compliant, making HR vital to any company.

## Essential HR Activities and Their Impact

Here are key HR activities that add value to a company:

*   Managing and utilizing people effectively
*   Linking performance appraisals and compensation to competencies
*   Calculating fair compensation rates and putting together a comprehensive list of benefits 
*   Developing competencies that enhance individual and organizational performance
*   Increasing innovation, creativity, and flexibility to boost competitiveness
*   Applying new approaches to work process design, [succession planning](https://www.investopedia.com/terms/s/succession-planning.asp), career development, and inter-organizational mobility
*   Managing the implementation and integration of technology through improved staffing, training, and communication with employees
*   Navigating complex and evolving labor laws to avoid legal issues, and regularly conducting compliance audits to maintain best practices and adherence to regulations

## Effective HR Management Strategies for Business Success

In the 1980s, HR departments began focusing on strategic initiatives due to research linking employee issues to long-term success.

These strategies are collectively called human resource management (HRM). They provide a comprehensive approach to managing employees and an organization’s [culture](https://www.investopedia.com/terms/c/corporate-culture.asp) and environment. HRM focuses on recruiting, managing, and guiding the workforce to align with the organization's goals.

HR departments adopting HRM strategies are more active in enhancing the workforce and recommending processes, approaches, and business solutions to management.

Google is one example of an organization that has adopted a more active approach to employee relations through its HR department. The company offers numerous perks, such as employee assistance programs focused on mental health, on-site meals and snacks, fitness centers, massage programs, and ergonomic support, believing happy employees are more productive.

> **Fast Fact**
>
> In 1901, National Cash Register Co., known today as NCR Corp., established what is thought to have been the first personnel department (the HR predecessor) to manage wages, workplace safety, and employee concerns.

## HR Outsourcing: When and Why Businesses Choose It

Since the mid-20th century, some companies have [outsourced](https://www.investopedia.com/terms/o/outsourcing.asp) some of the more traditional administrative, transactional HR functions to free the department to recommend and implement more meaningful, value-adding programs that positively impact the business.

Functions that may be outsourced in this process include:

*   Payroll administration
*   Employee benefits
*   Recruitment
*   Background checks
*   Exit interviews
*   Risk management
*   Dispute resolution
*   Safety inspection
*   Office policies

Modern tools like recruitment software can improve HR department efficiency. This allows HR to focus more on adding value.

## What Is the Role of Human Resources?

A human resources department focuses on recruiting and retaining employees within a company. HR is responsible for finding, hiring, and training employees, overseeing employee relations, and managing benefit programs. It's the go-to place for employees to ask questions about their roles, address concerns, and air grievances.

## What Is Human Resource Management (HRM)?

Human resource management (HRM) is a strategic approach to managing company employees, the work culture, and the work environment so that people can function as effectively and productively as possible. Typically, it involves using [metrics](https://www.investopedia.com/terms/m/metrics.asp) to measure workforce success.

## What Are the 5 Functions of Human Resources?

There are numerous important human resources functions carried out by an HR department. Five well-known types of responsibilities are:

*   Recruiting, hiring, and onboarding new employees
*   Handling employee compensation and benefits
*   Offering employee job/career development
*   Addressing work-related issues of individual employees
*   Developing policies that affect a working environment company-wide  
    

## The Bottom Line

Human resources (HR) plays a pivotal role in managing a company's entire employee lifecycle from recruitment and training to termination or retirement. HR departments must navigate complex labor laws and stay current with industry trends to ensure compliance and foster a positive workplace culture. By implementing strategic human resource management (HRM) initiatives, HR departments aim to enhance employee engagement and productivity, which are crucial for organizational success. Outsourcing administrative tasks allows HR to focus on value-adding activities that improve both employee welfare and corporate performance.

> **Article Sources**
>
> 1.  John Rogers Commons. “The Distribution of Wealth.” A.M. Kelley, 1963.
>     
> 2.  University of Massachusetts. "[Exploring 7 Key Functions of Human Resources](https://www.umassglobal.edu/news-and-events/blog/key-functions-of-human-resources)."
>     
> 3.  Google Careers. “[Benefits at Google](https://www.google.com/about/careers/applications/benefits/)."
>     
> 4.  David G. Collings, Hugh Scullion, and Paula M. Caligiuri. “Global Talent Management,” Chapter 5. Routledge.
>     
> 5.  Whatcom Community College. "[2.1 Strategic Planning: Human Resource Management](https://textbooks.whatcom.edu/bus230/chapter/2-1-strategic-planning/#:~:text=In%20the%20past%2C%20the%20personnel,the%20union%20after%20a%20lockout.)."
>     
> 6.  University of Washington, Paul G. Allen School of Computer Science and Engineering, Course Web Service. “[Outsourcing: Past, Present and Future](https://courses.cs.washington.edu/courses/csep590/04au/clearedprojects/Dorwin.pdf),” Page 3 (Page 6 of PDF).