Most people know that human resources departments handle things like hiring and paying employees, but they are often tasked with lesser-known responsibilities as well. At large companies, an entire team of HR professionals may divvy up these tasks into smaller units, such as managing employee safety or setting up employee benefits programs. At smaller businesses, however, the business owner and an administrative assistant may manage HR functions. Regardless of company size, HR serves many roles within an organization, and they can be divided into 10 core functions.
What are human resources?
Human resources is the term used to describe functions within a company that support people within the workplace. Some firms refer to the HR role as "people operations," a more human-focused evolution from the outdated "personnel department."
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What are the core HR functions?
The core human resources functions cover all people-related worker activities, from the time employees are recruited and hired to the time they retire or leave the company. Here are the 10 core functions of HR:
1. Find and hire great employees.
Whether you do the hiring yourself or outsource recruiting to an executive staffing firm, HR's primary responsibility is to find the right people to sustain and grow your company. The tools of the trade include job boards and recruitment software that keep track of applicants, candidates you've interviewed, and people who have passed your screening criteria and background checks. [In need of recruiting software for your business? See our recommendations for the best recruiting software from our sister site Business News Daily.]
HR employees known as recruiters or talent managers identify your hiring needs, create the job descriptions, post the jobs and manage the candidates to ensure you hire the best talent for the job. You can also use staffing firms and executive search firms to help you find and recruit talent for your business.
2. Ensure fairness and compliance.
HR staffers are trained to comprehend and interpret federal, state and local labor laws. They serve as business advisors, providing details about the Fair Labor Standards Act (FLSA), the Affordable Care Act (ACA) and anti-discrimination laws so that you can avoid expensive mistakes and fines.
Your HR team creates and maintains your employee handbook, ensures you have the correct labor law posters hung, updates your policies when laws change, provides onboarding to new hires to ensure they're aware of workplace requirements, and investigates claims of harassment, discrimination or company violations within your business.
3. Drive productivity and results.
Employees know when they're being discriminated against or treated unfairly, and that affects their productivity and loyalty and, in turn, your bottom line.
Conversely, employees know when they work for a company that treats people well. That's why HR leaders focus on helping workers understand the business's objectives and how employees' performance contributes to those goals. In that sense, HR serves as an advisor and coach to the business, determining what will help people do their best work.
4. Keep employees healthy and safe.
The Occupational Safety and Health Administration (OSHA) requires employers to keep employees safe and healthy at work. The rules vary according to the kind of firm. In an office, for instance, safety may include having personal protective equipment available for visitors, emergency exits labeled and a fire escape map posted. In a commercial kitchen, it may mean ensuring that employees are trained on how to use equipment safely and that underage workers aren't put in harm's way.
Once a company reaches 50 or more full-time staff, it's HR's role to ensure those employees have the employee health insurance benefits required by the ACA. They'll negotiate with benefits providers to help your business get the best health insurance rates. HR benefits experts understand the different types of resources, such as health savings accounts and employee assistance programs, that can work to keep your employees healthy, thereby lowering absenteeism.
5. Optimize the organizational structure.
HR supports your business in structuring the organization to improve efficiency and reduce noise and conflict. At a smaller firm, that may mean creating an organizational chart to show who reports to whom, as well as making a contact sheet so employees know whom to call for questions on things such as ordering office supplies or getting a copy of their paystub.
As a firm grows, it often needs to restructure jobs and create supervisor responsibilities. HR experts in organizational design can help determine what kinds of leaders and team structures are needed. They can assist in determining the best span of control (how many workers report to each manager) and clarify how much decision-making authority rests at each level of the organization.
6. Coach, train and develop staff.
HR professionals focus on people, so they are well versed in psychology, communications, body language and leadership. They're often called on to provide training and coaching. At a smaller business, that probably includes welcoming new hires on their first day and getting them set up in their workspace.
At a bigger firm, the HR team may teach employees about software, business practices and company culture. Larger corporations hire teams of people to manage employee development, provide one-on-one coaching, train managers on leadership skills, and help employees embrace new products, software upgrades, policy changes and more.
7. Promote best practices.
A core role of HR is to be the voice of what workers need as humans (fairness, connectedness, and communication) and what they need as workers (tools, processes and software). For example, HR managers help remote teams find and use tools that keep them productive on the job, such as Zoom and Slack.
It's often an HR staffer who updates the desk manual, maintains standard operating procedures and ensures that forms used by the business – such as job application forms, direct deposit forms, requests for time off and employee personnel folder documents – are up-to-date.
HR teams also bring tools (such as personality assessments) that can improve team communication, presentation decks to promote company values, and internal employee communication platforms to keep workers aligned with business goals.
8. Engage and motivate employees.
An HR team also understands employee motivation and can coach managers on a variety of activities, such as how to interview without bias, motivate low-performing employees and reduce interpersonal conflicts on the team. They're sometimes the event planners, too.
It's HR's job to stay up-to-date on more than just labor law. The human resources team embraces and drives best practices such as ensuring diversity and inclusion, managing remote work teams and providing effective peer feedback. HR experts understand how crucial it is to listen as part of engaging employees and helping them work through on-the-job issues.
9. Innovate and manage change.
At a small business, the business owner is usually the driver of change and innovation. However, once you hire more than a handful of employees, you'll need someone with excellent communication, people skills, project management and change management expertise to get your team to buy into your new business idea, product offerings, software solution or executive team.
The HR person or department can help you identify the impacts of these changes on people and build a plan to mitigate the risks inherent in rapid growth or other business changes, like a merger or acquisition. HR helps you strategize the best approach and bring tools from multiple disciplines (training, compensation, organizational design) to ensure your changes stick.
10. Minimize annoying paperwork.
This core HR function is listed last because it's the bane of HR. States require you to report new hires. The federal government requires year-end paperwork, OSHA requires reports, and employees need paystubs and benefits forms. And that's not all; job applications, garnishments, and requests for family medical leave are a paperwork nightmare. It's HR's job to minimize the paperwork by streamlining the business processes required when you have workers (contract or employees) on staff.
HR experts can help you choose the best systems and processes to manage all of the administration, forms, filings and mandatory paperwork required of employers. At a smaller business, they may be the keepers of the forms, timelines and reports. At a larger firm, HR experts may help you find and implement technology solutions, ranging from a simple project management board to track new-hire onboarding to a full-blown human resource management system that manages electronic document storage, benefits enrollment and payroll self-service for your team.
Should you do HR yourself?
The decision to handle HR yourself, hire someone on your team to manage HR or outsource your people operations to an external HR expert depends on the business's size, industry, budget and structure. Here are some examples of how different business types might handle HR:
- Mom-and-pop businesses. A retail or service company managed and staffed by family members may not require a full-time HR manager. The business owner or spouse can often hire new employees on Indeed or similar job boards and pay them using online payroll software.
- Tech A small firm wanting to attract and retain highly educated or technical staff may prefer to partner with an external HR consulting firm for specific HR activities, such as recruiting and leadership coaching, as well as to ensure that compensation and benefits are competitive.
- Manufacturing company. A midsize company in a regulated environment may need HR support for more than hiring; for example, they may need help with OSHA compliance and workers' compensation. Or, they may need an HR resource to set up and manage HR policies, processes and software for scheduling, timekeeping and overtime calculations.
- Growing businesses. Any company with over 15 employees needs HR support to ensure federal labor law compliance. Firms with over 50 employees must offer health insurance as well, and this requirement often necessitates outside benefits expertise to set up and manage enrollment.
- Larger or multistate firms. Any company that has 50 or more employees or hires workers across multiple states likely needs the support of a full-time HR manager or external HR service provider to navigate the myriad labor laws affecting larger, multistate employers, as many requirements vary by locale.
What types of HR solutions are available?
Cloud-based HR software and virtual HR consulting firms can fill many of your business's human resources needs. For instance, a small eatery may choose to use an online scheduling and payroll system that also keeps track of employee records, while a larger restaurant may decide to sign up with an HR provider to build its employee handbook and set up secure personnel folders.
Larger firms tend to hire full-time HR employees, while the biggest enterprises have entire departments dedicated to HR activities, with subteams that focus on areas such as learning and development, diversity and inclusion, or employee benefits management.
To help small and midsize businesses compete with bigger companies, HR consulting firms offer both niche services (e.g., staffing, outplacement, training, employee satisfaction surveys) and complete solutions that manage all HR functions.
Many smaller businesses aren't aware they can outsource their entire HR function to a co-employer called a professional employer organization (PEO). A PEO manages the HR, benefits, payroll and compliance, and you manage the workers. [Looking for a PEO service for your business? Check out our recommendations for the best PEO services.]
How is HR a value add?
When managed well, HR brings value to your organization by providing your business with people strategies to get more done and giving workers the kind of work environment that allows them to thrive.
HR saves your business money by hiring people faster, avoiding workplace conflict and reducing the expense of attorneys and lawsuits. Best of all, talented, engaged employees improve client satisfaction; get work done faster; and positively represent your brand. HR is all about ensuring you find and keep good people, which ultimately boosts your business's bottom line.