Human Resources (HR): Meaning and Responsibilities

What Is Human Resources (HR)?

Human resources (HR) is the division of a business that is charged with finding, recruiting, screening, and training job applicants. It also administers employee benefit programs.

HR plays a key role in helping companies deal with a fast-changing business environment and a greater demand for quality employees in the 21st century.

Understanding Human Resources (HR)

John R. Commons, an American institutional economist, first coined the term “human resource” in his book "The Distribution of Wealth," published in 1893. However, it was not until the 20th century that HR departments were formally developed and tasked with addressing misunderstandings between employees and their employers.

An HR department is an essential component of any business, regardless of an organization’s size. It is tasked with maximizing employee productivity and protecting the company from any issues that may arise within the workforce.

HR responsibilities include compensation and benefits, recruitment, retention, firing, and keeping up to date with any laws that may affect the company and its employees.

Key HR Activities

The following are the six key, people-related activities that HR must effectively do to add value to a company:

• Managing and using people effectively
• Tying performance appraisal and compensation to competencies
• Developing competencies that enhance individual and organizational performance
• Increasing the innovation, creativity, and flexibility necessary to enhance competitiveness
• Applying new approaches to work process design, succession planning, career development, and inter-organizational mobility
• Managing the implementation and integration of technology through improved staffing, training, and communication with employees

HR Management Strategies

Beginning in the 1980s, there was a push for strategic initiatives within HR departments. This movement was based on research related to the impact of employee-related issues on a firm’s long-term business success.

Collectively, these strategies are sometimes referred to as human resource management (HRM) strategies. HRM is a comprehensive approach to managing employees and an organization’s culture and environment. It focuses on the recruitment, management, and general direction of the people who work in an organization.

An HR department that adopts HRM strategies typically plays a more active role in improving an organization’s workforce. It may recommend 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 many employee perks, including on-site wellness centers, on-site meals and snacks, fitness centers, massage programs, and ergonomic support. For Google, happy employees are equivalent to productive employees.

HR Outsourcing

Since the mid-20th century, some companies have outsourced some of the more traditional administrative, transactional HR functions in an effort to free the department to recommend and implement more meaningful, value-adding programs that impact the business in positive ways.

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

The use of modern tools, such as recruitment software, can help to improve the efficiency of HR departments. In turn, that can give them more leeway to focus on adding ever-greater value.

The Bottom Line

A company’s human resources (HR) department manages the life cycle of each employee—from recruitment and onboarding to training and termination or retirement. HR departments also must monitor industry trends and rules to stay on top of compliance and legal issues.

Increasingly, HR departments focus on human resource management, using strategic investments and initiatives to improve an organization's workforce. The long-term goal of HRM is to create a more positive, loyal, and productive workforce, which ultimately benefits the company.