Human resource management: All you need to know

Human resource management (HRM) is an organisation’s structured and strategic approach to managing and retaining talent.

It includes all the processes and tasks performed by the HR team and aims to align the employees and organisation’s vision, mission and goals.

In a nutshell, HRM is all about building a workplace where people thrive, and the company thrives along with them.

Here’s what we cover in this article:

• What are the main functions of HRM?
• What are the responsibilities of a good HRM?
• HRM for small and medium-sized enterprises
• How can HR software support you?
• FAQs on HR
• Final thoughts on HRM

What are the main functions of HRM?

Let’s break down the nine key functions of HRM:

1. Hiring

In order to bring the best-qualified people into an organisation, HR needs to attract these candidates with the right sourcing strategies.

Once they have attracted the top talent, they need an effective selection process to choose the candidates who fit the organisation’s culture.

2. Participation and communication

The HR function works for the business, but it is also vital that they represent the voices of the employees and have ways to facilitate two-way communication, whether that’s in the form of satisfaction surveys, 360-degree feedback, or town hall meetings.

Employees should feel comfortable coming forward with comments and grievances.

3. Health and safety

Another important role of HR is to create and implement health and safety regulations. It’s important that they not only have these documents but that employees are aware of the regulations.

These will vary across the type of industry and specific health and safety concerns.

4. Wellbeing

One way HR can help employees perform at their best is to promote ways to stay healthy physically, mentally and emotionally.

There are many wellbeing initiatives a company can offer, from free counselling to flexible working initiatives. It is HR’s responsibility to promote and run these initiatives, and be the liaison between the employee and third parties.

5. Industrial relations

Unionisation is still common in Europe. However in the UK, only 23.5% of employees are members of a union.

But one of the functions of HR is to maintain good relationships with unions and other collectives, and quickly resolve any potential conflicts.

6. Compensation and benefits

Rewards help to attract the best employees, and this can include monetary benefits such as a competitive salary and bonus packages.

Then there are other benefits, such as health insurance and flexible working opportunities.

7. Performance management

A great way to motivate and support employees and also retain talent for the organisation is to source and promote talent internally whenever possible.

One way to ensure staff are qualified to be promoted is to communicate career paths and provide guidance and development training.

8. Training

Some employees have continuing professional development requirements to maintain qualifications for the job, and UK law requires employers provide opportunities for training and development.

HR must assess the training needs of their employees to ensure they’re up to date with the latest skills and knowledge required for their roles, and offer training to their employees that is relevant to their current roles and future career aspirations.

9. Data and analytics

This function has the power to turn large amounts of employee info into valuable insights.

HR data is basically the raw material—everything from employee performance to how many days off people are taking.

Analytics then make sense of all this data and helps HR figure out trends, identify areas for improvement, and make smart decisions about the workforce.

What are the responsibilities of a good HRM?

HR is tasked with creating and managing systems that improve workplace efficiency and employer-employee relationships.

This is a broad definition, but we can narrow it down to the following critical responsibilities:

Staffing

HR is responsible for the comprehensive process of managing a skilled and qualified workforce.

Hiring managers must first start with a hiring budget, then attract and interview qualified candidates, and finally, make selections, negotiate compensation and onboard new hires.

Developing workplace policies

When a new or revised workplace policy is needed, whether that’s covering health and safety, dress code or remote work, the HR team typically first consults with senior management.

Then they will be responsible for writing up the document and communicating it to employees.

Administering pay and benefits

In order to attract and retain talent, compensation must be comparable with the market, so HR is responsible for designing and implementing competitive salary structures.

A fair pay system should consider an employee’s years of service with the business, experience level, education and skills.

Resolving conflicts

Compensation isn’t the only thing that retains talented employees.

HR needs to proactively address issues with the workplace environment, the culture and relationships between team members.

Training employees

Helping teams develop new skills increases productivity and job satisfaction.

Some of the training programmes run by HR include technical and soft skills’ development, leadership training, diversity and inclusion workshops, cyber security awareness and ethics training.

Complying with regulations

Laws that affect the workplace are constantly evolving, for example discrimination, equal pay, health care and minimum wage laws.

HR professionals are required to keep up with these changes and ensure the organisation is complying with these laws.

Maintaining safety

Safety in the workplace means protecting not just the employees’ physical health, but also their private information. T

To ensure GDPR is maintained, it is HR’s duty to implement digital security measures.

HRM for small and medium-sized enterprises

Small business owners are used to wearing many hats – being responsible for not only the strategic oversight and leadership of a business, but also the day-to-day tasks, especially when it comes to HR duties.

But even for a small business, the HR functions are extensive. It can quickly take over an owner’s time with too many hours spent every week on HR administration.

Hiring a dedicated HR person or setting up an HR department requires an initial investment of time and money, but there are many short and long-term advantages to doing so:

• Save money and ensure legal compliance. Making the wrong HR decisions can end up costing businesses a lot of money. For example, when it comes to staff turnover, Centric HR estimates the cost of replacing an employee is on average between six and nine months’ salary. HR professionals can also help small business owners navigate complex employment laws and regulations, reducing the risk of legal issues and penalties.
• Save time. An owner’s time is extremely valuable, so by delegating HR functions such as hiring, onboarding and policy development, it frees up their time to focus on important high-level management and strategic decisions aimed at growing the business.
• Improve communication and employee satisfaction. Skilled HR professionals facilitate effective communication within the organisation, fostering transparency and enhancing employee trust. HR expertise allows for the implementation of employee engagement initiatives, training programmes, and benefits that contribute to higher job satisfaction and increased employee retention.

How can HR software support you?

A large part of HR is record keeping, with most HR documents needing to be kept for compliance and audit purposes, from employment contracts to termination letters, benefits enrolment forms, timesheets and disciplinary action forms.

So using HR software to automate daily tasks and streamline HR processes is a huge advantage to creating an effective HRM.

Depending on your organisation’s size and budget, there is a range of technology available with a variety of service options.

Basic HR software may offer recruitment services, payroll and benefits, while more complex solutions tend to include talent management, international compliance support and advanced analytics.

If you are looking for software to help you automate more of these HR tasks you can choose between:

• Human Resource Information Systems (HRIS) to perform core HR functions, such as applicant tracking, payroll and benefits administration.
• Human Resource Management Systems (HRMS) such as Sage HR (a modular product for small to mid-sized companies) and Sage People, (a comprehensive service for mid-sized and global businesses) that offer the benefits of HRIS, plus talent management services.

FAQs on HR

What is HR compliance?

HR compliance ensures that an organisation adheres to workplace laws, regulations, and industry standards. It helps prevent legal issues, penalties, and creates a fair and ethical workplace.

What is the purpose of performance management?

Performance management aims to set expectations, monitor employee performance, provide feedback, and align individual goals with the organisation’s objectives.

It often includes regular feedback sessions and annual performance reviews.

What are the five main areas of HRM?

• Recruitment and staffing: Involves identifying workforce needs, creating job descriptions, and implementing strategies to attract, assess, and select suitable candidates for various positions within the organisation.
• Performance management: Encompasses setting performance expectations, regularly evaluating employee performance, providing feedback, and aligning individual goals with organisational objectives to enhance overall productivity.
• Compensation and benefits: Focuses on maintaining competitive salaries, as well as managing benefits programmes, to attract and retain talented employees while ensuring compensation is fair across the business.
• Employee relations: Involves creating a positive workplace culture by fostering healthy relationships, resolving conflicts, and addressing employee concerns.
• Training and development: Aims to enhance employee skills and knowledge through tailored training programmes, workshops, and ongoing development initiatives, ensuring that employees stay aligned with organisational goals and industry trends.

How does HR contribute to employee development?

HR supports employee development through training, performance appraisals, and career development initiatives.

HR needs to identify skill gaps, facilitate learning opportunities, and help employees progress within the organisation.

What is HR analytics and how is it used in HRM?

HR analytics involves using data and statistics to analyse and interpret employee-related information.

In HRM, analytics is extremely valuable in order to make informed decisions about talent management, recruitment strategies, and overall HR effectiveness.

Final thoughts on HRM

From bringing in new talent to developing existing team members, HRM must be across all areas of the business.

HRM is the function that creates workplace policies, ensures regulations are being followed, and fosters a positive environment where people want to work.

As workplaces continue to evolve, HRM is the glue that helps organisations adapt, makes sure that employees feel supported and heard, and the business is hitting its goals.

So, think of HRM as the strategy for building a team that’s not just working, but thriving, and moving the business forward.