What is HR and why is it important?

Every organisation has three main resources: physical resources, financial resources and people. Sometimes, we forget about that third resource, but that’s a mistake. People are undoubtedly one of the most valuable assets a business has, and they need to have solid support to thrive and maximise their input.

That’s where a human resources strategy comes in. A good HR strategy will help people in an organisation be more successful in their roles, which in turn helps the business be more successful.

Human resources can affect every aspect of a business, and it and play a real role in growth, from recruitment to restructuring to business strategy. As you might have gathered, HR is a complicated thing. Below, we break it down so you can understand exactly what it is, why its important, and how its role could evolve in the future.

What is Human Resources?

In very simple terms, human resources is a group of people in an organisation who are responsible for managing the life cycle of all employees. That includes recruitment, hiring, onboarding, training and managing employee benefits, through to their eventual exit from the business. If you want to get really specific, it is truly a resource for the humans within an organisation.

When a human resources department is run effectively, it will create an ideal workplace culture and environment for all employees. It should help enable those employees to contribute to the business in a productive way and get everyone closer to achieving organisational goals.

Why is Human Resources Important?

Human resources is an important function within any business. As we’ve said above, it can and should actively support an organisation’s workforce in the fulfilment of business goals.

Here are five things human resources contributes to that highlight how important it is to any business, big or small.

  1. Valuing people
    Making sure your people understand how important they are to the organisation and recognising their worth is so important. Employees who feel like their employer listens to them and values them are more likely to stay with the company for longer. That’s good for business, since hiring can cost thousands of pounds. Also, if people feel that they’re valued, they’re likely to bring more fresh ideas to the table.
  2. Protecting employees
    Maintaining a high quality of work life and protecting people’s safety and comfort is an important function of an HR department. If employees don’t feel well taken care of, they’re more likely to disengage from their work.
  3. Investing in upskilling
    The need for continuous learning is so important for a future-focused strategy, and maintaining a culture that supports learning is the function of an HR department. Those skills needed for the future are constantly changing, so making sure your people can adapt is directly correlated to business success.
  4. Going beyond technical skills
    Again, skills are super important. But, this isn’t just about knowing how to use the latest software or understanding how technology work. This is about going beyond those hard skills and developing the right kinds of soft skills, like adapting to change and working collaboratively.
  5. Employee satisfaction
    Every person who works for your organisation should enjoy what they do, and find it fulfilling. Organisations have a responsibility to ensure that’s the case. This is good for the bottom line, as well as the wellbeing of your workforce.

What does HR do?

You can break human resources down into three main functions, which are managerial, operative and advisory.

Managerial functions

  • Planning: This makes sure what a business needs is being achieved by the employees it has. That involves analysing the people already in an organisation, forecasting who will be needed in the future, and then balancing all that against business goals.
  • Organising: This is about developing an organisational structure that again aligns with business goals. The main outcome of this function is building an org chart.
  • Directing: More about organisational goals here, this function is about making sure people are contributing at their maximum capacity and are motivated to do so.
  • Controlling: This function is about evaluating the planning, organising and directing, and if anything is off track, making plans to get it back on track.

Operative functions

  • Recruitment and selection: This is about building a pool of candidates and choosing the right ones to join the organisation. This is one of the biggest challenges in HR.
  • Job design: This involves describing what a job is, including required qualifications, skills and experience that would make someone a good fit.
  • Performance management: Once you have an employee hired, this function involves analysing that person’s performance. That includes feedback, goal-setting and constant communication.
  • Learning & development (L&D): A favourite at Avado, this function is all about supporting your employees in upskilling and reskilling to help them be the best they can be at their jobs. This is important in hiring, retention, and individual’s movement within your company.
  • Compensation management: This function is about pay and figuring out how much each person in your company should be earning. That includes salaries, bonuses, incentives and benefits.
  • Policies: Conceptualising, communicating and implementing any organisational policies is the mission here. All of these are key in ensuring that all employees are treated fairly.
  • Employee welfare: This function is all about supporting employee wellbeing. Offering benefits that support both physical and mental health are important for loyalty and retention, and that importance will only increase.

Advisory functions

  • Advising senior management: It is the responsibility of the HR department to keep senior management abreast of any policies and procedures. That keeps them in the loop on any changes among employees and can help them better control employee morale.
  • Advising heads of departments: As with advising senior management, this involves keeping department heads in the loop on any changes to job descriptions, or processes involved in recruitment or hiring.

What does a HR department do?

When a business is new and small, it might seem like an entire department dedicated to human resources isn’t necessary. But, if you want your business to grow, or if it is already growing, you’ll find it isn’t so easy to deal with the day-to-day functions of managing people.

Along with all of the above functions we’ve outlined not being properly carried ouot, there are real consequences. It can negatively affect employee satisfaction, company culture and the long-term success of the business.

If you don’t have a good HR strategy, your employees won’t feel supported, and their motivation to do well will likely decline. That will absolutely affect your bottom line, which goes to show that HR and business success are interwoven.

If you’re known as a good employer with a great HR department, you’ll attract better talent, which is also beneficial for your customers. Uber is a great example of this. After years of catastrophic HR events like sexual harassment and ignoring employee feedback, people boycotted their service.

The pandemic has also shown the cracks (or strengths) in HR departments. As Covid forced companies to revaluate their business models, HR has become an even more important piece of this puzzle. From hybrid working to better supporting employee mental health, what HR teams do is integral to come out on the other side of this unscathed.

The future of HR

The HR profession and the functions that come with it are changing. According to a 2020 report from Sage Accounting surveying 500 HR leaders in the UK, 80% of those leader are already adopting new ways of working.

What does that mean for the future of HR and the future of organisations as a whole? There’s no doubt the impact will be massive, and that changes will continue to happen at a rapid pace.

Future HR trends

Hybrid working – This will become the norm for all organisations, with some employees working completely remotely, some in office part time, and some in office full time. That means HR teams will have to work to develop a solid people-centric culture that functions both in-person and in a virtual environment.

Continuously improving the employee experience – This has always been a priority, but it will be an even bigger focus when it comes to recruiting and retaining the best talent. HR departments will have to invest in tools that will improve the employee experience.

Upskilling across the entire business – The capabilities gap is a massive problem that will only grow if it’s not address, a fact that we explored in our recent Beyond Skills report. A great idea is to start from the inside and upskill your people working within HR. This can set the tone for other departments across your organisation investing in upskilling.

Changing employee benefits – Prior to the shift to remote working, employee benefits were focused on on-site office things like childcare and subsidised food. Now that we’re moving to remote working, those benefits will have to shift to what works for this new workforce, including things like home office equipment and wellness programmes.

Finding the human connection in a data-driven world – This one will be a trend and a challenge for departments throughout an organisation. For HR, it’s about finding that balance between tech and people, and ensuring they know which parts of the business people can bring the most value to. As well, HR departments will need to help their workforce become more tech-savvy and data-oriented.

Future challenges for HR

The biggest challenge HR departments will face in the future is preparing people for change. The right kind of change that happens across the organisation’s entire culture has to be lead by leadership, and when that happens, real behaviour changes will follow.

HR needs to ask questions both of themselves and of their leadership teams like, “How can we keep creating value with the current roles we have?” and “How can data help us understand the health of the business?”

Adopting an agile approach will be fundamental to navigating change. HR is essential to the shift to agile and can help transform a business. Things like developing the people-management process, creating new career paths for agile teams and overhauling capability building will be essential to sustainable growth.

As we’ve said, and we hope you’ve now come to know, human resources is so essential to the success of a business. And, as we move ahead through 2021 and into a vastly different working world, developing your HR teams is integral.

About Avado

At Avado, we believe in unlocking potential and changing lives. Learning with us makes real, lasting change happen for individuals, and entire organisations. Through our connected learning experiences in Data, Marketing, People, and Agility, we can help you drive real change.

Going beyond just technical skills, our award-winning programmes help teams find success in an ever-evolving world. With a strong emphasis on the behavioural and mindset shifts needed to embed new capabilities, we’ll work together to develop leaders, teams and individuals through interactive learning experiences.

Tara MacInnis

Posted July 13, 2021