Why the Human Resources Department is More Important Than You Think

While the human resources department of many businesses is often brushed aside as a simple administrative necessity where payroll is managed, it can actually play an important role in shaping the firm’s overall strategy, finances, conflict resolution, and many other areas that can mean the difference between success and failure.

Let’s take a closer look at 8 reasons why Human Resources is more important to a business than you might think …

1) Knowing the Value of Staff

Even in small businesses, it is sometimes difficult to fully appreciate the value of individual staff members and how this relates to revenue. Having a dedicated HR team, where someone spends time assessing this ‘human capital’ will make sure you don’t lose staff that are integral to the business and you’ll be ready to find suitable replacements if you do.

In fact, it can be even more important for smaller businesses where staff might have one official title but do any number of cross-functional tasks.

If that person leaves, a massive void can be left. A good HR department makes sure that the process runs smoothly.  

2) Makes the Budget Go Further

If your business has a tight budget or relies on finance the HR department can formulate ways of reducing costs by implementing more efficient workforce management, more realistic salaries, or even assessing whether you require that number of staff in the first place.

It’s not all about making people redundant or paying them less though—HR can also negotiate better rates for health care coverage and other employee benefit plans.  

3) Keeping Employees Happy

A productive employee is a happy employee and having a clear and effective conflict resolution process plays a role in that. If a member of staff has a concern, they need to feel comfortable that they can broach the subject, will be listened to and a fair solution reached.

Someone from Human Resources tasked with overseeing staff relations can go a long way in making the business run smoothly and happily.

4) Training

Businesses are always evolving and so are the underlying technologies and practises of which their industry is based. There will be times when existing staff need to be re-trained as things move forward or new staff need to develop their skills before moving forward with their new job.

Human Resources are responsible for assessing the training requirements of the company and implementing it effectively.

This can be much more cost effective than firing and hiring people as and when different skills are needed.

5) Employee Satisfaction

In larger companies, it can be difficult to ascertain how positive the work environment is and how satisfied employees really are. HR will use an employee satisfaction measure based on surveys and focus groups, giving you a better understanding and helping to improve the situation.   

High employee satisfaction can also be promoted as a way to draw new talent to the company.

6) Measuring and Managing Performance

One responsibility of Human Resources is to implement a performance management system that can unobtrusively track high and low performers, making it easier to determine who should be promoted, where to allocate tasks (i.e. matching skill and performance levels), and who might need letting go or moved into a lesser role.

7) Tagging Future Leaders

A good Human Resources team can recognize the qualities of a future leader early-on and spot talent outside of the company that could bring it great benefit. Getting people into the right roles and getting young people on board who have the capability to progress is important for the long-term success of the business.

8) Public Image

All businesses aim to be an ‘employer of choice’—a company that is recognized for having high employee satisfaction and for being a number one choice in their industry for job seekers.

It is Human Resources that help you attain this coveted status by hiring the most suitable candidates, allowing for career progression and otherwise keeping them happy during their time at the company.

Do you own a business with a dedicated Human Resources department or do you yourself work in HR? Let us know your experiences and opinion about how important it is for the overall success of the business.


What do you think?


Written by Virily Editor

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