Why Is HR Important? The Top 6 Reasons You Need to Know

Human Resources (HR) plays a crucial role in every business, regardless of its size. HR departments contribute to the growth and development of companies and teams in various ways. Whether they serve as the initial point of contact for employees or handle tasks such as managing compensation and assessing performance, human resources encompasses a wide range of functions, highlighting its significance to a company.

While many founders and business owners excel in their respective industries, they may not possess inherent management skills. As companies expand, it becomes challenging to handle employee benefits, payroll issues, and conflicts within the workplace. At some point, management must consider the introduction of an HR department.

So Why Is HR Important for your business? Let’s examine why strategic human resource management holds such importance.

A key factor in the success of many HR departments is their approach of treating the company’s employees as valued customers. Adopting this perspective enables HR to maintain a strong focus on the primary objective: supporting employees in performing at their best.

Although the HR department handles various aspects, the majority of their responsibilities can be categorized into these six fundamental functions:

Ensuring effective applicant tracking and strategic hiring. HR plays a crucial role in providing the company with competent and dependable talent.

Overseeing employee benefits and leave policies: HR also takes on the responsibility of managing schedules, leaves, and benefits, such as health insurance.

Developing managers and employees through training: One of the valuable contributions of HR is their ability to enhance the workforce by training managers to become better leaders and equipping employees with a broader and more diverse skill set.

HR professionals undergo specialized training to effectively mediate conflicts among employees and between employees and management.

Streamlining the onboarding process: Not all company environments are easy to adapt to, as some businesses have distinct cultural norms. HR takes on the task of making the integration into the company culture smoother and more seamless.

Resolving internal conflicts. HR professionals undergo specialized training to effectively mediate conflicts among employees and between employees and management.

Addressing legal matters: Lastly, HR professionals are responsible for ensuring compliance with labor and employment laws and handling complaints related to discrimination and harassment.

Why Is Human Resources Management Important?

The significance of human resources can differ for each business. If you’re contemplating the importance of human resources management and whether your business can operate without hiring someone to fulfill this role, let’s delve into the importance of each HR function in the following sections.

Typically, the hiring process lasts around three to six weeks on average, but it can extend for months or even years.

Furthermore, there is the risk of hiring an unsuitable candidate for the role or the company, which can lead to future conflicts and potentially result in losing an employee. In such cases, the hiring process needs to start again, and considering that turnover costs can reach 1.5-2 times the employee’s salary, high turnover rates can have a detrimental financial impact on your company.

HR professionals play a crucial role in managing the recruitment process, making it more streamlined to identify talented individuals, hire the right candidate, and facilitate their quick integration into the company. This assistance from HR can alleviate the challenges associated with hiring and minimize the potential negative consequences.

Salary is not the sole factor that current and potential employees use to evaluate a job. Benefits and time off are also significant considerations and play a crucial role in fostering employee engagement within the workforce.

In 2023, there are four primary categories of benefits that employees value: leave and time off, health and well-being, work-life balance, and retirement and financial benefits. However, without the expertise of a professional who comprehends the importance of prioritizing these benefits, these essential aspects often do not receive the necessary attention and strategic planning they deserve.

Developing managers and employees through training:

It is commonly stated that “people don’t leave companies, they leave managers.” In fact, a research study involving over 7,000 participants revealed that 50% of those who left their jobs did so due to issues with their managers. While this may hold true in certain cases, the solution to the overall problem is not that straightforward.

Developing managers and employees through training:

Very few individuals have such a deep passion for their work that they are willing to stay in the same role throughout their entire career. Most employees desire upward mobility, seeking additional challenges, responsibilities, and financial rewards. When employees feel that their efforts and talents are not recognized or appreciated, their level of engagement significantly decreases, and thoughts of leaving the company start to arise.

Having HR professionals who can assist employees and managers in their skill development can shift the dynamics in this struggle. Implementing employee training and development programs helps employees progress towards qualifying for more advanced positions. Simultaneously, providing HR training and development opportunities for managers equips them with the capabilities to effectively motivate their teams and elicit their best performance.

Frequently, the onboarding process is left to chance, neglecting the potential benefits it can bring in terms of increased employee retention and productivity.

Human resources plays a pivotal role in this aspect by designing a more captivating and efficient onboarding process. Furthermore, they can tailor the onboarding experience to be job-specific, ensuring a more tailored and targeted approach.

In 2023, the typical employee in the United States spends approximately 2.8 hours per week addressing workplace conflicts. Given that 85% of US employees encounter some form of conflict at work, managers spend an average of 6 hours per week attempting to find resolutions.

This is why having accessible HR professionals is beneficial. HR teams that have received training in conflict resolution are well-equipped to handle the challenges posed by interpersonal conflicts. Additionally, providing training to a single HR department is more manageable and cost-effective compared to training an entire organization of managers. By reducing conflicts in the workplace, employee satisfaction increases, resulting in greater levels of engagement with their work.

Only in the year 2022, the Equal Employment Opportunity Commission (EEOC) resolved more than 65,000 cases related to discrimination. This figure does not include all the charges that were filed, indicating that numerous incidents likely went unreported due to factors such as fear of retaliation, lack of evidence, and limited understanding of legal rights.

In the absence of a dedicated HR professional, it becomes challenging to stay updated on the relevant laws and regulations necessary for ensuring the company’s compliance. Moreover, without an HR professional available to address problems, issues may remain unresolved and unnoticed by the company until they escalate to the point of litigation.