Every one of us knows that organizations achieve their targets because of employees hard work, who give their best and push organizations ahead. This shows that employees are an important part of all companies; they may be an asset or a liability to any of them. To manage employees in the right manner, human resources are needed. HR’s responsibility does not only end with interviewing or selecting a candidate; they are also responsible for the motivation and productivity an employee brings to the workplace.
In this article, we will learn about what human resources are and why they are important for small businesses.
What is Human Resource Management?
Basically, human resource management is made up of three words: human, resource, and management. Where human means a skilled labour force in a company, resource means constrained availability, and management means how to make the best use of limited or constrained resources to accomplish the goals of an organization.
In short, HRM is the process of hiring people, training them, paying them, and developing strategies to motivate and retain them for a long time. Over the years, human resources have evolved a lot. With the advent of technologies now, HRs can use the method to analyse the data related to employees using HR Analytics, through which HR can estimate how many employees left an organization during a given period or how much recruiting cost a company incurs after every employee gets hired. In this modern period, the role of HR analytics is continuously growing as analytics help companies make decisions.
Basic Functions of HR
HR performs various functions, and all the functions are of equally importance. Let’s discuss in detail functions of HR.
1. Recruitment and Selection :
Do you also remember your first interview? Obviously, every one of us This is a function that is visible to all of us. Recruiting and selecting the best candidates is one of the key responsibilities of HR. Posting a job description is part of recruitment and selection. As soon as HR managers post a job on LinkedIn or at any other source, they start receiving job applications from various candidates, and all of them are sorted by the application tracking system. It also involves interviewing a candidate, doing reference checks, and making different assessments.
Some organizations won’t hire themselves; rather, they take the help of HR consulting firms, which help organizations hire the best candidates.
2. Compensation and Benefits
Compensation is the amount of money that is given to employees for their work. Compensation does not only relate to money but also includes other benefits like extra holidays, a company car, a laptop, daycare, and many more things that motivate an employee to increase their productivity. When employees are paid right, they feel motivated, and the goal of compensation and benefits is to increase the morale of employees so that they may work in a better manner. Thus, increasing company profit.
3. Performance Management
This is also one of the main functions of HR. Performance management is the process of handling the performance of employees. There are various methods through which HR measures performance, such as 360-degree feedback, the assessment centre method, the psychological method, or the behavioural-anchored rating scale (BARS). It lets an organization know who the high performers are and who the low performers are with high potential, and vice versa. Those employees who are performing poorly may get fired, or, luckily, they may get a chance to improve themselves through training and development programs.
4. Learning and development
It is important for the employees to continuously upgrade their knowledge and skills. Through learning and development programs conducted by HR, employees can learn those skills that are lagging. Nowadays, organizations do not only focus on developing the hard skills of employees but also on developing soft skills. Training is mostly provided to the employees, whereas development programs are for future leaders such as directors, managers, and CEOs. These are the basic functions that are performed by HR. Other than this, there are many functions that are performed internally by Human Resources.
Importance of HRM in small businesses :
It is a myth that only large enterprises or businesses need human resources. But this is totally wrong, as every business was small before it became large. So, it is important for small businesses to also have an HR person who will help them find the best candidates. Let’s discuss in brief what the importance of HRM is for small businesses :
1. Hiring new employees
We know hiring the perfect candidate is quite hard, especially when it is related to IT staffing. But HR professionals can do this task easily, as they know all the tactics that need to be followed while hiring a candidate. They are responsible for screening job applications and interviewing them, and before selecting them, it is very important to conduct background verifications.
2. Budget Control
Every business focuses on reducing their budget, and so do small businesses. HRs are gifted with negotiating skills, which help companies control their budget. They know when and how to negotiate salaries with employees. All the research is being conducted, and salaries are analysed according to market standards. HR helps companies save money in the long run.
3. Employee satisfaction
HR is responsible for employee satisfaction. They need to know whether employees are satisfied with their job role or not. Though it is complex to measure employee satisfaction, HR management can design a survey through which they will learn about the areas where they need to improve themselves.
4 .Training and development
Training and development are important for the employees as well as the managers. Suppose an organization hires a new employee who is a fresher and is not well acquainted with using tools that are necessary for his or her job. HR gives them training so that they are able to bridge the skill gaps. On the other hand, managers need development programs that will help them transform themselves into future leaders. In small businesses, there is a great need for the employees to learn new skills so as to compete with their competitors.
5. Resolve conflicts
At the workplace, conflicts are more likely to happen because there is a large diversity of employees being hired. Everyone working at organizations has different backgrounds, personalities, attitudes, skills, and experiences. HR needs to handle and solve the conflicts that occur among or between the employees. They must make a fair decision that will increase the satisfaction and faith of the employees in the company.
6. Focus on Improving performance
None of the businesses likes to work with low-performing employees, as the performance of employees is directly correlated to the company’s performance. High performers get rewards, and low performers get training or are fired by the company. As low performers add unnecessary costs to the companies. The decision is made with the help of employers.
It is usual that small and medium-sized companies face budget restrictions while hiring an employee, but with an HR manager, organizations can never lag in hiring the best candidate at a reasonable cost. Besides this, they help businesses retain employees, as if they do not resolve the issues faced by employees, they are likely to leave the business. At the end of the article, I hope that you understand why human resource management is important to organizations; without it, all companies are incomplete.