Human resources - what is their role and how can they contribute to growing a business effectively?

Publication date: 15 February 2023

Legislation is also very complex and constantly changing, which requires constant adaptation to new rules and policies. In this article, you will learn more about what HR means, how important the department is, and what ways of managing tasks exist.

Contents:

1. What does human resources mean and how important are they in a company? 

1.1. What does HR mean?

1.2. The main objectives of a human resources department

1.3. The importance of human resources in a company

2. What do human resources do and how are related activities more easily managed?

2.1. Responsibilities and role of human resources

2.2. About human resources and their management

1. What does human resources mean and how important are they in a company?

In case you've been wondering what HR is and why it's important, you should know that HR professionals perform many tasks, not just simple personnel management or payroll processing. The entire department plays a vital role and can contribute to a company's strategy and overall culture. It can help the company achieve its goals and objectives by optimising employee productivity and efficiency. HR is an integral part of any business strategy, with a role to increase productivity, identify and address issues early, providing constructive and useful feedback, and promoting a safe corporate culture. What exactly HR means and how important it is to run a balanced and strong HR department in a company, you will find out in the lines below.

1.1. Ce înseamnă HR?

The term human resources was coined by John R. Commons in his book The Distribution of Wealth, published in 1893. Human resources departments in companies were created in the 20th century, initially tasked with resolving disagreements between employees and their employers. Later, they developed and took on more and more responsibilities due to the increasing complexity of the field.

Regardless of the size of an organisation, the human resources department is an essential component, which is responsible for protecting the company from any problems or irregularities that may arise in this sector. Until the 1920s, this area was called personnel administration and focused on issues related to hiring, evaluating and compensating employees.

The term human resources is used both to describe the staff working in a company and to name the department responsible for managing employees. So the definition of human resources is not just one, it is a complex concept that branches off in many directions. What is certain is that the human resources department is fundamental in companies, institutions and in any economic field.

Today, the HR department is a division that has complex tasks and serves as a link between a company and its employees. It deals with recruiting, selecting, hiring and training new employees, as well as administering staff benefits. The role of human resources is to manage an organisation's people, culture and working environment. The payroll and benefits administration side is increasingly being outsourced to third-party providers as a more efficient way of managing and aligning with labour laws.

1.2. The main objectives of a human resources department

The duties of an HR department are many and varied, as it is responsible for managing human capital to meet business objectives. Therefore, this department is vital in any company and its main tasks are to find, maintain and develop human capital in order to make a company successful. Of course, this is also achieved by creating effective programmes and following established rules and procedures.

More specifically, the main objectives of HR departments are as follows:

• In achieving company objectives through a competent team, the role of HR is to find the right people to meet these requirements;
• Attracting and retaining the best talent - the HR team needs to attract and retain the best and most competent employees through a well-planned strategy that fosters motivation and well-being in the workforce;
• Improve productivity - the HR department must oversee the success and performance of the entire team;
• Ensuring compliance with legal regulations - in this area there are many regulations and laws that need to be complied with and HR is responsible for this.

1.3. The importance of human resources in a company

People are the foundation of any successful business. For this reason, the human resources department is of paramount importance in any business, regardless of its size or field of activity. It performs a variety of tasks and is responsible for the proper functioning and development of the workforce, as well as for problem solving and risk management within the company.

Human resources is a complex area, so this department needs to be supported by strong leadership and appropriate management. Only in this way will it become a strong structure and evolve over time, contributing to increased employee satisfaction, productivity and organisational success.

The personnel department is constantly developing and evolving due to technology, new workplace policies and the changing marketplace. Modern recruitment methods, HR software and automated payroll are just a few examples of new and improved practices that help increase efficiency and achieve business goals.

2. What do human resources do and how are related activities more easily managed?

The organisation of the HR department has changed over time to attract and retain the workforce and to contribute positively to business objectives. As a result, its role has also changed greatly. Whereas it used to focus mostly on managing payroll and recruitment, it now plays an extremely important role in companies, helping to achieve specific goals and results. Given the importance and complexity of the tasks of an HR department, digitalisation has become an excellent solution. An easy, intuitive and fast HR software platform will streamline processes and improve the organisation of the department, contributing to a better focus on achieving set goals.

2.1. Responsibilities and role of human resources

As well as being the place where employees seek advice or support on organisational issues, the HR department is responsible for ensuring a good working climate and promoting the well-being and productivity of the workforce. HR's role is also to understand the specifics of the company, each employee and the current economic situation in the labour market.

Therefore, the list of tasks is extensive and the duties of this division are varied and numerous. Hence the particular significance of human resources in increasing efficiency. Here are the main functions and duties of such a department:

Staff administration

Administrative management of staff is a core task in this department and includes activities such as administering contracts, pay slips, authorisations, sick or annual leave. Although they may seem simple at first glance, these tasks require a lot of time and good coordination with the whole team to avoid errors. Today, however, there are much more efficient HR management solutions that allow you to automate much of this work and save time.

Recruitment and selection of staff

Among the things that human resources deals with is the recruitment and selection of staff. Attracting and selecting the best talent is vital to a company's success. The whole process involves a lot of work to identify, interview and select the most qualified and high potential candidates.

Salary and incentives

Human Resources is responsible for employee salaries and benefits. This includes several important tasks, such as: calculating appropriate pay rates for each position, taking into account the labour market wage level, employee value and other parameters set by the collective bargaining agreement. But the role of the HR department does not stop there. There is also a need for regular review of salaries, negotiation of incentives and setting other performance-based benefits.

Maintaining a positive working climate

Work climate is extremely important in any company, influencing staff well-being and performance. That's why the HR team needs to take the necessary steps to promote a positive working climate, constantly identifying problems faced by employees and their level of satisfaction within the organisation.

Evaluating employee performance

Evaluating team performance is another important task for the HR department. Thus, each employee must be evaluated regularly through a well-developed system.

Employee training and development

The personnel department must maximise the potential of the workforce through continuous training. This ensures the development of skills needed to meet company objectives, but it is also a way to retain talent. By providing employees with a supportive environment for career development, you can help them stay abreast of the latest trends and developments in their field and stay with the organisation for a long time.

Enterprise risk management

Another role of HR is managing risk and compliance. Staff in this department need to work with the unit's management, which involves statistical analysis and knowledge of legislation to improve overall company policies and practices.

2.2. On human resources and their easier management

In addition to finding, selecting, recruiting and training employees, the HR department also administers employee benefits and compensation programs and must always be aware of all laws that may affect the company. For this reason, many companies turn to HR consultancy, transferring many tasks, such as payroll, to external providers. Outsourcing administrative and transactional HR tasks is advantageous for companies, as the department will have more time to carry out actions beneficial to the organisation.

Hiring a third party to handle payroll and other personnel services is extremely useful, improving the accuracy, efficiency and security of these processes. The use of more modern tools, such as HR software and other platforms, also gives HR departments more flexibility and productivity.

One example is payroll, which is a difficult task for employer and employees, so external support is the best option to ensure accurate financial reporting and avoid problems in a tax audit. There are different types of payroll software available that professionals use to manage, maintain and automate the employee payroll process. In this way, companies can streamline their entire methodology, as well as other related activities, including complex reporting and tax calculation.

Human resources is a key area within any organisation. The whole activity involves more than just processing salaries and setting employee benefits, it plays a key role in developing a company's strategy. Without an effective HR department, it is impossible to build and maintain a strong team and achieve success in a business. As such a complex sector, HR consultancy and payroll services firms are a powerful support. This makes it easier to understand the law and employees, but also allows you to be relieved of time-consuming and attention-intensive tasks.

Human resources therefore contribute to improving efficiency in an organisation. From developing new ways to ensure high standards of performance to making sure a company stays within its budget, there are plenty of reasons why human resources mean so much to the success of a business.

*This material has been prepared for information purposes only and is not intended to provide tax, legal or accounting advice. We recommend that you consult with your team of tax, legal and accounting advisors before making any decisions on the topics mentioned in this article.