In your business there are experts to oversee and advise you on various areas and departments. For example, your CFO’s sole purpose is to keep their eye on the financial functions and decision for the company. Without good accounting and insight on your cash flow, investments, and balance sheet you risk making poor business decisions and potentially going out of business.
Likewise, there are many reasons why the role of HR in a company is important to its survival and success. The reasons why HR is important can vary depending on if you look at the issue from a manager or employee perspective. Below is a list of typical functions of a human resources department that will help you better understand the essential role of HR in a company.
Why Is HR Important for Managers?
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1. Management development and training
One way to be a company resource multiplier is to help managers be better managers, which in turn will help prevent or eliminate distractions for your employees. Employees don’t leave bad companies, they leave bad bosses, according to Beverly Kaye, co-author of Love 'Em or Lose 'Em: Getting Good People to Stay. Good managers are crucial to an effective organization but most have to learn how to be effective. The role of HR in a company is to help develop and coach managers to do the best job possible. HR professionals have a lot of experience working with employees in all sorts of situations. HR’s role is to advise and assist management on how to manage employees and deal with difficult situations. The reason why HR is important in helping managers is if they are able to manage effectively, problems that arise won’t escalate to the point of distraction for employees.
2. Keeping management focused on their job
HR is important for managers so that they can stay focused on their job. There is a lot of new regulation that came out this year that affects businesses. One role of HR in a company is to unravel the byzantine employment regulations using their expertise and to advise management about how they affect the business. HR then updates business practices so the company is compliant. This is no easy feat. Already in 2009 there are many new employment laws, acts and regulations that have gone into effect. I’ve listed only four here, however there are many more.
- President Obama signed the American Recovery and Reinvestment Act (ARA) into law in February. This affected HR professionals greatly. There is now a subsidy to pay for health insurance under COBRA and with it there are steps HR must take to comply with the act.
- President Obama also signed the Lily Ledbetter Fair Pay Act. This law lengthens the amount of time employees have to make a compensation discrimination charge. While I view this as a good thing, it forces HR and management to be more diligent on documenting how they make compensation decisions.
- Effective January 16th, 2009, extensive changes were made to the Family Medical Leave Act (FMLA). These changes require HR to overhaul their policies and processes and required notification to employees.
- Effective January 1st, 2009, the Americans with Disabilities Act Amendments Act of 2008 (ADAAA) redefines who is considered “disabled” under the Americans with Disabilities Act (ADA), and thus will potentially lead to a larger population of “disabled” employees seeking accommodations and a larger number of employees who claim they were “regarded as” disabled in disparate treatment claims.
3. Hire strategically, hire right
Another way HR is important for managers is that it can assist with strategic hires; by this I mean hiring right. I believe recruiting is the number one way for HR to make an impact on the organization.
Hiring right means reduced turnover and increased retention. It means finding the high potential candidate who can do ten times as much as the average employee and then being able to convince them to work for you. It also means not hiring problem employees to start with. Most of us have heard of the Pareto Principle (The 80/20 Rule), which suggests that 20% of the employees take 80% of your time. Again, going back to the notion that HR is a human resource multiplier, by hiring right you can focus on growing the business not dealing with problem employees. To do this there should be a systematic interview process that probes for work ethic, attitude, aptitude and motivation, in addition to determining if they have the right skills for the job. HR can be an instrumental in the process.
Why Is HR Important for Employees?
HR is an advocate for employees. The functions of an HR Professional are to make sure that all employees are treated fairly and equitably and that the needs of the business are balanced against the needs of the employees.
For the same reasons listed above, employees also make gains. Employees benefit when managers are trained well and know how to be good managers. Employees need their managers focused on getting work done instead of trying to figure out what new HR laws just came out this year. Employees also benefit when the company hires right because that means they have less co-worker issues to deal with themselves. They don’t have to take on extra work when poor performers are let go. They don’t have to train the new person. They can stay focused on their job.
I have presented only the most essential reasons why HR is important. There are many more when you look at the day-to-day operations of a smooth-running, successful company. HR is more than someone who takes your new hire paperwork or files the benefit forms. The role of HR in a company affects all aspects of the organization. Why? Because HR supports employees and employees are your most important resource.
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