Human resources (HR) is the department within a business that is responsible for all things worker-related. That includes recruiting, vetting, selecting, hiring, onboarding, training, promoting, paying, and firing employees and independent contractors. HR is also the department that stays on top of new legislation guiding how workers need to be treated during the hiring, working, and firing process.
HR is considered by many business strategists to be the most important of all company resources. That’s because employees can gain new skills, thereby increasing the size of a company’s competitive advantage over time. Other resources simply don’t have that capacity.
The trend toward outsourcing
As with many aspects of business, HR is one function that some businesses now outsource. By handing over responsibility to an outside agency to find, hire, manage, and pay qualified workers, the company can stay focused on developing its core competencies.
Some different types of organizations that will handle your HR responsibilities include:
- Professional employer organization (PEO) – PEOs assume complete responsibility for all aspects of your HR function. That includes finding and hiring workers and setting their pay rate. Employees work for both the PEO and your company.
- Human resource outsourcer (HRO) – Companies uncomfortable with handing over all responsibility and control of their employee base may be happier with an HRO, which handles all HR activities but does not actually employ workers.
- E-services – Using an online HR platform enables small businesses to maintain control of their HR activities while leveraging information technology to do it more efficiently.
The list of tasks the HR department oversees is quite lengthy. Besides hiring and firing, HR professionals also take care of:
- Background checks
- Drug testing
- Training and professional development
- Compensation plan development
- Employee assistance plan
- Payroll management
- Benefits administration
- Employee relations
A well-functioning HR department ensures that a business has all of the right employees it needs, at the right time, at an affordable cost, and it helps support the continued development of those workers, providing the company with an appreciating human asset.