Human Resources (HR) is an extremely important function in any thriving business. The HR team plays a huge role in motivating employees, rewarding desired behavior, and nixing behavior that is detrimental to the success of the organization. Additionally, a new generation of Millennial workers is infusing new demands on the workplace environment that must be addressed and managed by the HR team. Here are a few more specific reasons why HR matters in business:
Contributes to Financial Health
Surprisingly, HR professionals have a huge impact on a company’s bottom line. While they aren’t typically the expert when it comes to numbers they do manage a company’s most valuable asset: the employees. Employee turnover is one of the most expensive changes a company can encounter. A recent study found that the loss of an employee can cost as much as six months of the employee’s salary. Additionally, there are costs associated with the recruitment and hiring process. HR professionals are a key component in reducing these costs by hiring the right employees from the beginning and then keeping them happy while they are employed with the organization.
HR departments also impact budget as they are responsible for compensation and benefits. HR teams can do research on compensation to ensure they are in-market when it comes to pay. They are also able to negotiate benefits packages each year to ensure the organization is getting the best bang for their buck which can impact the bottom line.
Supports Strategy
The HR team can also be valuable when it comes to the strategic direction of a company. Without the input of HR, an organization might create big plans for the future without the infrastructure to carry out the vision. A strong organization will include HR on strategic discussions and will ask for their input on how to make it to the final destination. HR might offer strategies for grooming the next group of leaders or engaging in a major hiring spree. Regardless, people are an important component of any long-term plan and HR can help set the organization up for success.
Improves Performance
Every business wants their employees to be productive and profitable and HR plays a huge role in employee productivity. The HR team will establish performance metrics and create processes to hold employees accountable for their effort and production. A Human Resources database can track everything about an employee and can offer insights on how an employee’s time is being used, major milestones hit by the employee, or any additional training or certifications earned by the employee. Reporting out of this database will help HR leaders continually improve the performance of the workforce and allow them to promote and retain the best talent.
Avoids Tangling with the Law
HR teams are also well equipped to deal with legal issues when it comes to employment law. HR departments are extremely important to an organization because they set policies that follow the law and protect employees from things like burnout, harassment, and a hostile work environment. The last thing an organization wants is a scandal. One slip up or turn of the eye can tarnish the organization’s reputation permanently. Therefore, HR teams must be extremely aware of the issue and unafraid to address any hostile or inappropriate behavior.
These are just a few of the many reasons why HR matters in the business community. More than ever before successful organizations are recognizing the importance of this invaluable group and are opting to involve HR leadership in more strategic conversations. Without a doubt, organizations that value and support HR teams are sure to experience an improvement in the overall culture and success of the company.
