Human Resource Management: Functions & Importance

What is Human Resource Management?

Human resource management is the process of acquiring, introducing, and retaining employees. It aims to ensure that the company has the best talent available. Their job responsibilities often involve finding highly qualified candidates, convincing them to work for the company, and helping them adjust once they’re hired.

Why is it Important?

HR management helps organizations get the most out of their people by making sure the right skills, support, and structure are in place. It connects day-to-day people management with broader business goals, so teams can work effectively and grow with confidence.

Human resource management covers the full employee journey, from hiring and onboarding through training, performance management, and eventually retirement. At each stage, it helps organizations put the right people in the right roles and gives them what they need to do their jobs well.

In practice, effective HRM supports organizations in several key ways, as it:

• Controls labor costs by supporting fair pay, benefits, and practical workforce planning

• Improves retention by creating clear roles, growth paths, and consistent people processes

• Shapes a positive work culture by encouraging inclusion, work-life balance, and employee engagement

• Establishes clear processes that abide by labor laws and workplace regulations

• Reduces risk by improving hiring practices, employee relations, and workplace safety

• Drives long-term growth by developing leaders and reinforcing company values

What are the Functions of Human Resource Management?

Human resource management consists of the following key functions:

Recruitment

When people think of HR, their mind first goes to recruitment—and with good reason. This HR function involves attracting, selecting, and appointing suitable candidates to fill job vacancies. HR teams must identify the responsibilities, duties, and qualifications needed for a role and then source candidates through job boards, social media, recruitment agencies, and career fairs. They’re also responsible for screening and selecting candidates and conducting background checks and interviews.

Employee onboarding and offboarding

HR teams are also responsible for the employee’s journey within the company from start to finish. After recruitment, they can move into onboarding recent hires for their new roles in the company. This part aims to give newcomers everything they need to get started with the job—from team best practices to online tools and platforms for business use.

Once an employee decides to part ways from the company—whether through resignation, termination, or retirement—HR teams must help them transition out seamlessly. Employee offboarding typically involves an exit interview to gather feedback from former employees on their motivations for leaving. This information then allows the company to improve its employee retention strategy.

Compensation and benefits

When setting compensation and benefits, it helps to be clear about what’s included and why. Pay should be broken into three parts:

• Base salary outlined in the employment contract

• Additional incentives such as holiday pay or meal allowances

• Legally required benefits like healthcare, maternity leave, and sick leave

Compliance

HR professionals have to keep up to date with the latest government regulations on labor, corporate finance, and business management. They also have to know how to navigate the different government agencies and processes. These tasks are especially difficult due to the changing nature of government administration and lawmaking.

Workplace policies

Workplace policies are company standards on employee behavior, the use of company property, and vacation periods. HR managers establish and enforce such rules in order to maintain a professional and respectful atmosphere within the company.

Workplace safety

In high-risk environments, workplace policies often sit alongside safety programs, but they serve different purposes. Policies guide behavior, while workplace safety is about protecting people and meeting legal requirements that vary by industry and region.

Performance appraisal

A performance appraisal is a monthly, quarterly, or annual review of an employee’s performance and accomplishments. It’s usually divided into what the employee succeeded in doing and what the employee failed to do. Doing this regularly helps identify the skills and training gaps affecting employees’ work as well as what the company can do to close those gaps.

Employee evaluation

Unlike a performance appraisal, which is a holistic overview of an employee’s actions, an employee evaluation is the formal assessment of an employee’s work against company standards. Additionally, it can serve as the basis for employee termination or advancement.

Training and development

Training and development varies for each company, job type, and job level. However, common aspects of this function are job skills training, which is sometimes included in the onboarding of new employees, and team-building activities conducted throughout the year.

HR records

Human resource records are documents containing a list of employee activities and corresponding evidence. HR records help the company support regulatory requirements, create emergency plans, file insurance claims, and justify employee advancement.

Challenges in HR Management

Managing people comes with real pressure. HR teams balance hiring, compliance, training, and well-being while supporting a workforce that keeps changing. Here are a few of the most common issues and challenges in human resource management:

• Employee retention and engagement : It’s hard to keep people invested when workloads are high and expectations keep shifting. When engagement drops, turnover increases and productivity often follows.

• Recruitment and talent acquisition : Finding the right people takes time, especially in competitive markets. Skills gaps, poor role fit, and unclear expectations can slow hiring and lead to short tenures.

• Regulatory compliance : HR teams also need to keep up with labor laws and workplace regulations as part of their job. When processes aren’t clear or consistent, it’s easy to lose time and miss important details.

• Burnout and low productivity : Heavy workloads and constant change can wear teams down. Burnout affects morale, performance, and long-term retention if it goes unchecked.

• Change management : Rolling out new tools, processes, or ways of working requires teams to adapt quickly. Without the right support, change can stall progress instead of improving it.

• Onboarding and training : Inconsistent onboarding and training make it harder for new hires to settle in and perform with confidence, slowing their path to productivity.

• Data management and insights : HR teams manage large volumes of people data, but turning that information into clear, useful insights isn’t easy without the right tools.

Best Practices in Human Resource Management

When HR challenges start to slow teams down, clear and consistent practices make the difference. These best practices focus on building trust, supporting employees, and creating the conditions for stronger performance across the business:

Core best practices

• Targeted hiring : Hire people who fit both the role and your culture. Use structured interviews and consistent criteria to keep decisions fair and consistent.

• Fair pay and benefits : Offer market-aligned pay and meaningful benefits such as health, retirement, and wellness support, so employees feel valued and motivated to stay.

• Training and growth : Invest in ongoing skill development, mentoring, and clear career paths to keep employees engaged and motivated.

• Performance management : Use regular feedback, clear goals, and documented check-ins to support growth and keep expectations aligned, especially across multiple sites or shifts.

• Flexible work options : Support work-life balance through remote work, flexible schedules, or job sharing to improve satisfaction and retention.

Workplace culture and engagement

• Supportive environment : Encourage open communication by giving teams simple ways to raise issues, share feedback, and recognize good work as it happens.

• Diversity and inclusion : Promote inclusivity in hiring and decision-making through standardized processes that reduce bias and improve accountability.

• Employee engagement tools : Use centralized tools for feedback, task management, communication, and learning so teams stay connected without juggling multiple systems.

Strategic and operational excellence

• HR and business alignment : Ensure people practices support business goals by using real-time insights from day-to-day work to guide decisions.

• Technology-enabled processes : Reduce manual work with digital workflows, checklists, and workplace training that teams can use every day without friction.

• Clear and fair policies : Maintain transparent policies around pay, performance, and expectations so they’re easy to understand, access, and apply consistently.