As a business owner, you may be thinking about hiring an HR manager or setting up your own HR department. After all, your employees are your greatest asset. You need to find a way to attract and retain talent, increase employee engagement and reduce your turnover rates. The role of HRM, or human resources management, is to streamline these tasks and help your organization grow.


The purpose of HRM is to attract and engage highly skilled people who can add value to an organization and support its goals.

What Is Human Resources Management?

Human resources management is the process of recruiting, hiring and training employees. The professionals who work in this industry use their skills and expertise to find talent, manage wages, train workers, solve workplace conflicts and more. Their primary role is to maximize employee performance. This department has both operative and managerial functions.

Think of HRM as a strategic approach to managing your employees. This term covers all activities related to the management of an organization's human capital. Over the past years, the role of HRM has grown significantly. Today's HR specialists do a lot more than just recruit, hire and manage a company's personnel. They serve as strategic partners, counselors and leaders of change.

The Purpose of HRM

In 2014, the average U.S. company spent approximately $4,000 to fill an open position. That's a lot, especially for small businesses that usually have a tight budget. Employee onboarding and training further increase these costs. If you hire the wrong people and they quit soon after, you're throwing money down the drain. According to a recent report, U.S. workers are leaving their jobs because of unsatisfactory compensation, poor work-life balance, lack of career development or job insecurity.

The purpose of HRM is to prevent these issues in the first place and maximize a company's performance by investing in the right people. Those who work in this field have the skills, knowledge and tools needed to find and employ top talent, help employees succeed in their roles and ensure good working conditions. Depending on the organization, their responsibilities may include:

  • Internal and external recruitment.
  • Candidate selection.
  • Employee onboarding and training.
  • Employee performance assessment.
  • Employee compensation.
  • Organization development.
  • Compliance with labor laws.
  • Labor and employee relations.
  • Employee recognition and engagement.
  • Career development.

In large organizations, each area of HRM falls under the responsibility of one or more HR managers and other specialists, such as training and development managers, employment services managers, career counselors and so on. Small companies either outsource this process or handle it in house on a smaller scale. In general, the main functions of human resources management include staffing, employee orientation/training, employee welfare and employee retention.

Why Is HRM Important?

The objectives of HRM are directly related to an organization's mission and goals. The activities involved in this process nurture human talent and support employee welfare, which in turn leads to business growth. HR managers in corporations and large companies play a key role in strategic decision making. It's their responsibility to find highly skilled people and keep them on board, reduce employee absenteeism and turnover rates, make decisions about workforce planning and facilitate employee communication.

Some experts say that human capital management is the new name for human resources management. Today's HR managers invest time and resources in human capital, which includes but is not limited to employees' skills, education, intelligence, training and other key factors that influence their performance. They treat each staff member as an individual with his own set of strengths and weaknesses.

Decades ago, the role of HRM was limited to labor, time and payroll management, but times have changed. This process now encompasses a wide range of activities and functions, from workforce planning and analytics to employee efficiency. It leads the employment life cycle and regards people as a company's most valuable asset.