A business owner has many considerations in operating her company, but she's never far away from the needs of her staff. The role of human resources is most important in a business environment in which human labor is a big part of how customers are served. If you own a business, you must become an expert at managing people or else bring on board a person with that expertise. Without the right HR practices in place, you are not likely to get the maximum effort from your staff.

Firm Performance

One way to think about the role of human resources is to understand that people do important work. They are the labor force that you depend on to produce results. These results lead to some benefit for customers. In a factory, employees use their physical labor and operate machines so that products are produced and ready to sell to customers. In service businesses, employees deliver services or perform business activities that support business operations.

Customer Value

The resource-based view of a business's competitive advantage refers to how you would produce long-term value for customers from those resources. Employees are one kind of resource in which you can invest. Their value relates to their "skills, judgment and intelligence," emphasizes an article from the Center for Advanced Human Resource Studies at Cornell University. You make investments in areas like training and development to help employees become more effective. It makes sense to implement HR practices to evaluate and recommend better working conditions, improved compensation and other rewards to keep employees happy. You want them to stay and work for your business so that your investment is secured.


Before you get employees trained and performing at the desired level, you need effective ways to recruit them into your company. You must compete with other businesses recruiting similar talent. However, in its early years, your company may have limited money to spend on attractive salaries and benefits packages. What you do have more control over is creating positions that really challenge employees and give them a lot of authority and programming flexibility. They might choose to work for your business because they prefer the work and the small, organic culture over a better salary at a larger firm with less chance to have control over their work.

Organizational Design

The HR function also helps you decide the best arrangement of employees in various jobs. If your company has one manager and a sales team and another manager and a back office team, then you have a simple organizational design. Each employee is assigned tasks to support the purpose of her team. When the distribution of work is not efficient, you can rearrange employee positions and assigned tasks until you find a more logical system. Without knowledge of how to manage employees' needs, such as achieving buy-in for big changes and reducing resistance, you could have difficulty achieving success with your new arrangement. You need knowledge of employee motivation and performance management, which are important aspects of the HR function.