What is human resources? The ultimate guide

Human resources (HR) plays a key role in a company when it comes to recruiting, hiring and managing employees. Ensuring your HR team has efficient processes helps to meet business goals, whether it’s to remain in compliance or to cultivate a healthy work culture. 

Knowing exactly why human resources is important, its role in a company and whether outsourcing it is a better fit can help your business attract and retain high-quality employees. 

Featured payroll software offers

OnPay

Learn More

Via OnPay’s website

Monthly fee

$40 per month plus $6 per employee

Direct deposit

Yes

Rippling

Learn More

Via Rippling’s website

Monthly fee

$35 per month + $8 per user

Direct deposit

Yes

Gusto

Learn More

Via Gusto’s website

Monthly fee

Starting at $40 plus $6 per month per employee

Direct deposit

Yes

SurePayroll

Learn More

Via SurePayroll’s website

Monthly fee

$29.99 per month plus $5 per employee

Direct deposit

Yes

What is human resources (HR)?

Human resources is a department or team within a company that helps to manage potential and current employees. HR professionals work on specific tasks to attract, hire, onboard and retain qualified employees. 

The department focuses on human resource management (HRM) strategies to try and reach the long-term goals of the business, like improving the quality of talent it attracts and hiring quality employees to boost productivity.   

Why is human resources important?

Think of human resources as the backbone of a business’ success. In order to run a business smoothly, it needs highly qualified and motivated employees and it needs to understand how to best leverage an organization’s human capital. Effective HR increases the chances an organization remains competitive, remains compliant and other critical components that boost success. 

In other words, HR is not only a department that processes payroll and answers questions on employee benefits. It often needs to consider other factors, such as:

• Employment trends like increased work/life balance desires.
• Technology.
• The economic environment and how it affects staffing needs.
• New and changing employment laws.

What does HR do?

Aside from record keeping and managing employee communications, some of the major roles HR teams play include retention, employee training and managing employee compensation and benefits.

Staffing and retention

Staffing includes tasks that range from attracting to hiring employees. More specifically, HR teams may work on any of the following: 

• Developing a staffing plan to hire based on company goals and revenue projections. 
• Developing processes to create fair and equitable hiring practices. 
• Attracting and recruiting candidates to fill any open job positions. 
• Arranging interviews with the appropriate parties.
• Assisting in salary and benefits package negotiations. 

Another important part of managing staff is to find effective strategies to retain them. Retention entails tasks that help to motivate and encourage employees to stay with the company.  

Some ways HR teams tackle this challenge include understanding and communicating workplace culture and helping to open the channels of communication between managers, employees and the HR department. 

Compensation and benefits

HR teams need to work to ensure compensation is fair and competitive within their industry and with similar companies. It also needs to be comparable to similar types of jobs in order to attract people to work for your company. Compensation doesn’t only include pay — other types of benefits are equally as important. 

Depending on your company, industry and job position, benefits can include:

• Health benefits.
• Employer-sponsored retirement plans.
• Vacation and sick days off.
• Tuition reimbursement.
• Professional development training and bonuses. 

HR professionals may occasionally look at salary trends and what their competitors are offering so that they can work with management or decision-makers to update compensation if need be.

Training and development

Training and continuing to develop skills are essential to retaining employees and ensuring they have what they need to do their job well. Training can include onboarding tasks like learning about the organization, legal and compliance, as well as relevant ethics training. 

Ongoing professional development can look like updating employees on new best practices, hiring a speaker for a wellness event or leading a workshop with an expert on trends in your company’s industry. 

Developing workplace policies

All businesses have workplace policies to foster a positive work culture and to promote fairness and quality between employees. The HR department isn’t solely responsible for developing these policies (executives or managers can play an active role). It is, however, responsible for helping to work on the language around these policies and recognizing when there needs to be updates or changes. 

For example, if there has been confusion regarding personal internet usage during work breaks, HR can work with management on how to develop more specific verbiage in an updated employee handbook. Other policies HR teams can work with management on include dress code, time off and the discipline process. 

Compliance and workplace safety

HR departments need to be aware of workplace laws that can affect the organization. Whether it’s federal or state labor laws, healthcare requirements, discrimination laws or minimum wage requirements, HR teams need to be caught up on changes and communicate them in an efficient manner to the entire management team. 

Should you outsource human resources?

Outsourcing your human resources tasks will depend on factors such as the size of your business, industry and whether you feel you can trust a third party to handle tasks. 

Some of the common benefits to outsourcing include:

• Cost savings compared to staffing your own internal HR department.
• Streamlining operations when you have a small team. 
• Getting access to specialists who are well-versed in the latest regulations. 

If you already have other efficient business processes and have the capacity to handle HR tasks internally, you may feel better having more control over them. That being said, there’s no need to outsource all of your HR tasks. Your business can take advantage of companies that handle specific tasks so you don’t have to take it all on.

When deciding to outsource HR tasks, look at what your current systems and processes are. Then, consider if you need to outsource all of them or only any of the following tasks:

• Managing and processing payroll. 
• Completing and updating legal compliance duties. 
• Recruiting tasks. 
• Creating and updating employee handbooks. 
• Conducting background checks.

Helpful HR solutions

The most helpful HR solutions tackle your most pressing tasks, are cost-effective and keep track of pertinent data. The following three HR solutions are based on research we conducted on over 25 options. 

Monday.com

Monday.com offers users the ability to customize tasks such as recruiting and onboarding employees, managing employee information and tracking time off. It can even give you a high -level view of what your employees are working on, so managers can allocate tasks accordingly. 

Users can take advantage of resources such as 24/7 customer support and live webinars to train them on the platform. Its interface makes it a user-friendly platform to use. If you want to use other HR tools, Monday.com supports popular integrations like LinkedIn and JobFlows. 

A free plan is available for two seats only. If you have three seats or more, it will cost $10 per month per seat when billed monthly.

ClickUp

ClickUp is a project management platform HR teams can use to track past, current and ongoing projects. For example, teams can use it to create company-wide documents, create goals for the organization and keep key players in the loop when developing and updating HR processes. ClickUp AI can also help HR teams streamline creating HR-related documents like employee handbooks and feedback on other potential changes. Like Monday.com, ClickUp offers 24/7 support and free training on how to use their platform. The company offers a free plan, but this is only for personal use. If you have a business, you will need to pay $10 per member per month for its basic plan.

GoCo

GoCo touts itself as an all-in-one HR tool offering features to help your business with tasks like: 

• Payroll. 
• New hire onboarding. 
• Benefits management. 
• Compliance. 
• Performance management. 
• Time tracking. 
• Document management. 
• Accessing personalized HR advice and resources. 

For example, you create an automated workflow to hire and onboard employees, from sending an offer letter to collecting data such as signed documents before the employee’s official start date. Customer service options include email and phone during working hours.  

Pricing starts at $5 per month per employee, though you will need to contact GoCo for a customized quote based on the features you want. 

Featured payroll software offers

OnPay

Learn More

Via OnPay’s website

Monthly fee

$40 per month plus $6 per employee

Direct deposit

Yes

Rippling

Learn More

Via Rippling’s website

Monthly fee

$35 per month + $8 per user

Direct deposit

Yes

Gusto

Learn More

Via Gusto’s website

Monthly fee

Starting at $40 plus $6 per month per employee

Direct deposit

Yes

SurePayroll

Learn More

Via SurePayroll’s website

Monthly fee

$29.99 per month plus $5 per employee

Direct deposit

Yes

Frequently asked questions (FAQs)