The 12 Key Functions of Human Resources

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HR has many important functions in the organization. These include recruitment, performance management, learning and development, and many more. In this article, we will explain the 12 key functions of HRM.

But first, a definition. If we want to understand the functions of Human Resources, we need to understand what Human Resource Management (HRM) is.

According to Storey (1995), HRM is a distinctive approach to employment management that seeks to achieve competitive advantage through the strategic deployment of a highly committed and capable workforce, using an integrated array of cultural, structural, and personnel techniques.

In this article, we will go over the 12 human resources functions and explain how they help move the organization forward. These functions are:

  1. Human resource planning
  2. Recruitment and selection
  3. Performance management
  4. Learning and development
  5. Career planning
  6. Function evaluation
  7. Rewards
  8. Industrial relations
  9. Employee participation and communication
  10. Health and safety
  11. Personal wellbeing
  12. Administrative responsibilities

Let’s dive right in.

1. Human resource planning

The first HR function is all about knowing the future needs of the organization. What kind of people does the organization need, and how many? Knowing this will shape recruitment, selection, performance management, learning and development, and all other human resources functions.

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Human resources planning is similar to workforce planning. Both focus on where the organization is today and what it needs to be successful in the future.

Key Human Resources Functions

2. Recruitment and selection

The second HR function involves attracting people to work for the organization and selecting the best candidates.

Attracting people usually starts with an employee brand. Being an attractive employer has plenty of advantages – just as it is the other way around. A good example of the latter is the tobacco industry which struggles to attract talent due to its tainted reputation.

With a strong employer brand and the right sourcing strategies, you’re already halfway there. Once candidates apply, the selection process is an HR instrument to pick the best qualified and highest-potential candidates. Technological developments in recruitment have gone very fast and as a result, there are different types of recruitment tools for each part of your recruitment funnel. 

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3. Performance management

Performance management is essential in ensuring that workers stay productive and engaged. Good performance management involves good leadership, clear goal-setting, and open feedback.

Performance management tools include the (bi)annual performance review, in which the employee is reviewed by his/her manager. It also includes 360-degree feedback tools in which peers, managers, subordinates, and sometimes even customers review the employee’s performance. These kinds of tools can be very helpful in providing feedback.

Performance management is also an instrument to close the gap between the workforce you have today and the one you want to have tomorrow. One of the best ways to build your future workforce is through learning and development (L&D).

4. Learning and development

Enabling employees to develop the skills they need for the future is an essential responsibility for HR. This is also related to the first HR function we listed, in which HR bridges the gap between the workforce today and the workforce needed in the near future.

Traditionally, organizations have a set budget for learning and development. This budget is then distributed among its employees. In some countries, this fee is mandatory. In the UK, for example, companies with an annual pay bill of more than £3 million pay a mandatory rate of 0.5% designated for the professional education of their employees.

In other countries, like Belgium and the Netherlands, L&D falls under the employer’s responsibility to take care of its employees. In the third group of countries, like the US, this is almost unregulated territory.

Despite the differences in regulation, almost all employers understand the value of investing in the (future) skills of their employees. It’s the responsibility of the HR department to lead these efforts in the right direction.

5. Career planning

The fifth function of Human Resource Management is career planning, guidance, and development for employees, together also referred to as career pathing.

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Showing employees how their ambition can align with the future of the company helps to engage and retain them. For the organization, there are the benefits of better succession planning, higher productivity, and a stronger employer brand.

6. Function evaluation

As a business and society changes, so too must an efficient HR function. Function evaluation is a technical aspect of HR. By evaluating the HR function, the department ensures that the company is successful at both a strategic level and with service delivery and support. The company needs to deliver the level of services required, whilst operating strategically. 

Practically, function evaluation involves comparing various parts of the overall HR operation. This can include the quality, and availability of workers, job location, working times, the economic situation, job responsibilities, and how much value a job adds to your organization. The idea behind function evaluation is that similar jobs should be rewarded similarly.

There are different ways of internally ranking functions.

  • Ranking method: a method in which subject matter experts rank functions in terms of how much they contribute to the organization as a whole. Functions are paired and raters have to decide which one is more valuable. This is done with all functions and based on the outcome, a ranking is established.
  • Classification method: jobs can also be classified in different categories using classification methods. In this case, jobs are categorized and then ranked within these categories to come up with a ranking. Categorizations can include education, experience, the degree of specialized skills needed to do the job, the degree to which these skills are in-demand, and so on.
  • Points method: jobs are categorized according to the factors the organization believes contribute most to its success. Points are then awarded to each category for every job. These categories can include key competencies, like problem-solving, technical knowledge, communication and influencing skills, innovative capability, business acumen, and so on. These competencies will differ per organization
  • Personal method: in this method, the job itself is not evaluated but the person doing the job is. Here, employees are rewarded based on their skills and competencies.

7. Rewards

Rewarding employees for their work is a function that is impossible to miss. Compensation and benefits are integral to attracting the right kind of candidate for the role, and company. These will vary across different fields, countries, and cultures. In some countries, such as the USA, health insurance is often part of a job offer. However, in countries such as the UK, where a public health system provides most healthcare, to most people, this is not the case. Yet the total rewards framework shows that rewards are more than just money. They can also be relational and psychological outcomes.

Rewards include salary but also growth and career opportunities, status, recognition, a good organizational culture, and a satisfying work-life balance. For example, fantastic colleagues and meaningful work are also rewarding to employees. The monetary reward of the job consists of financial rewards and other (secondary) benefits.

AIHR-Elements-of-Total-Rewards (1)

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The Employee Value Proposition (EVP) sums up all these aspects. The EVP of your company is distinct from the external image and brand. It is the image a company reflects to its employees. Rewards are thus much more than just financial. Here is a non-exhaustive overview of total rewards:

  • Base salary
  • Performance-based-pay
  • Bonuses
  • Social environment
  • Job security
  • Status
  • Alternating work
  • Autonomy
  • Growth opportunities
  • Feedback
  • Formal and informal development opportunities

Functions 1 to 7 all fall within the scope of what’s called talent management; they aim to attract, develop, motivate and retain (high-performing) employees.

8. Industrial relations

Another function of HR is maintaining and cultivating relationships with labor unions and other collectives, and their members.

Unionization is still prevalent in Europe, although it is declining overall. In 2018, 92% of employees in Iceland were a member of a union and 67% of employees in Denmark. However, in the UK and Estonia, only 23% and 4% of employees, respectively, were. In the USA trade union membership is low, with 10% of employees being members in 2018. Maintaining good relations with unions will help to spot and resolve potential conflicts quickly and will also be beneficial in more difficult economic times when layoffs or other actions are required.

9. Employee participation and communication

According to Dave Ulrich, one of the key roles of HR is to be a credible activist for the employees. Employees need to be informed and heard on different topics that are relevant to them. Communication relates to spreading information relevant to employees.

Being a People’s Advocate is one of five elements of the T-shaped HR professional, a new competency framework we developed for the future of the HR workforce. People Advocacy includes culture building, people practices, workplace champion, and communication expert. 

10. Health and safety

HR plays an important role in creating and implementing health and safety regulations. Making these regulations part of the company culture is one of the main functions of HR.

A famous example is oil company Shell where it is forbidden to walk the stairs without holding the railing – also in the company’s HQ. This is part of Shell’s ‘Goal Zero’, which stands for zero accidents. Although holding the railing is much more important on an oil platform, safety is such a big part of the company culture that safety roles are applied everywhere.

11. Personal wellbeing

HR has a function in assisting and taking care of employees when they run into personal problems. Personal wellbeing is about supporting employees when things don’t go as planned. Problems in the workplace and outside can negatively impact employee performance, engagement, and productivity. This, in turn, harms a company’s bottom line. 

Good personal well-being led by your HR department must work at the level of one-on-one communication with employees, and communication across teams, and companies. For example, a company may offer an employee assistance program by which anyone with mental health issues, can access counseling. On an organization-wide level, the company could hold a mental health awareness day.

12. Administrative responsibilities

The final function of HR is its administrative responsibility. These include personnel procedures and Human Resource Information Systems.

Personnel procedures involve the handling of promotions, relocations, discipline, performance improvement, illness, regulations, cultural and racial diversity, unwanted intimacies, bullying, and so on.

For each of these situations, policies and procedures need to be developed and followed to successfully comply with the requests, or overcome these challenges.

Human Resource Information Systems (HRIS) store employee data. These systems need to be purchased, implemented and managed so the data can be used for better decision-making.

Over to you

HR is a multi-faceted role that enables companies to get the most out of their workforce. As an HR professional, you need to have a wide-ranging skill set to perform across these core HR functions. Within HR, education cannot end with gaining your core qualification. Society and the workplace are constantly changing and evolving. You too must continuously develop, to lead your workforce confidently through change.

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