Why Is Human Resource Important? - Eminence Core Solutions LLP

Why Is Human Resource Important?

There is a point in every start-up where you start thinking about adding human resources to your structure.

Many founders and entrepreneurs are experts in their industry. However, management skills are not always a matter of course. As companies grow, it can be difficult to reconcile benefits, payment problems, and conflicts between branches. Ultimately, the company reaches critical mass and management must decide whether or not to recruit the HR department.

The problem is that for many productivity-oriented companies, the value of HR is not always obvious. Often companies see that they have a need, but I’m not sure if hiring a human resource professional (or outsourcing to a human resources company) will bring a positive return on investment. Many choose not to set up an HR team and then find that their concerns grow as the company grows.

Why is HR Important For the Company?

Can the HR department help make your company more profitable? If so, how do you measure it?

If you’re not sure what Human Resource has for your business, here’s a breakdown of HR’s role and why strategic human resource management is so important to modern businesses.

What is the HR department really doing?

  • Many successful HR departments are successful when they treat the company’s employees as their customers.
  • When you update the relationship between HR and employees in this way, the perspective of the Human Resource department’s ultimate goal remains: to help employees do their best in their work.
  • Just as it is the job of the sales team to turn potential customers into regular customers, it is the job of the human resources department to turn potential and current employees into loyal and committed members of the company.

Although there are a large number of functions that a particular HR department can perform for a company, most of its responsibilities (especially those for which it is specifically responsible) can be grouped into six basic functions:

  1. Track your applications and hire new people strategically. The human resources department is responsible for providing the company with qualified and reliable employees
  2. Performance and Vacation Management – Human Resource is also responsible for managing schedules, vacation, and benefits such as health insurance.
  3. Training managers and employees – what makes Human Resource so valuable is that it can help train employees, train managers to become better managers, and train employees who are deeper and more competent. wide
  4. Optimize the integration process – you cannot jump on both legs and stay afloat in all business environments. Some companies have a steep cultural learning curve, and it is the responsibility of the Human Resource department to promote cultural integration
  5. Resolving conflicts between branches – Human Resource experts receive special training to mediate conflicts between employees and between employees and management
  6. Manage Legal Issues – After all, HR personnel are responsible for complying with labor and employment laws and dealing with complaints about discrimination and harassment

All of these tasks tend to increase rapidly as companies hire new employees, and it doesn’t take long for the administration to become an independent job.

That said, there are still owners and managers who are trying to do it on their own and do both their job (which can be very technical and/or time-consuming) and the job that is normally assigned to the HR department. The problem with this strategy is that secondary HR functions are often left to do tasks that have a more direct impact on results.

Why HR Functions Are Important?

The first Question Arises: Why and how important are these Human Resource functions?

Does your company manage to hire someone who is specifically responsible for the filling?

Let’s look at the importance of each function separately.

1. Candidate tracking and strategic attitude

  • The recruitment process is difficult. It can take months (or years for some positions) for maximum productivity to be achieved from the first job to the point of hiring.
  • Even worse, you may be hiring a candidate who is not suitable for the job or company. This can lead to friction losses, which can even lead to the loss of a new employee. Then hire again for the position, and if the cost of sales can be double the annual salary of the position, high turnover rates can bleed your business out.
  • Many managers lack the time in their schedules to pay due attention to hiring, which often leads to less than excellent hiring decisions, poor integration processes and a certain level of attentiveness, high frustration for managers, new hires and their colleagues.
  • HR experts support you in managing this process so that you can easily find high-quality talent, hire the right candidate and quickly upgrade them.

2. Management of benefits and vacation

  • Remuneration is not the only criterion by which current and potential employees measure employment.
  • Benefits and vacation are also important considerations that are crucial for the engagement of your employees.
  • Without a professional who knows how to prioritize benefits for and on behalf of the company, these important details rarely get the attention and strategies they need.
  • Hiring HR professionals means having someone negotiating with health insurers. Someone who can tell you whether one of your employees is overusing (or under using) his vacation / sick leave over time.
  • Someone who changes the benefits and offers incentive programs to maintain morale, and someone who can promote awareness and use of the benefits in your organization.
  • In short, it means more commitment from your employees.

3. Training of managers and employees

Streamlining the integration process

  • People usually don’t leave companies, they leave their managers. Although this is true in some cases, the answer to the whole problem is not that simple. More than half of the problem of employee retention is the availability (or the lack) of progress and developments in the company.
  • Few people feel so passionate that they are ready to work hard for the next 40 years. Most want promotion opportunities: additional challenges, additional responsibilities, and salary increases. If they feel that they are never recognized or valued for their efforts or talent, the commitment wears off significantly and employees begin to think about leaving.
  • Even if there are opportunities for advancement, a lack of trust in corporate management or poor management can impair engagement, so that valuable talents are unwilling to see the fruits of their work.
  • Human resource professionals who can help employees and managers develop their skills reverse the trend in this struggle. The institution for employee training and development helps employees to qualify for more advanced positions, and employee training and development for managers enables them to get the most out of their teams.
  • Too often, integration is left to chance. Only 32% of organizations have formal integration programs, and more than half of employees say that if they had better training, they could do their job better. Integration is the cornerstone here. Employees who are “very satisfied” with the company’s integration experience feel twice as comfortable in the company in the first year.
  • An human resource team can help design an engaging and effective integration process. In addition, they can create a specific integration into the respective job so that your employees are not among the 36% of employees who do not receive relevant training.

4. Conflict resolution between offices

  • 67% of employees avoid employees due to conflicts in the office and 25% completely avoid work (e.g. calling the sick) to avoid conflicts.
  • And since 43% of employees have a bad opinion about how their superiors deal with conflicts, many hesitate to contact their superiors about their problems with their colleagues.
  • Disputes in the workplace can be very difficult to deal with, and neither employees nor managers can reasonably expect to reach a peaceful settlement if they are not properly trained. And let’s face it, thorough training of every employee in conflict resolution is not always a practical solution.
  • For this reason, it is good to have human resource professionals who can reach employees. Human resource teams trained in conflict resolution are ready to deal with the difficulties of interpersonal conflict, and training a single department is much easier (and less expensive) than training an entire organization.
  • The fewer conflicts you have in the office, the happier your employees are and the more committed they are to their work.

5. Treatment of legal issues

  • In 2016 alone, more than 91,000 discrimination and harassment lawsuits were brought before the EEOC.
  • Only the lawsuits have been filed; It is believed that many other incidents have been overlooked due to factors such as fear of reprisals, lack of evidence, and misunderstandings of the law. This is a common problem with ugly headaches, and companies must be prepared for the legal ramifications.
  • Without a dedicated human resources specialist, it can be difficult to keep an eye on all applicable laws and regulations and ensure that the company is on the right track.
  • In addition, problems may remain unsolved (and not noticed by society) until they settle in litigation that cost American companies. In 2016 alone, regulations totaling $ 482 million were enacted.

6. How do you calculate HR ROI?

  • After reading these human resource examples, you may be ready to test human resources to see if investing in human resources is really worth it.
  • There are a number of performance indicators that you can measure to get an idea of ​​the type of performance you are getting from your HR efforts. Let’s start with two simple KPIs: sales and absence.

7. Turnover rate

If your human resource work works, your fluctuation rates should decrease. At least they shouldn’t get worse. To measure your fluctuation rates, use a very simple equation to determine what percentage of your workforce or team has been changed over a period of time. As an illustration, let’s say your measurement period is the third quarter. They employ 30 people, five of whom have left the company and were replaced during the quarter.

Your equation should look like this:

30-5 = 25

25 ÷ 30 = 0.83

0.83 x 100 = 83%

This gives you your retention rate or the percentage of employees that you cling to.

If you specifically want the fluctuation rate, the additional step is simple:

100% -83% = 17%

Most industries strive for a ratio of 85% to 15% or better. Compare your retention and employee turnover rates over time to see if your business is improving or deteriorating.

8. Absenteeism

  • Absence rates are determined using another simple calculation. Keep in mind that absences generally refer to unplanned absences (i.e., planned paid vacation days do not count).
  • Absence rate = total number of working days of those absent ÷ (number of working days per year x average number of employees in the company)

Additional measures that you can use to track the effectiveness of your HR work overtime are:

  • Talent Defektionsrate
  • security incidents
  • Company-wide workforce
  • Cost per rental
  • Total number of employees trained
  • Total number of hours spent on training
  • Time to fill positions
  • Compensation and benefits of competitiveness

Be prepared to adjust the course if some of your practices and guidelines (or those of your HR team) do not work. It may take a while to find an effective framework for your business, but if you do, you will reap the benefits that HR has to offer.

The Cost of Absence of Human Resource.

You may still be wondering whether you really need personnel management in your company. You may think that your organization is too small to need it, or that you can manage the functions yourself.

You may think that you cannot afford to hire a specialist or outsource staff to an experienced team.

Whatever your reason, we would like to warn you of any reluctance to implement an HR strategy as this can have serious consequences, including:

  1. Bad hiring practices

Without human resource management, you’re probably using some kind of to-do list and forgotten list to put an ad in the newspaper, copy it and paste it into a few online job boards, or even just put a “Help Wanted” sign in the window. If you just start the list there, you are unlikely to give the interview and hiring process the attention it needs, which will result in it failing to attract the right talent and hiring the right people. And no company can afford bad attitudes.

2. Poor management of benefits

Nowadays, you can’t give your employees a PTO for a few days and call it good. Nor can you simply trust people to take out insurance or report the holidays correctly. Without an HR team, you run the double risk of being less competitive in terms of benefits and not respecting the benefits you actually offer. This is more than a simple legal or budgetary issue, especially since most employees in both Generation X (84%) and Generation Y (89%) would benefit from additional benefits compared to a salary increase %).

3. Bad commitment to your organization

Just as the generations that are replacing baby boomers are looking for significant benefits such as adaptive health insurance and flexible working hours, they are also looking for opportunities for advancement. In fact, substantial wage cuts are being made to create jobs that meet their long-term goals. Without an human resource expert who ensures that he receives the training and support he needs to prepare for the ascent, he is unlikely to leave the ship either.

4. Poor perception of your organization

As mentioned earlier, many employees are not happy with their company’s integration process, and a poor first impression can lead to a number of problems later. In most cases, a missing integration process is only remedied if someone is specifically responsible for this task. Without HR experts, there is rarely someone in the group The company that has time to devote to integration.

5. Toxic work environment

Toxic work environments are real problems. They can seriously damage your health. Whether it is friction between colleagues, a boss who is not listening, or a corporate culture that has become malicious, they all affect your employees. The fact is that working men and women don’t like it when they lie down. Of the total workforce, 74% are ready to start looking for a new job, and 32% are already doing so. Without a personnel strategy to improve corporate culture and reduce office conflicts, employee turnover and employee turnover rates will remain high.

Tips For Implementing Human Resource.

Once we have convinced you of the importance and value that HR experts and HR strategy have for your company, the next step is to use them.

Here are some tips to get you started:

  • Building a Cultural Vision – If you don’t have a defined corporate culture, it’s time to sit down and understand it. It is better to have a plan than to allow the culture to develop as the company grows. Write down the values ​​of your company and consider how you can promote these values. B. Guidelines, training, resources and even inspiring posters.
  • Start tracking key indicators: If you think it is important to measure your success, you need a baseline to measure. Track or calculate some or all of the KPIs listed above, as well as any others that apply to your industry.
  • Use existing technology – Many human resource functions (e.g. PTO tracking) can be wasted in real-time. Look for software that logs information for you so your personnel budget is not spent on busywork. With the best human resource software packages, it’s easy to request or approve a vacation at the push of a button.
  • Be prepared to give more regular feedback – good human resource communication is sometimes improved. Be ready to speak more to your team to support their efforts and to be a constructive critique. Your employees will appreciate the positive feedback and you will have the opportunity to improve their workflow if you can provide timely (and useful) criticism.
  • Develop an HR strategy that should succeed. Start with the six human resource functions above and be sure to include initiatives that help your employees find a good work-life balance. A stress-free workplace is a productive workplace.
  • Consider Outsourcing – If you think your business is too small to hire a full-time HR professional, consider outsourcing early. Hiring a recruiter is not the same as hiring a full-time HR team. However, you can provide key services and keep an eye on issues such as compliance with performance guidelines while adhering to your budget.

Frequently Asked Questions

Ans: An internal human resource staff or a human resources expert from staff can increase understanding of the importance of human capital for business results. For small businesses, in particular, human capital is essential because many small businesses have employees who perform cross-cutting tasks.

Ans: Identify seven main human resources functions
Strategic management.
Workforce planning and employment (recruitment and selection).
Human resources development (training and development).
Total rewards (compensation and benefits).
Policy formulation.
Employee and work relations.
Risk management.

Ans: Below is five HR pillars that every organization needs to know when developing or refining their HR strategy.
1 Legal requirements.
2 Employee contract.
3 Professional advancement programs.
4 Corporate image.
5 Performance management system.

Written By Kajal Bhagat (Digital Marketing Executive)

Categories: blog
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