What Are the Seven Functions of HR?

Businesses can have strategic goals supported by a flawless business plan, but their execution will fall short every time without skilled employees to carry out their strategy. Human Resource Management, also known as HRM, exists to bridge the gap between a company’s employees and its management and business objectives. Many companies are turning to outside experts like Milestone for additional help and guidance with HR outsourcing services to help focus on their most valuable asset.

What is Human Resource Management? 

The Society for Human Resource Management defines Human Resource Management as the process of managing an organization’s most valuable asset—its employees. HR encompasses every aspect of employee management, from recruiting to onboarding and training to information management. 

What is the main role of HR? Here are the seven core functions of human resource management in every effective organization.

1. Employee Recruitment and Selection 

XpertHR’s Survey of HR Challenges found that “recruiting and hiring” tops the list of company’s biggest challenges in 2021. Recruitment is the HR practice and function of scoping out job duties for a role and then searching for and screening qualified candidates for that position in a timely manner. 

2. Compensation and Benefits

To attract qualified candidates, companies must have a compensation strategy and benefits. HR plays an important role in benchmarking pay against local and industry standards and setting recommended pay rates as well as rate increases for existing employees. HR also sets standards for benefits available to employees such as health insurance, life insurance, paid time off, retirement contributions, and workplace amenities. HR is responsible for working with vendors, brokers, and insurance companies to find the best plans and best rates available for the company and roll out new plans and programs.

3. Performance Management

Supervisors play the starring role in managing an employee’s day-to-day performance, but they need a centralized strategy that enables them to measure employees in a way that’s consistent and fair. HR teams often set company-wide standards such as the frequency and metrics of performance management that can be implemented across many different job types. HR can also serve as a resource for supervisors when complicated performance issues arise and extra support is needed. They can also provide opportunities for employee successes to be recognized outside of individual departments. 

4. Learning and Development

A lack of proper training for employees can lead to employee performance issues, disengagement, and turnover. Learning and development, the fourth pillar of the seven functions of HR, empowers employees to do their best work and increases satisfaction and retention. Learning and development can be broken down into onboarding, the training that takes place when an employee is initially hired or enters a new role, and ongoing training that helps existing employees adapt to changing company processes and industry updates. 

5. Information Management and Documentation

Today, companies are entrusted with more and more of their employee’s personal information and are responsible for safeguarding that information. HR serves as the gatekeeper of employees’ data including contact information, performance reviews, payroll and banking information, and medical and insurance information. HR can also play a key role in documenting and communicating company-wide policies and best practices.

6. Succession Planning

The departure of a key employee, particularly an executive, could have a major impact on a business. Succession planning is a critical function of HR to document processes and make a plan to replace key talent when change occurs, whether expected or unexpected.  

7. Data and Analytics

Data and Analytics in HR is in rapid growth mode, accelerated by the explosion of cloud computing and evolving technologies. When used well, HR can apply data and analytics to assist with recruitment and performance management as well as identify opportunities for improvement in its Human Resource Management strategy.

For more information on the core functions of human resource management, see the Society of Human Resource Management’s HR functions PDF. 

Manage your human resources with Milestone

Milestone believes that no matter your business size, you should have the expertise and resources worthy of your entrepreneurial journey. Milestone brings a refreshingly forward approach to outsourcing HR and accounting with a team of experts that has your back. Highly trained, specialized, and well equipped with the resources to help your business, contact Milestone to learn how we take the guesswork out of HR.