Human resource management (HRM) is about crafting strategies to engage, develop and retain top talent. HRM is crucial for nurturing a productive workforce, from onboarding new hires to creating successful company policies.
In this article, you’ll discover what human resource management is and how it drives growth. You’ll also learn the five responsibilities of HRM and how to execute them to retain an engaged workforce.
What is human resource management?
Human resource management is a strategic approach to managing people within your business. It involves a wide range of activities, including:
Workforce planning
Recruitment and staffing
Compensation and benefits
Performance management
Learning and development
Employee relations
Compliance with labor relations and employment laws
HRM aims to nurture a workplace environment that boosts employee satisfaction and improves productivity. It helps create a framework that attracts, retains and leverages talent to drive business growth.
What are human resources?
Human resources are the people working within an organization. The term includes the collective skills, knowledge, talents, creativity and abilities employees bring to their jobs. Human resources are sometimes referred to as human capital.
While “human resources” sounds a bit impersonal, they’re the lifeblood of any company. People bring the initiative and adaptability needed to stay competitive.
Unlike machines or financial assets, human resources can innovate, solve problems and add a personal touch to their work.
However, employees also have feelings, needs and goals. HR’s main task is creating an environment where employees feel valued and supported.
6 ways effective HRM drives business success
HRM plays a critical role in steering a company toward success by:
1. Attracting top talent
HR develops strategies that attract strong, suitable employees. The team creates job listings and showcases the brand’s achievements by sharing thought leadership and open positions on social media, job boards and other platforms where candidates are active.
2. Retaining employees
HR retains acquired talent through comprehensive onboarding programs, competitive benefits and career development opportunities. A good HR strategy creates a positive work environment that minimizes turnover and associated costs.
3. Empowering managers
HR supports managers by providing resources to help leaders succeed in their jobs. For example, HR could offer guidance on conflict resolution, performance evaluations or motivational strategies.
It might also provide training on leadership skills like effective communication and team-building techniques.
4. Enabling strategic business planning
HR uses strategic planning to align human resource policies with the company’s long-term performance objectives. Forecasting future talent needs ensures the company has the right mix of skills and personnel to adapt and grow.
5. Developing company culture
HR promotes fundamental values like collaboration, inclusion and innovation to create a positive work environment. A strong culture improves employee satisfaction, boosts company reputation and attracts more talent.
6. Improving productivity
HR ensures work is safe, inclusive and productive by promoting work-life balance, addressing workplace diversity and ensuring compliance with safety regulations so employees can perform at their best.
4 core functions of strategic human resource management
Here are HRM’s four essential functions and their roles in creating a successful work environment.
1. Recruitment and staffing
Recruitment is a cornerstone of HR and lays the foundation for a competent workforce. HRM identifies, attracts, screens, hires and onboards the best candidates for each role. Here’s a closer look at HR’s role in these steps.
Identify what the role needs
Before recruitment begins, HR needs to identify the specific skills and competencies required for the role. During this step, they’ll work closely with managers to define job descriptions and specifications.
Job descriptions outline a position’s duties, responsibilities and scope. They also explain the skills, experience and educational qualities required for the role.
A tech company looking to expand its software with cloud-based functionality might conduct a needs assessment and realize its team lacks cloud computing experience. Once it knows what it’s looking for, it can start attracting the right talent.
The human resources manager will conduct a job analysis and regular workforce planning to ensure staffing needs align with organizational goals.
Attract the right candidates
HR creates appealing posts using job boards, social media and employee referrals to attract the right candidates. This process involves:
Crafting well-written job descriptions. Job descriptions use straightforward language to describe roles and highlight unique aspects of corporate culture to attract people with the same values. They also showcase benefits like flexible work arrangements.
Posting to job boards and websites. HR posts openings on popular job boards like Indeed, Glassdoor and industry-specific sites. Social media platforms like LinkedIn and Instagram are also helpful in reaching potential candidates.
Creating employee referral programs. Current employees act as brand ambassadors and attract high-quality hires who fit with the company. Employee referral programs encourage candidates with bonuses.
Highlighting the company brand. HR shares employee stories on social media and the company website to give potential candidates an authentic glimpse into the workplace culture. It organizes participation in industry events to spread awareness to potential candidates.
Building talent pools. As human resources departments repeat the hiring process, they create a database of interested candidates for future openings to streamline recruitment.
Leveraging technology. HR teams use employee management software to manage job applications and enhance the candidate experience. Customer relationship management (CRM) software like Pipedrive also helps track job candidates.
Attracting candidates is about more than listing job openings – it sets the tone for new hires. Strategic hiring ensures new employees while aligning with the company and its workforce.
Interview candidates
Once HR receives applications, it shortlists candidates and begins the interview process. Depending on the role’s complexity, they might perform multiple rounds of interviews that include:
Initial screenings. Phone or video calls gauge communication skills and verify basic qualifications (like whether they have a bachelor’s degree or a master’s degree). They include open-ended questions like “What interests you about this position?” that screen for enthusiasm and understanding of the role.
Behavioral interviews. Behavioral interviews check how candidates react to specific scenarios using questions like “Tell me about a time you had to overcome a challenge. What did you do, and what was the outcome?”
Technical assessments. Practical tests or problem-solving exercises gauge the candidate’s skill level. For example, when hiring a software engineer, you might provide a paid coding task that proves they have the chops for the advertised role.
While interviewing, HR scores candidates based on their skills, experience and cultural fit. They involve multiple interviewers to ensure well-rounded evaluations.
Make the final decision
After evaluating interviewees, HR makes a final decision. It conducts reference checks while ensuring the candidate’s work performance and character are suitable. If everything checks out, HR informs the successful candidate and tells them the next steps.
Onboard new hires
Onboarding is the final step in the recruitment process. It sets the tone for a new employee’s experience with the company and can improve retention and job satisfaction.
Effective onboarding includes a comprehensive plan to make new employees feel welcomed, supported and well-equipped.
Here are a few actions HR might perform at each onboarding stage:
Onboarding stage | Actions |
Preparatory steps | Send a welcome email outlining what to expect, who they’ll meet and any paperwork they need to complete. Ensure their workstation, equipment and access to software or spaces are ready. |
First-day orientation | Introduce the new hire to the team and give them a tour of the office (or a virtual meet-and-greet if it’s a remote team). Walk them through the company values and policies; illustrate expectations clearly. |
Training and development | Provide training for their role and pair them with mentors who can answer questions. Encourage participation in workshops and training programs. |
Integration into the team | Organize team lunches, virtual coffee breaks or informal gatherings to help new hires connect with colleagues. Regular check-ins will ensure they feel supported. |
Pipedrive streamlines onboarding by organizing tasks, enabling communication and automating workflows. HR teams can customize onboarding pipelines to track each new hire’s progress and ensure they complete every step.
Likewise, Pipedrive’s built-in scheduling and email tools help coordinate training sessions and meetings. Using Pipedrive makes onboarding more efficient while improving the new hire experience.
2. Compensation and benefits
The second role of HRM is to design and implement compensation and benefits programs. It must ensure the programs align with organizational goals and market standards. This process involves:
Designing compensation structures. HR researches industry standards and compensation packages to make competitive offerings. It creates salary ranges for each role by considering skills, experience and responsibilities.
Managing pay raises. HR might need to adjust salaries based on inflation, changes in the cost of living, promotions and performance reviews. It’s HR’s job to negotiate the timing and amount of raises with employees.
Negotiating benefits packages. HR assesses the workforce’s needs and preferences, tailoring employee benefits packages accordingly. It also negotiates with benefits providers to secure favorable pricing and decrease costs.
Maintaining compliance. HR ensures all compensation and benefits packages comply with the relevant laws and regulations, such as minimum wage and overtime laws.
Competitive pay and comprehensive benefits help attract top talent and keep them from jumping ship for better offers. However, one of the main challenges is offering attractive compensation while keeping company expenses as low as possible.
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3. Performance management
Employees must work to the best of their abilities – and HRM ensures this using performance management tactics. Companies with performance management programs are 1.5 times more likely to outcompete rivals and 1.25 times more likely to boost productivity.
Performance management focuses on aligning employees with organizational goals. The purpose is to enhance employee performance, ensuring personnel and the company improve together over time.
A strategic performance management process involves:
Setting clear expectations. Employees must understand their responsibilities and how they contribute to the company’s mission. Specific, measurable, achievable, relevant and time-bound (SMART) goals give employees precise targets.
Documenting performance. Tracking progress for key metrics helps identify areas for improvement. For example, you might monitor sales metrics like conversions or deal closure rates when tracking a sales team’s performance.
Providing ongoing feedback. Regular one-on-one check-ins with employees help review progress. With positive feedback and constructive criticism, HR can help employees improve outcomes and stay motivated.
Holding regular performance appraisals. Formal performance reviews help assess accomplishments and challenges. Using documented metrics and peer feedback uncovers areas where employees can improve or expand their skill sets.
Creating learning and development plans. Professional development courses, workshops and certification programs boost skills and enhance productivity. HR supports training and creates human resource development plans for each employee.
Recognizing and rewarding achievements. Reward outstanding performance to motivate employees. Incentives might include bonuses, promotions or public recognition like employee of the month awards.
Prioritizing talent management helps business owners create a motivated, efficient and goal-oriented workforce. This process supports the organization while enabling personal and professional growth for employees. However, it can be time-consuming.
CRM tools automate the process of tracking and reporting on metrics, saving your HR department valuable time.
For instance, Pipedrive’s dashboards can report individual and team performance for various KPIs.
Use it to set goals and visualize progress in real time, making it easier to monitor performance and track improvement.
4. Employee retention
HRM’s final role is to retain employees. It does this by managing employee relations, developing a solid company culture and engaging employees.
Managing employee relations
Employee relations are ongoing efforts by HR to nurture employee-employee and employee-employer relationships. The goal is to ensure open communication while driving collaboration.
HR’s employee relations responsibilities include:
HR function | Explanation |
Resolving conflicts | HR is the mediator in workplace disputes, resolving conflicts between employees and management |
Establishing communication channels | HR establishes communication channels and feedback mechanisms, encouraging open dialogue between staff and management |
Creating and administering policies | HR ensures employees understand workplace policies and how they’re enforced |
Promoting core values and mission | HR promotes the organization’s values and mission to create a unified sense of purpose among employees |
Setting management practices | HR helps managers implement effective management styles to set the tone for company culture |
Managing diversity and inclusivity | HR promotes a diverse and inclusive workplace culture to enhance creativity, cohesiveness and innovation |
Building company culture
Company culture includes the shared values, beliefs and behaviors within the organization. It shapes the work environment and influences how employees interact with each other.
Establishing a compelling culture begins with outlining core values and upholding them in all aspects of the business. A well-defined culture guides employee actions and creates a unified direction for the company.
Leaders, including HR managers, play a crucial role in shaping and reinforcing culture. They embody the values they want to see in employees and set a standard for the rest of the company.
Enhancing employee engagement
Engaged employees are intrinsically motivated. They care about their work, invest in the company’s success and commit to personal growth. They’re more likely to contribute, collaborate and perform at high levels.
Here are the best practices for enhancing employee engagement:
Enable open communication. Open communication creates trust and encourages employees to share ideas and feedback. This dialogue builds stronger relationships between management and staff, ensuring everyone gets taken seriously.
Provide competitive compensation and benefits. Competitive salaries make it easier to attract and retain talent. Offering extra incentives, health benefits and retirement plans can also make a significant difference.
Encourage inclusivity. Creating a sense of belonging and ensuring diverse perspectives drives engagement. It helps organizations tap into ideas and makes people feel confident to share their unique contributions.
Provide work-life balance. Flexible work arrangements and wellness initiatives show employees the company cares about their well-being. Employees who find harmony between work and personal life are less stressed and more engaged.
Supply development opportunities. Offering career development opportunities demonstrates a company’s investment in its employees. When they see a clear path to advancement, they’re more likely to pursue long-term success within the company.
Pipedrive boosts employee engagement with collaborative tools that let employees see their activities in real time.
Streamlined communication and task management ensure everyone stays connected and focused, creating a more engaged and productive workforce.
Final thoughts
An effective human resources management system is the backbone of thriving organizations, aligning the workforce with strategic goals. HR professionals who manage recruitment, compensation, development, relations and engagement ensure the company and its employees flourish.
Discover how Pipedrive can enhance your HR efforts by tracking employee progress, managing performance metrics and organizing data in one place. Elevate HR management with better insights and workflow automation – try Pipedrive’s 14-day free trial today.
