Setting up the human resources department (HR) is often the last thing on an entrepreneur’s mind when starting a business. That is because the functions of the HR department are usually not so obvious, especially for SMEs. However, it is telling when a business or company lacks HR capacity, although it takes a while for business owners to notice.

Despite all the hypes about HR departments, what does HR do?

The HR department undertakes some essential business tasks and you’ll find their top 10 responsibilities here. However, it’s imperative first to understand what the HR department is.

What is Human Resources (HR) as a business division?

In simple terms, HR is a business department responsible for managing employees’ life cycles. The life cycle of an employee begins at recruitment and ends at retirement, firing, resignation, and other work termination possibilities. A lot of research has gone on to establish that employee welfare can directly affect an organization’s well-being. So, the HR department exists to protect the organization’s well-being by ensuring employee satisfaction.

Practices, policies, and laws guide employee-employer relationships, and the HR division implements these policies and procedures. Additionally, the department provides that the business gets the very best from its employees regarding work performance. In many cases, HR establishes and maintains company culture and is viewed as the employee’s advocate.

So, what does HR do for a company?

Sometimes, employees only realize that the company has an HR department when disputes arise among company personnel. But the duties of the department go beyond resolving grievances or paying salaries. Unsung heroes of the corporate world, HR departments are responsible for the following.

1. Recruits the right employees

Hiring an employee is a complex process as it is a business cost that needs to be adequately justified. Also, it is a risk as a wrong employee would bring losses to the company. The HR department takes on the task of filling the correct positions with the right people through external and internal recruiting.

They begin with market analysis, stakeholders consultations, and even look inward to the company itself. All that is done to justify, with data, the need to recruit an employee. After the need is established, the department develops the perfect job description to attract the right candidates.

Usually, advertised vacancies would get tens to hundreds of applications, if not thousands. The HR department takes charge of organizing interviews and other selection processes. At the end of the day, the HR department helps businesses make diligent recruiting decisions.

2. Onboarding and induction

Companies lose 4% of new employees after the first day and 22% in the first 45 days because of bad onboarding systems.

Joining a new company and functioning right requires understanding the work system and culture. Even outgoing professionals may not easily find their way around the working environment without some guidance. Companies lose 4% of new employees after the first day and 22% in the first 45 days because of bad onboarding systems.

Induction is the initial introduction of a new hire to their job and colleagues; it lasts for a day or two. Onboarding takes about a year; it is more than just a welcome shout-out at the cafeteria or job shadowing. One important duty of HR is to set up onboarding systems that work and save the company from employee turnover losses. For instance, more than branded gifts, 72% of new hires prefer a one-on-one meeting with the hiring manager.

Also, HR ensures that all the necessary paperwork involved with a new hire is filled. This is important for legal reasons and proper company functions. It also gives the new employee a sense of security.

3. Payroll management

The first and most important thing for an employee is remuneration. No matter how much a person loves the job, they will eventually quit if they do not get adequate and timely compensation. A study by Kronos shows that 49% of employees will leave after two paycheck errors. That’s because 6 out of 10 families live from paycheck to paycheck and such errors endanger their well-being critically.

49% of employees will leave after two paycheck errors.

Paying employees seems straightforward but it is a complex process, and errors can occur. Companies have to sort out employee data and reconcile them to make payments. The payroll must reflect a reduction or increase in salary, bonuses, promotions, demotions, and remuneration sanctions. Also, taxes, labor laws, and policies apply to payroll administration.

One of the most important responsibilities for human resource professionals is making payroll roll smoothly. They also implement laws and policies that affect the company’s compensation practices, keeping up with new developments.

4. Employee training and development

Smart businesses understand that employees are their biggest assets. Extending the capacity of these assets maximizes the human resources of the company. Employees will walk away from a firm that doesn’t give them room to grow or cannot help them grow. Capacity building through employee training and development benefits both the company and the employee.

What do people in human resources do about this?

They set up training structures like retreats, seminars, and workshops that allow employees to acquire skills on the job. These newly acquired skills equip employees with the tools to move up the corporate ladder. Sometimes, additional formal education is required for employees to move up in the firm. The HR team sets up educational assistance that helps with tuition and a lighter workload.

Workers want to see a future for themselves within the company and receive help towards that future. This encourages loyalty, work satisfaction, and productivity.

5. Compensation and benefits

The way employees see benefits and compensation has changed post-pandemic. Many workers prioritize better work-life balance, health, and reward for being innovative. Flexible work schedules, remote work options, and mobility opportunities are the top three benefits workers want. According to experts, companies that provide this type of benefit attract more talented workers and record lower attrition rates by 56%.

The HR department works with third parties to provide benefits like health insurance to the employees. The HR department has individuals trained to negotiate better and more cost-effective benefits on behalf of the company. Beyond that, the research to find out what kind of benefits and compensations company employees need.

Companies that lack HR capacity will find it difficult to have a compensation and benefits system that works. Those benefits include short- and long-term disability and personal accident insurance. Others are commuter benefits, educational assistance, paid time off, vacation day accumulation, and dependent care.

6. Conflict resolution and disciplinary actions

Conflicts in the workplace are a given. It can arise among employees or between employees and employers. Resolving these conflicts through due process and recommending appropriate sanctions is one of the duties of HR. They deal with harassment reports, insubordination, intellectual property theft, poor work ethics, etc.

When due diligence is applied to disciplinary procedures it repairs the problematic situation. However, poor procedures may negatively impact performance in the workplace. But that’s not all, wrong disciplinary measures can result in legal battles or scandals for the company.

For instance, an employer may simply fire an employee that’s frequently late to work and incur related expenses. The HR’s drawn-out and detailed strategy for dealing with such matters may find that the tardy employee needs counseling or support with a dependent or some other resources.

7. Company culture development

Company culture refers to how work is done in an organization and the “how” results from decisions made by the management over time. Today, a non-toxic, healthy, and inspiring work environment is a big deal for workers. The styles of company culture favored nowadays place people over processes like that of Netflix. It improves employee engagement and retention.

HR is viewed as a chief contributor to the overall company culture. They manage most employee-employer relations and drive policies that make healthy company culture possible. From communication and management to organizational dress codes and work ethics.

HR does try to improve company culture, including casual office events, motivational activities, and in-office recreation. They also monitor the costs of these initiatives and reconcile them with company goals.

8. Performance appraisal

Periodically, HR evaluates the performance of employees to measure productivity. This evaluation reveals how much the employee has progressed and gives an insight into areas where they have shortcomings. The revelations allow companies to reward excellent workers and provide resources for shortcomings to be improved.

The HR department cannot analyze employee performance without adequate knowledge of each employee’s expectations. So HR gets familiar with the responsibilities expected of each employee in their area of specialization. Employees sometimes negatively perceive the appraisal, so the department ensures that the appraisal process is fair and smooth.

9. Policy formulation and implementation

The HR division goes through the company’s activities, philosophies, and goals with a fine-tooth comb to develop appropriate organizational policies. HR policies touch every aspect of the business; it ensures protocol exists to guide correct responses whenever issues arise. An ever-improving policy system helps the company to function smoothly internally and externally.

The Occupational Safety and Health Act of 1970 (OSHA) requires that work environments not threaten workers’ health and wellness. One essential thing that the HR department does is champion workers’ safety. Implementing safety policies and programs reduces work accidents and saves an organization’s medical claims and turnover compensation costs.

Apart from creating policies, the department monitors government agencies and professional bodies for new policies. They adjust company policies and practices to reflect standard practices. That way, they keep the company compliant with all the necessary laws and regulations.

10.  HR surveys

HR conducts annual surveys to measure the organization’s progress regarding its employee-employer relations. It measures employee engagement, morale, and satisfaction. Understanding employees’ attitude towards the organization helps determine its current state. Also, it provides valuable data on improving productivity by fixing holes in people management.

Surveys like this help answer the question, “what do HR professionals do?” Because it measures the level of knowledge employees have about the human resources management efforts of the company. Additionally, it tells the management what benefits to scrap and areas to direct compensation efforts. Another usefulness of the HR survey is that it reveals communication gaps between the different workforce levels.

Outsourcing the HR function

HR functions are essential but not every business can afford to set up an entire division and hire professionals. Some companies may have HR departments that are too small to manage the employees efficiently. That’s why outsourcing the human resource manager’s responsibilities is popular.

Smaller companies hire such external HR firms to take on their HR responsibilities. They help companies secure better and more affordable benefits and manage payroll with the latest technologies, amongst other things.

Our top recommended HR Outsourcing firms


The role of HR in an organization applies to both small and large companies. Only businesses with zero employees can genuinely afford not to care about the role of human resources managers. HR takes on payroll administration and resolves conflicts and employee productivity.