An Overview of Human Resource Management

8 Feb, 2023 | Read in 4 minutes

Get a comprehensive understanding of Human Resource Management with our informative article. Learn about its definition, why it is important, and its basics.


Human Resource Management (HRM) involves practices, policies, and focused decisions on developing business through people in a company's well-being. That sounds simple: ensure the business has good people, motivated and able to carry out their responsibilities.

In practice, HRM is more complex and vital. A successful company depends on human capital, funds, and tangible assets. When one of them is missing, it will be difficult for the business to survive.

But business boils down to people. By managing people, organisations become more effective. Plus, to create brand loyalty, companies need human resource management. In essence, management provides direction, provides good organisation and systems.

Smita Dass, HRM in Reliance Foundry, said that the human resources department is the backbone of a strong company. She added that HRM is the hidden structure that keeps things moving forward.

So, let's unpack what HRM is and what makes this HRM department successful.

Human Resource Management Definition

Human Resource Management (HRM) is managing people in an organisation to achieve good performance. Managing practices include policies, employee well-being and business growth.

HRM focuses on improving workplace culture, including recruiting, compensating and redundancy of staff. Holidays, leave, and health issues are also HRM areas.

At a certain level, HRM oversees staff and includes a leadership culture. The main goal is to build a work culture with a positive environment.

Why is HRM important?

The key roles of HRM include strategic planning to building a corporate image. Human resource control and involvement enhance employee experience and strengthen business operations.

The Bureau of Labor Statistics explains that a human resources specialist handles employee relations, payroll, benefits and training. They also manage recruiting, interviewing and job placement processes.

From its duties and functions, HRM has a vital role in business. The various factors that determine its critical importance include:

  1. Act as strategic management, participating in decision-making related to staffing assessment and projected workforce needs based on business demand.
  2. Managing things like safety at work and preventing things that break the rules.
  3. Analyse and build a strong compensation structure to align wages with the staff's workload.
  4. Act as conflict management to investigate workplace issues. HRM manages employee relations by preventing companies from being accused of unfair labour practices.
  5. HRM interventions help grow employee-employer relationships within the organisation. They administer surveys to ensure employer and employee satisfaction.

7 HR Basic Practices

Adopt from Academy to Innovate HR; There are seven basic functions of HRM. Every organisation can adjust this function to the size.

Source: A.I.H.R.

1. Hiring, Recruiting and Retaining Talent

The most well-known task of HRM is talent acquisition, which includes Hiring, Recruitment and Retaining Talent. This department ensures that the workforce matches the talents and goals of the organisation.

Hiring and Recruiting are two procedures for finding qualified individuals and then hiring them. Human capital performs several stages of screening to obtain the best candidate. In the past, the most popular screening process was offline interviews, but now screening techniques are more developed.

HRM is also responsible for employee retention. According to Huntscanlon, there are five main contributors to employee job satisfaction:

  • Respectful treatment of all employees at all levels
  • Compensation/pay
  • Trust between employees and senior management
  • Opportunities to use their skills and abilities at work
  • Job security

2. Performance Management

Employee performance is continuously monitored, planned, reviewed and rewarded using the performance cycle within the company. Typically, HRM uses assessment, coaching, counselling tools, and ongoing feedback. How companies evaluate employees depends on characteristics, distribution and other factors. In this case, the company supports everyone to be the most productive person.

3. Learning and Development

Development programs can have a positive impact on employee productivity and creativity. The company offers many opportunities for individuals to try new skills and enhance their talents. When employees feel the company is investing in their growth, company value becomes more positive.

HRM is responsible for providing training and development sessions in line with company objectives. The department can adjust the type of training by individual roles.

4. Succession Planning

Succession planning is like contingency planning in case a key employee leaves the company. For example, if a Project Manager quits his job, then HRM has prepared a replacement.

How does HRM get a replacement? The talent came from the L&D (Learning and Development) program, and a group of competent individuals emerged. The process of building leaders is not instantaneous. Still, the cost is more affordable than recruiting new talent. The Human Resources Director (HRD) mentions that hiring leaders cost almost $20,000.

5. Compensation & Benefits

Compensation and benefits are crucial to motivating and retaining employees. Another way to motivate employees is through awards and prizes. Both become invaluable in many situations, especially if the competition for candidates is intense.

HRM must calculate an appropriate level of compensation and compile a complete list of benefits. The goal is to create a competitive, attractive offer aligned with the candidate's experience.

6. HR Information Systems

HRIS supports all aspects of the human resources department. All major performance management, reward, training and recruiting operations are contained within the HRIS. HRIS also handles payroll and employee data.

7. HR Data & Analytics

The vital point of HRIS is that HRM can utilise its data to analyse company trends. HRM analytical metrics or KPIs serve to make better management decisions. Especially in remote work, HRIS helps to monitor every candidate from various backgrounds.

But HRM must ensure employees are aware of privacy and micromanagement issues. The HR department is prohibited from undermining employee trust.


HRM includes a strategic approach to managing and supporting individuals in the workplace. Recruiting, onboarding, training and empowering employees fall under the HRM department.

Human Resource Management has seven essential functions to manage an organisation. Each of these functions is related to and interacts with each other. HRM is one of the critical departments in the company. HRM is an essential part of modern business driven by people and relies on realising many people's potential to work successfully.


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