In this guide, you’ll learn about the 21 key functions of human resource management (HRM). These key functions can be further broken down into following main types:
| Function Type: | Key HRM Function: |
| Managerial | Planning, Organizing, Directing, Controlling |
| Operative | Job Analysis, Recruitment, Selection, Placement, Orientation, Performance Appraisal, Training, Career Planning And Development, Transfer, Promotion, Compensation And Incentives |
| Strategic | Staffing, Retention Management |
| Relations | Human Relations, Industrial Relations |
| Compliance | Equal Employment Opportunity (EEO), Risk Management And Worker Protection |
Read on till the end to learn more about each of these functions in detail.
What Is Human Resource Management?
Human Resource Management, or HRM is the practice of managing people within an organization.
It involves a wide range of activities, all focused on ensuring that the company has the right people, with the right skills, in the right roles.
HRM professionals are responsible for attracting, selecting, training, assessing, and rewarding employees.
They also handle employee relations, ensure compliance with labor laws, and support the overall strategic goals of the organization.
The ultimate goal of HRM is to maximize the productivity of an organization by optimizing the effectiveness of its employees.
This involves creating a positive work environment, supporting employee development, and aligning the workforce with the company’s mission and objectives.
Effective HRM is crucial to the success of any organization.
It helps ensure that the company has the talent it needs to achieve its goals, and that employees are engaged, productive, and satisfied in their roles.
To achieve these objectives, HRM professionals focus on several key functions.
21 Key Functions Of Human Resource Management (HRM)
1. Planning
Planning is the process of setting goals and determining the best way to achieve them.
In human resource management, it involves analyzing the organization’s current workforce, forecasting future needs, and developing strategies to bridge any gaps.
The HR manager is primarily responsible for the planning function.
They work closely with top management to understand the company’s strategic objectives and convert them into HR plans.
This could include plans for recruitment, training and development, succession planning, and more.
For example, if the company plans to expand into a new market, the HR manager would assess the skills and headcount needed to support that growth. They would then create a plan to recruit and onboard the necessary talent.
Effective HR planning avoids costly issues like understaffing or skill gaps.
2. Organizing
Organizing is the process of designing a structure that enables the company to achieve its goals. In HR, this means creating a framework for managing the workforce effectively.
The HR manager leads the organizing function. They develop the organizational structure, define roles and responsibilities, and establish reporting relationships.
They also create HR systems and processes, such as performance management or employee data management.
For instance, the HR manager might decide to structure the department by function (recruitment, training, compensation).
They would define the roles within each function and clarify who reports to whom. They might also implement an HR information system to streamline employee data management.
Proper organizing ensures that everyone understands their role and how it contributes to the company’s success. HR organizing enables the smooth operation of the workforce and supports the achievement of business objectives.
3. Directing
Directing is the process of guiding and motivating employees to achieve the company’s goals.
It involves communicating expectations, providing feedback and support, and creating a positive work environment.
While top management sets the company’s overall direction, HR plays a crucial role in directing the workforce.
The HR manager communicates company goals and expectations to employees and develops policies and programs to support employee performance and engagement.
For example, the HR manager might implement a recognition program to celebrate high performers. They might also conduct regular check-ins with employees to provide coaching and feedback.
4. Controlling
Controlling is the process of monitoring performance, comparing it to goals, and taking corrective action when necessary.
In HRM, this means tracking key workforce metrics and ensuring that HR strategies are delivering the desired results.
The HR manager is responsible for establishing HR metrics and reporting on them to top management. They monitor indicators such as turnover rate, time-to-fill vacancies, and employee engagement scores.
They analyze this data to identify trends and potential issues.
For instance, if the HR manager notices a spike in turnover, they would investigate the causes. They might discover issues with management practices or compensation. They would then recommend and implement solutions to address the problem.
Controlling allows HR to demonstrate its value to the organization. Effective controlling ensures that HR strategies remain aligned with business needs and are delivering the desired outcomes.
5. Job Analysis
Job analysis is the systematic process of gathering, analyzing, and documenting information about a specific job.
It involves determining the duties, responsibilities, and requirements of a job, as well as the knowledge, skills, and abilities needed to perform it successfully.
The HR department is typically responsible for conducting job analysis. The process involves several steps, including:
- Collecting data through interviews, questionnaires, and observation.
- Analyzing the data to identify the key tasks and responsibilities of the job.
- Determining the necessary qualifications, such as education, experience, and skills.
- Creating job descriptions and specifications based on the analysis.
Job analysis is important because it provides a clear understanding of what each job entails.
This information is used for various HR functions, such as recruitment, selection, training, performance management, and compensation.
6. Recruitment
Recruitment is the process of attracting and identifying qualified candidates for open positions within an organization.
It involves sourcing candidates through various channels and encouraging them to apply for available jobs.
The HR department is responsible for developing and executing recruitment strategies. This involves:
- Identifying the most effective recruitment channels, such as job boards, social media, or employee referrals.
- Creating compelling job descriptions and advertisements to attract qualified candidates.
- Attending job fairs and networking events to connect with potential candidates.
- Screening resumes and applications to identify the most promising candidates.
Recruitment has a direct impact on the quality of an organization’s workforce. By attracting a diverse pool of qualified candidates, organizations can select the best talent for each position and build a strong, capable workforce.
Proper recruitment also helps organizations reduce turnover and improve employee retention.
7. Selection
Selection is the process of evaluating candidates and choosing the most qualified individual for a specific job.
It involves assessing candidates’ knowledge, skills, abilities, and other characteristics against the requirements of the job.
The HR department is responsible for designing and implementing selection processes that are fair, valid, and reliable.
This involves:
- Conducting initial screening interviews to assess candidates’ qualifications and fit.
- Administering tests or assessments to evaluate candidates’ skills or personality traits.
- Conducting in-depth interviews to assess candidates’ experience, motivation, and potential.
- Checking references and conducting background checks to verify candidates’ qualifications and history.
Selection is crucial because it has a direct impact on the quality of hires and the overall performance of the organization.
Effective selection also helps organizations reduce the costs associated with poor hiring decisions, such as turnover, low productivity, and poor performance.
8. Placement
Placement is the process of assigning a new hire to a specific job or role within the organization.
It involves considering the individual’s skills, experience, and preferences, as well as the needs and requirements of the job.
The HR department works with hiring managers to determine the most appropriate placement for each new hire. This involves:
- Analyzing the job requirements and the new hire’s qualifications.
- Considering the new hire’s career goals and development needs.
- Assessing the fit between the new hire’s personality and work style and the team or department culture.
- Providing guidance and support to help the new hire transition into the role.
Placement is important because it begins new hire’s success and engagement with the organization.
By placing individuals in roles that align with their strengths, organizations can maximize their contribution and job satisfaction.
9. Orientation
Orientation, also known as onboarding, is the process of introducing new hires to the organization and helping them adjust to their new roles.
It involves providing new employees with the information, resources, and support they need to become productive and successful members of the organization.
The HR department is typically responsible for designing and delivering orientation programs. These programs include:
- Providing an overview of the organization’s history, mission, values, and culture.
- Explaining the new hire’s job duties, expectations, and performance standards.
- Introducing the new hire to their supervisor, team members, and other key colleagues.
- Providing training on company policies, procedures, and systems.
- Assigning a mentor or buddy to help the new hire navigate the organization and their new role.
Proper orientation helps new hires feel welcomed, valued, and prepared for success in their new roles.
10. Performance Appraisal
Performance appraisal is the process of evaluating an employee’s job performance. It involves assessing how well an employee is doing their job compared to set goals and standards.
The HR department usually manages the performance appraisal process. They work with managers to:
- Set clear job expectations and goals
- Monitor employee performance over time
- Provide regular feedback and coaching
- Conduct formal performance reviews
- Use the results to make decisions about pay, promotions, and development
Performance appraisals are important because they help employees understand how they are doing and what they need to improve.
They also help the company make fair decisions about rewards and recognize top performers.
11. Training
Training is the process of teaching employees the skills and knowledge they need to do their jobs well.
It can include everything from job-specific technical training to soft skills like communication and teamwork.
The HR department is in charge of creating and managing training programs. They:
- Figure out what training is needed based on job requirements and company goals.
- Design or choose appropriate training methods and materials.
- Deliver training either in-person, online, or through a mix of methods.
- Evaluate the effectiveness of training and make improvements.
Training helps employees perform better in their current jobs and prepare for future roles.
It can also increase job satisfaction and reduce turnover.
Some best practices for effective training:
- Customizing training to the specific needs of the job and the individual.
- Using effective learning techniques like practice and feedback.
- Providing opportunities for ongoing learning and development.
- Evaluating the impact of training on job performance and business results.
12. Career Planning And Development
Career planning and development is the process of helping employees manage their careers within the company.
It involves working with employees to identify their skills, interests, and goals and find ways to grow and advance in their careers.
HR plays a key role in career planning and development. They:
- Provide career counseling and guidance to employees
- Help employees create individual development plans
- Identify internal job opportunities and career paths
- Provide training and development programs to support career growth
- Work with managers to support employee development
Career planning and development is important because it helps the company retain and engage talented employees.
When employees feel like they have a future with the company, they are more likely to stay and perform their best.
13. Transfer
Transfer is the process of moving an employee from one job or department to another within the company.
It can be initiated by the employee or the company, and can be temporary or permanent.
HR manages the transfer process. They:
- Develop policies and procedures for requesting and approving transfers.
- Help match employees with available job openings based on their skills and interests.
- Coordinate with managers to ensure a smooth transition.
- Update employee records and provide necessary training and support.
Some best practices related to transfers:
- Having a standard and fair process for requesting and approving transfers.
- Considering the impact on both the employee and the business.
- Providing adequate training and support during the transition.
- Following up to ensure the transfer is successful.
14. Promotion
Promotion is the advancement of an employee to a higher level position with more responsibility and usually higher pay. It is a way to recognize and reward high-performing employees and fill higher level jobs with proven talent.
HR works with managers to manage the promotion process. They:
- Establish clear criteria and guidelines for promotions.
- Identify potential candidates based on performance and potential.
- Assess candidates’ readiness for promotion through interviews, assessments, or other methods.
- Coordinate the selection and transition process.
- Update job descriptions, pay, and other records.
Promotions act as one of top ways to recognize and reward top performers. They also help companies develop and retain high-potential employees.
15. Retention Management
Retention management is the process of keeping valued employees with the company.
It involves understanding why employees stay or leave and taking steps to create a positive work environment that encourages employees to stay.
HR plays a key role in retention management. They:
- Analyze turnover data to identify trends and issues.
- Conduct exit interviews to understand reasons for leaving.
- Develop strategies to address the root causes of turnover.
- Create programs to improve employee satisfaction and engagement.
- Monitor the effectiveness of retention efforts over time.
Retention is important because high turnover can be very costly for companies. It leads to lack of productivity, plus, increased hiring and training costs.
Some best practices for effective retention management:
- Regularly assessing employee satisfaction and engagement.
- Providing competitive pay and benefits.
- Offering opportunities for growth and development.
- Developing a positive work culture and strong manager-employee relationships.
- Recognizing and rewarding high performance.
16. Compensation And Incentives
Compensation is the money and benefits that employees receive for their work. It includes things like:
- Base pay
- Bonuses
- Stock options
- Health insurance
- Retirement plans
HR is in charge of creating and managing the company’s compensation programs.
They make sure the programs are:
- Fair and competitive
- Aligned with the company’s goals and values
- Compliant with laws and regulations
Incentives are rewards given for meeting specific goals or performing well. They can be things like:
- Sales commissions
- Performance bonuses
- Profit sharing
- Recognition awards
Just like compensation, HR handles incentive and reward programs.
Overall, compensation and incentive are important because they directly affect an employee’s standard of living and their motivation to work for the company.
Good implementation of rewards and incentives can help attract and keep top talent.
17. Staffing
Staffing is the process of determining and filling the company’s human resource needs.
It involves:
- Workforce planning to determine how many and what types of employees are needed
- Recruiting to attract qualified candidates
- Selecting the best candidates to hire
- Placing new hires in appropriate roles
- Orienting and training new employees
HR is responsible for managing the staffing process and working with managers to ensure their departments are appropriately staffed.
Effective staffing is important because it directly impacts the company’s ability to operate and achieve its goals.
Understaffing can lead to overwork, burnout, and poor customer service. Whereas, overstaffing can be costly and inefficient.
Some of the best practices related to staffing:
- Conducting regular workforce planning aligned with business strategy.
- Developing a strong employer brand to attract top talent.
- Using diverse recruiting methods to reach a wide candidate pool.
- Using valid and reliable selection methods to assess candidates.
- Providing thorough orientation and training for new hires.
18. Equal Employment Opportunity
Equal Employment Opportunity (EEO) refers to the practice of giving everyone the same chances for employment without any biases or discrimination.
HR is responsible for ensuring the company complies with EEO laws and regulations. This involves:
- Developing and enforcing non-discrimination policies.
- Training managers and employees on EEO rights and responsibilities.
- Monitoring hiring, promotion, and other employment decisions.
- Investigating and resolving discrimination complaints.
Not following EEO properly can lead to serious penalties for the company.
Some of the best practices for EEO compliance:
- Making EEO a clear company value and priority.
- Analyzing workforce data regularly to identify and resolve any issues.
- Training all employees, especially managers, on EEO regularly.
19. Human Relations
Human relations refers to the way the company manages interactions between employees and between employees and the company.
The goal is to create a positive and productive work environment.
HR is responsible for:
- Developing policies that promote respect, fairness, and open communication.
- Training managers and employees on effective communication and conflict resolution.
- Investigating and resolving employee complaints or conflicts.
- Promoting diversity, inclusion, and equal opportunity.
- Organizing team building and employee engagement activities.
Good human relations improve employee motivation and job satisfaction. It also enhances teamwork and productivity.
20. Industrial Relations
Industrial Relations, also known as labor relations, refers to the relationship between the company and its unionized workforce.
It involves:
- Negotiating collective bargaining agreements that regarding wages, hours, and working conditions
- Administering the agreement and resolving disputes that arise
- Representing the company in formal grievance and arbitration proceedings
- Promoting positive union-management cooperation
In companies with unionized workers, HR (or a dedicated labor relations staff) manages the industrial relations function.
Effective industrial relations is crucial because it directly impacts labor costs, productivity, and employee engagement.
Some of the best practices include:
- Understanding and respecting the rights of workers to organize and bargain collectively.
- Training managers to understand and administer the union contract.
- Maintaining open and honest communication with union representatives.
- Looking for win-win solutions to problems whenever possible.
- Developing a climate of mutual respect and cooperation.
21. Risk Management And Worker Protection
Risk management in HR refers to identifying, assessing, and controlling threats to the company’s workforce.
This includes:
- Ensuring a safe and healthy work environment.
- Protecting employees from harassment, violence, or other threats.
- Securing confidential employee information.
- Complying with labor and employment laws.
- Managing the risks of employee lawsuits or claims.
HR is responsible for developing and administering policies and programs to manage these risks.
This involves:
- Conducting regular safety inspections and addressing hazards.
- Investigating and resolving employee complaints.
- Securing employee data and maintaining privacy.
- Training managers and employees on relevant laws and company policies.
- Purchasing appropriate insurance coverage.
Proper risk management protects the well-being of employees, reduces legal liabilities and financial losses for the company.
Top 5 Recent Trends In HRM
1. Emergence Of AI In Workforce Management
Artificial Intelligence is making its way into many aspects of HR. From recruitment to performance management, AI is helping HR professionals make better decisions.
AI can scan through hundreds of resumes in seconds, identifying the most promising candidates.
It can also analyze employee data to spot trends and potential issues, like high turnover in a particular department.
The use of AI in HR is growing because it can save time and reduce bias in decision-making. However, it’s important to remember that AI is a tool to assist HR, not replace human decision entirely.
2. Skill-Based Recruitment
In the past, recruitment often focused heavily on degrees and years of experience. But many companies are now shifting to skill-based hiring.
With skill-based hiring, the emphasis is on what a candidate can actually do, rather than just their educational background.
This opens up opportunities for candidates who might have been overlooked before, like those with non-traditional career paths.
This trend is important because it helps companies find the best talent for the job, regardless of background. It also promotes diversity and inclusion in the workplace.
3. Hybrid Work Is Here To Stay
The rise of digital technologies has made remote work more feasible than ever.
Many employees now prefer flexible work arrangements that allow them to balance work and personal life more effectively.
Hybrid work, where employees split their time between the office and remote locations, is emerging as a popular middle ground.
It provides employees with the flexibility they desire while still allowing for face-to-face collaboration when needed.
For HR, managing a hybrid workforce comes with new challenges. It demands clear communication, good technology infrastructure, and a strong emphasis on maintaining company culture and employee engagement.
4. Finding Top Talents Becomes Challenging
With many companies competing for the same talent, finding and attracting top candidates is becoming more challenging.
Traditional recruitment methods may no longer be enough.
HR teams are having to get creative in their recruitment strategies. This might involve using social media, offering unique perks and benefits, or emphasizing the company’s mission and values.
The key is to stand out from the crowd and make your company an attractive place to work. This requires a strong employer brand and nice employee value proposition.
5. Employee Satisfaction
Employee well-being and satisfaction are becoming top priorities for many companies.
There’s a growing recognition that happy employees are more productive, more engaged, and more likely to stick around.
HR plays a key role in promoting employee well-being.
This might involve offering wellness programs, providing mental health support, or fostering a positive work culture.
The benefits of focusing on employee happiness are clear. Companies with engaged employees outperform their competitors, with higher productivity, lower turnover, and better customer satisfaction.
Conclusion
So there you have it – the top 21 key functions of human resource management.
From recruitment and training to industrial relations and risk management, we covered all the important functions of HRM.
Focusing on these areas is important for the HR department of any company. It helps in enhancing employee satisfaction, reduces turnover, and contributes to the overall success of the organization.
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