Human Resource Department is a Necessity for both Small Businesses and Large Corporations

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Introduction

The debate over the need for a Human Resource department in an organisation continues to rise among organisational leadership. Some argue that the Human Resource (HR) department is the backbone of a company’s sustainability, is essential in gaining a competitive advantage in the market, and plays an active role in business success. In contrast, others argue that the Human Resource department is a transactional, bureaucratic, and old-fashioned aspect of the company in a modern business where company success depends on business agility and its ability to cut edge. Greg Jackson, the CEO and founder of Octopus Energy, a start-up company in the United Kingdom, argues that a business does not need a Human Resource department; the HR department contributes to line managers shelving their responsibilities to third parties (Shaw, 2021). Organisations globally have integrated and delegated some human resource duties to line managers. However, they cannot sufficiently and effectively handle all human resource duties due to inadequate knowledge and training, ineffective human resource practices, and increased workload. Therefore, organisations need a human resource department to identify, attract and retain talented employees, manage employee’s performance, manage business costs, enhance company business ethics and ensure organisational compliance with labour laws.

Identify, Attract and Retain Talented Employees

Employees are the most valuable asset of a business; they form the base for a strong and running company. Therefore, companies need to identify, attract, and retain talented employees who will remain committed, dedicated, productive, and loyal (Ionel, Alina, & Dumitru, 2010). For businesses to acquire such a workforce, it requires a robust Human Resource department to conduct employee selection and recruitment, employee motivation, enhance employee satisfaction, and resolve employee conflict (Al Mamun and Hasan, 2017). These activities require a team that possesses adequate human resource training and not line managers.

Selection and Recruitment

Selecting and recruiting a qualified and skilled workforce is necessary for organisational performance. Good hiring decisions that meet organisational workforce demands require guidance from a team familiar with standard hiring processes. These teams should develop job descriptions, effectively screen resumes, prepare interview schedules, and select applicants that suit the task and fit the organisational culture (Bratton and Gold, 2017). Although line managers understand what is required to complete a task, their inadequate knowledge in human resource training can result in subjective hire instead of objective hire (Anwaar et al., 2016). Objective hire evaluates an applicant’s suitability to do the work and fit in the organisation’s culture. Proper selection and recruitment policies and procedures are essential in identifying, attracting, and retaining talented employees in an organisation.

Employee Motivation

Employee motivation is a significant aspect of an employee’s work life. It enhances employee dedication, loyalty, commitment, energy level, and creativity. Business requires a Human Resource department that understands all aspects of employee motivation from compensation, training, and development to work balance to build an environment that enhances employee productivity (DeCenzo et al., 2016). Employee compensation includes intrinsic and extrinsic rewards that the team should effectively balance to encourage employees to engage and be committed to an organisation. The business should develop training and development programmes that enhance employees’ ability to do the job and contribute to their personnel development, such as leadership skills and financial management training (Al Mamun and Hasan, 2017). Also, the business should develop a work balance system where employees enjoy a flexible work arrangement. This will enhance employees’ productivity and contributions to the organisations. These activities require an understanding of an organisation’s human capital aspect and need a team that is not already overwhelmed with their specific management roles (Anwaar et al., 2016). Line managers cannot adequately develop employee motivation practices that sufficiently attract and retain talent in an organisation. Hence, the need for a human resource department.

Employee Satisfaction

Employee satisfaction contributes significantly to the low employee turnover rate in the business. Achieving employee satisfaction revolves around business ability to strengthen the employee-employer relationship; this is dependent on the communication system and style in an organisation, majorly both way feedback (Nasir, 2017). These are functions of an employee specialist among Human Resource professionals. The absence of a Human Resource department implies that the company task line managers to ensure employee satisfaction that is majorly dependent on feedback. In most instances, employees find it easy to give feedback about managers to third parties, human resource department. When the human resource department is unavailable, employees cannot report managers’ misconducts such as harassment, discrimination, and favouritism that are the primary cause of high turnover rates in labour markets (Brewster and Soderstrom, 2017). Therefore, for businesses to encourage employee retention and enhance their company’s attractiveness in the labour market, there is a need for a Human Resource department that manages and improves employee satisfaction.

Employee Conflict Resolution

Working environment conflict is inevitable given the assorted diversity of personalities, foundations, and understanding among workers, work styles, and backgrounds. Disputes can be between employee and employee or employee and managers and require an independent party to resolve effectively (Bratton and Gold, 2017). Employees often accuse line managers of favouritism. This implies that employees doubt line managers’ objectivity in solving employee versus employee conflict. Additionally, it is challenging for a line manager to resolve a conflict between them and employees (Anwaar et al., 2016). Therefore, there is a need for an independent Human Resource department to enhance conflict resolution in an organisation. This will contribute to talent retention, which eventually will make the business attractive in the labour market.

Maintaining Compliance

Several rules and regulations govern the labour market, and companies need to adhere to these mandates for effective operations. Aside from state laws and regulations, several guidelines concerning employee well-being stem from international organisations. Thus, businesses should employ a competent Human Resource department to ensure their company complies with all the labour laws (DeCenzo et al., 2016). The human resource department reduces business liability, enhances safety and risk management and business legal compliance.

Reduce Business Liability

Workers often accuse the business of employment malpractices such as poor working conditions, harassment, and discrimination. With a proper human resource department, companies can minimise exposure and liability related to employment malpractices. Human resource specialists identify, investigate and resolve workplaces problems (Bratton and Gold, 2017). For instance, in an organisation without human resource management, employees do not have a department to report sexual harassment or discrimination from managers; hence most opt to report these incidences to the media impacting business reputation negatively. Limiting business liability exposure is a role that requires a proper Human Resource department.

Safety and Risk Management

The business should provide the employee with a safe working environment. Companies must comply with employee safety and risk management guidelines through developing programmes that reduce employees’ injuries, maintaining accurate work logs and records, and training and involving employees on how to handle dangerous equipment’s in an organisation (Bratton and Gold, 2017). Line managers do not have adequate knowledge of safety and risk management guidelines that businesses need to comply with. Additionally, managers often focus on business returns and pay little to no attention to the working environment and work conditions (Brewster and Soderstrom, 2017). Thus, the business needs to employ a proper Human Resource department to ensure that it creates a safe working condition.

Business Legal Compliance

It is the responsibility of the human resource department to ensure that the business complies with labour laws. The department ensures employees undergo training on their rights regarding union and state minimum wages, discrimination, harassment, and working conditions (Nasir, 2017). Additionally, the human resource department’s responsibility is to ensure that the company develops guiding principles that document employee rights and obligations and maintain employee records. This is essential in case an employee sues a company for any malpractices. Also, this department’s role is to keep tabs on emerging laws governing business operations to ensure complete compliance. These are roles that line managers cannot effectively carry out and implement due to their limited knowledge regarding human resource practices and their lack of adequate training on human resource operations and management (Brewster and Soderstrom, 2017). Companies need a proper human resource department to ensure that the business complies with the union and states legal laws regarding employee and business operations.

Business Ethics

The ability of a business to attract employees, customers, and investors depend on its business ethics. This includes corporate business image and steadfast business corporate principles. Business corporate image in the labour market is essential to the business’s ability to attract and retain talents (Al Mamun and Hasan, 2017). A proper human resource department that engages in ethical employee selection and recruitment, employee motivation, and creating a favourable work condition gives business the tag “employer of choice,” making it a preferred destination for workers. Similarly, Human resource development helps in building a steadfast business principle (Ferrell et al., 2019). This department plays a significant role in ensuring the business operates along morally acceptable standards (DeCenzo et al., 2016). For example, the HR department develops guidelines that prevent companies from engaging in forced child labour, low employee pays, and long working hours in unfavourable conditions. These are functions that line managers cannot adequately perform. Sometimes, they are at the center of morally unacceptable behaviours that employees accuse companies of, such as sexual harassment and discrimination (Anwaar et al., 2016). In the modern business world, individuals, investors, customers, and the workforce pay close attention to a business’s moral principles and standards. Therefore, businesses need a Human Resource department that pushes managers to engage in standards accepted in society.

Employee Performance

Peter Drucker said, what companies cannot measure; they cannot manage or improve (Webster, 2009). A proper employee performance management system is essential in ensuring the company’s success. Employee performance management involves performance evaluation and measuring, performance monitoring, and performance improvement (Bratton and Gold, 2017). Performance evaluation and measuring involve developing performance appraisal procedures that evaluate employee ability to complete tasks and employees’ behavioural attributes towards other employees and management. Performance monitoring involves periodic employee assessment and issuance of feedbacks through disciplinary warning, performance improvement plans, and evaluating if an employee task matches employees’ skills and expertise. Similarly, performance monitoring enhances employee engagement on a personal and individual level. This makes employees feel valued and essential in an organisation, enhancing employees’ loyalty and dedication towards the business. Performance improvement stems from effective performance measurement and performance monitoring. When employees realise the efforts attached to their performance and how genuine the company is interested in their performance, they will strive for a higher performance level (Al Mamun and Hasan, 2017). Although line managers can oversee employee performance, their management workload and inadequate human resource management training limits their ability to construct an effective plan that evaluates, measures, monitors, and enhances performance improvement in an organisation (Brewster and Soderstrom, 2017). Building a proper employee performance management system requires a competent Human Resource department.

Business Cost Management

The management of employee-related costs is vital in the overall cost management in an organisation. The human Resource department develops strategies essential in trimming employee-related costs, curbing excessive spending, and reducing the company’s overall operational costs in the long run (Nasir, 2017). This department can negotiate for better medical coverage plans with employees and health service provides. Similarly, Human Resource personnel has the necessary knowledge to develop competitive and realistic wages due to their in-depth understanding of employment trends, labour markets, and salary analysis based on job functions (Nasir, 2017). This is beneficial in managing costs related to employee compensation. Additionally, a proper human resource department ensures that the hiring and selection process and employee motivation are effectively carried out in an organisation; this reduces employee turnover and saves the company from hiring and training costs. These are functions that line managers cannot effectively carry out due to their limited knowledge of human resource practices and the overall working of the labour market (Brewster and Soderstrom, 2017). Therefore, companies should build a proper Human Resource Department to help in employee budget management.

Conclusion

Businesses globally recognise the importance of employees in attaining organisational goals and objectives. However, some companies do not acknowledge the importance of a department that ensures this valuable asset stays loyal, committed, and dedicated to the organisation. Some organisational leaders and managers, such as the CEO of Octopus Energy, Greg Jackson, view the Human Resource department as a transactional, bureaucratic, and old-fashioned aspect that limits business agility and the ability to cut edge. However, the Human Resource department contributes immensely to business ability to identify, attract, and retain talent, business cost management, employee performance, business compliance with the labour laws, and business ethical operational standards. Direct line managers cannot sufficiently carry out these functions due to their limited knowledge of Human Resource practices and the work overload created by this function. A proper Human Resource department positively impacts employees enhancing employees’ contributions towards company competitive advantage, growth, and productivity.

References

Al Mamun, C. A., & Hasan, M. N. (2017). Factors affecting employee turnover and sound retention strategies in business organization: A conceptual view. Problems and Perspectives in Management, (15, Iss. 1), 63-71.

Anwaar, S., Nadeem, A. B., & Hassan, M. (2016). Critical assessment of the impact of HR strategies on employees’ performance. Cogent Business & Management, 3(1), 1245939.

Bratton, J., & Gold, J. (2017). Human resource management: theory and practice. Palgrave.

Brewster, C., & Söderström, M. (2017). Human resources and line management 1. In Policy and practice in European human resource management (pp. 51-67). Routledge.

DeCenzo, D. A., Robbins, S. P., & Verhulst, S. L. (2016). Fundamentals of human resource management. John Wiley & Sons.

Ferrell, O. C., Harrison, D. E., Ferrell, L., & Hair, J. F. (2019). Business ethics, corporate social responsibility, and brand attitudes: An exploratory study. Journal of Business Research, 95, 491-501.

Ionel, V. C., Alina, C., & Dumitru, M. I. (2010). Human resources accounting accounting for the most valuable asset of an enterprise. Annals of the University of Oradea: Economic Science, 1(2), 925-931.

Nasir, S. Z. (2017). Emerging challenges of HRM in 21st century: a theoretical analysis. International Journal of Academic Research in Business and Social Sciences, 7(3), 216-223.

Shaw, D. (2021, June 22). CEO secrets: ‘my billion-pound company has no office.’ BBC News. Retrieved November 22, 2021, from https://www.bbc.com/news/business-57517669Webster Jr, F. E. (2009). Marketing IS management: the wisdom of Peter Drucker. Journal of the Academy of Marketing Science, 37(1), 20-27.