Human Resources

Written By
Paul Tracy
Updated August 5, 2020

What is Human Resources?

Human resources is an organizational function related to the procurement and retention of talented employees.

How Does Human Resources Work?

All companies deal with human resources in some form or another, even if they don't have dedicated human resource departments. That's because human resources goes far beyond hiring; the function also deals with (among other things) maintaining morale within the organization; creating motivational compensation plans; creating and maintaining performance-appraisal programs; ensuring that important information about benefits, laws, and employment issues is disseminated; and helping employees maintain and develop their skills.

Sometimes the payroll function is part of human resources; sometimes it is part of accounting.

Why Does Human Resources Matter?

Human resources recognizes that people are assets rather than liabilities in companies. In order to keep these assets optimally productive, human resources is there to make sure a company hires the right employees, fires the wrong ones, develops employees with potential, keeps everyone happy, and ensures that companies and employees are fulfilling their legal obligations to each other.

One can measure the effectiveness of the human resources function through various ratios such as cost per hire, employee turnover rates, training return on investment (ROI), and benefit costs per employee. However, human resources is as much of an art as it is a science because it deals with some of the more emotional aspects of labor management.