What is human resource management?

Human resource management (HRM) refers to the processes and structures that help an employer recruit, train and manage employees. However, HRM goes beyond the basics of hiring and administrating staff. Well-developed HR strategies can help employers and employees thrive by creating an efficient, harmonious and fulfilling work environment.  

Human resources (HR) can refer to either the process of managing employees or refer to the department and staff in charge of that process. The terms HR and HRM are sometimes used interchangeably, but HR focuses more on administrative functions, departments or staff, while HRM often refers to the big picture of management, procedures and strategy. 

The process of managing human resources is typically carried out by an HR department. But that’s not always the case. The tasks may be integrated into other departments or performed by one or a few employees or the owner, especially at smaller businesses. 

It’s common for larger companies to have their own HR departments, although the nomenclature can vary. Besides “HR,” you might hear departments titled as People and Culture, People and Development, People Experience or Employee Support.

HR managers can help a company run more efficiently by managing administrative tasks such as recruiting and training, compensation and benefits. They also protect company interests by creating, communicating and enforcing company policies.

An HR manager may also spearhead other collaborative work with different department leaders (such as executives and supervisors) to develop a positive workplace culture, performance incentives and rewards, talent development programs and workplace engagement initiatives. These long-term, overarching HR goals are sometimes referred to as strategic human resources.

The origin of HR in the U.S. can be traced back to employment clerks in the early 20th century who were responsible for hiring workers for factories. Some companies created separate personnel departments for this, naming what we now call HR as “personnel administration.” 

In the 1920s, industrial researcher George Elton Mayo founded the human relations movement, which emphasized the connection between employee well-being and workplace productivity. 

Eventually, the scope of personnel administration shifted to also focus on legal compliance. Underpinning this change were new workplace and antidiscrimination laws, such as the New Deal labor laws, the Civil Rights Act of 1964, the Occupational Safety and Health Act (OSHA) and the Americans with Disabilities Act (ADA). 

The term “human resources” is reported to have been coined in 1954 by the legendary management consultant Peter Drucker, in his classic book The Practice of Management.

The growth of HR included practical changes too. The internet, for example, brought tech solutions still used today. Furthermore, continuous improvements in cloud services, software, web portals, apps and more all impact recruiting, candidate screening, onboarding and employee management.

Human resources also evolved to focus more on employee retention. In practical terms, this might look like surveys, feedback and exit interviews to measure employee satisfaction. 

HRM goes beyond procedures that help a workplace to function. HR managers also protect the employer from various risks and manage legal and ethical responsibilities. Some examples include:

• Creating a safe work environment 
• Preventing discrimination, harassment and bullying
• Establishing procedures for employees to report misconduct
• Resolving workplace conflicts
• Communicating company policies and workplace laws
• Encouraging employees to voice concerns and communicate feedback
• Mitigating risks such as security breaches and leaks of confidential information
• Managing layoffs and firing of employees
• Promoting an inclusive work environment

In small businesses, managing human resources can be more challenging since they might have less, or sometimes no, staff devoted to it. HR tasks may fall to individual managers or the business owner, or be outsourced.

The lack of an HR department can bring both challenges and opportunities. It can be easier and faster to implement meaningful change because there is less bureaucracy. 

However, if there are no employees trained in HR, there may be a higher likelihood of mistakes. A smaller or nonexistent HR department can also mean that HR resources are more focused on the basics and less on strategic human resources. 

Still, small-business owners can have a meaningful influence in HR even if they’re running a limited department or don’t have one. For starters, they can mindfully define the company’s culture, mission and values. This can help small businesses remain competitive in a market where both employees and customers prioritize such features. If budgets are tight, small-business owners can potentially offer low- or no-cost incentives to employees, such as flexible work arrangements. 

Of course, business owners can always grow their skills. Taking HR classes can better prepare business owners with skills and knowledge to create strategies that larger companies use to recruit and manage employees, such as:

• Building an employer brand
• Writing job pages that describe what makes the workplace special
• Conducting productive job interviews
• Recognizing employee achievements
• Encouraging work-life balance
• Creating team-building opportunities