It is crucial to understand human resource management for your business because your workforce is your most important asset. In fact, human capital is one of the determinants of labor productivity. Investments in this area will lead to business growth. The National Association of Business Owners and Entrepreneurs supports this idea by saying that valued employees are 24% more likely to increase the company’s sales. Here are some basics in human resource management to get you started.

What is Human Resource Management in Business?

Human resource management is simply managing your employees effectively to maximize the productivity of your business. Think of your people as the hands and feet of your company. Without them, your company will not function. A business must maximize and use human resources efficiently in order to greatly benefit from them in terms of sales.

However, human resource management means an increase in sales and job satisfaction among your employees. If you focus on sales and exhaust your human resources, your employees’ welfare might be compensated. Hence, human resource management is maximizing your human resources without sacrificing your employees’ well-being.

The HR department is the one responsible for human resource management. It acts as a mediator between the organization and its employees. They carry tasks such as recruiting, hiring, deploying, and all other matters concerning the workforce.

Principles of Human Resource Management

Human resource management works on several underlying principles. These ideas guide HR in implementing rules and regulations that concern employees in the organization.

  1. Human resources are the most important asset of a business. Without recognizing this, human resource management is impossible. This is the most fundamental principle that drives everything in managing your workforce.
  2. Fair treatment. Rules, regulations, benefits, compensation, and rewards must be consistent. They should not work in favor of a group or an individual inside the organization.
  3. Respect. Everyone deserves to be respected, not just those who are at the top of the organizational chart.
  4. Rewards must be earned, not given. If an employee works hard to earn a reward, it must be given to him or her. Rewards should be given to those who deserve them rather than to anyone.
  5. Career Development. The organization must offer opportunities for employees’ career advancement. This benefits not only the individual but the organization as a whole.

Functional Areas of Human Resource Management

In order to maximize the workforce, the human resource department works on several areas under human resource management.

1. Recruitment

One goal of human resource management ( is to select suitable candidates applying for a job in the organization. Recruiting, screening, and doing background checks are tedious tasks. It also necessitates the full attention of the HR department so as to hire those that really fit given the profile of your company.

2. Workers’ Compensation and Benefits

Both intrinsic and extrinsic rewards motivate employees to work optimally. Workers feel proud of themselves after excelling in a task given to them. This is an intrinsic reward. Intrinsic is a sense of accomplishment. On the other hand, compensation and benefits are extrinsic rewards because they come from the outside. Your employees work to live, and monetary rewards are effective in boosting workers’ performance. Medical benefits, paid vacation time, and educational assistance are examples of employee benefits.

3. Education and Training

Training programs for employees are one investment that any business can significantly benefit from. Training and developments include giving orientation to new employees to introduce them to your organization. Job training also helps your employees develop their skills further to grow as individuals and help increase their output. It’s a win-win situation.

4. Workplace Safety

The workplace is the second home of your employees. They must feel safe and secure inside your office building so they can carry out their duties.

5. Legal Obligation

Human resource management adheres to the rules and regulations set by the US Department of Labor. There must always be a legal basis for decisions made by the HR department. They should also be updated with the latest employment laws to make updated employment decisions.

Strategies for Effective Human Resource Management

Managing your employees is not a difficult task. Listening to them is always the first step. Here are some strategies you can employ in effectively managing your human resources.

  • Let your employees reach their full potential.
  • Listen to what they have to say.
  • Encourage teamwork.
  • Appreciate or reward hard work.
  • Get to know your people.


Human resource management plays an important role in a company’s success. Without it, you will be unable to maximize your human capital and increase your company’s labor productivity. Now that you know the basics of human resource management, it’s time to give attention to your most important asset: your people.