Why is Human Resources Important for an Organization?

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Why is Human Resources Important for an Organization
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The Human Resources (HR) Department is one of the essential departments of any organization. The HR team ensures effective management of the ‘human’ element of a company – the employees.


Employee management consists of several different factors, such as employee payroll, attendance and leaves, training, etc. It also ensures compliance with the laws to mitigate any risks arising from unintentional non-adherence to any regulations.


In this article, we will discuss the fundamental roles and responsibilities of the HR department and understand the answer to the query of why is human resources important for an organization.
Also Read: Human Resource Management (HRM) Definition & Meaning


What are the responsibilities of the HR department?

Let us take a closer look at the various responsibilities of the HR department:



Recruitment and talent management are an essential part of human resources duties as it directly affects the quality of the employees present in the organization, which directly affects the organization’s success.


The Human Resource Team is required to search and find the perfect candidates, develop a talent pool based on the candidates found and negotiate with the best candidates to make them take up the vacant position in the organization.



Another significant responsibility of the Human Resources is to undertake the onboarding of the newly joined employees.


The Human Resource department undertakes the joining formalities and conducts the induction for the new joiners to ensure that they feel welcome and valued in their new company. Since first impressions matter to human beings, the HR team’s onboarding efforts often prove to be a decisive factor in retaining the employees for longer.


Payroll Management

Payroll is one of the essential factors, if not the most essential one, that motivates the employees to work for an organization. Hence, managing payroll is a crucial part of Human Resource responsibilities.


Effective payroll management ensures that the employees receive their correct salary on time, thereby enhancing their perception in the employees minds.


Employee Performance

Employee performance management is one of the most vital duties of the HR professionals. It directly influences the employees’ performance and hence, the company’s long-term success. Irrespective of solid recruitment strategies, your employees will have skill gaps.


Only robust performance management and adequate training will result in filling these gaps. Performance management will also help recognise potential performers and future leaders early, which would help groom them accordingly.


Training and Development

Training and development go hand in hand with performance management. Once you identify the poor performers with performance management, you can train them to develop their skills and ensure better performance.


Employee developments result in better engagement, improved productivity, and reduced turnover. It results in an overall better workplace and a positive work environment. As a result, your organization automatically gains a competitive edge.


Company Culture

As mentioned earlier, having well-trained and skilled staff ensures a positive work environment. It improves job satisfaction and employee engagement, which results in positive business culture in the workplace.


Your employees would love to work in such a positive workplace, ensuring that they remain loyal and longer with you. The Human Resource department must develop a positive and encouraging company culture and ensure that every employee adheres to the same philosophy.


Statutory Compliance

Being a commercial organization, you must maintain and adhere to multiple regulatory guidelines regarding employment and labour. The Human Resources is responsible for ensuring that the company abides by all these laws and protects the business from expensive lawsuits and penalties.


ince the statutory compliances mainly deal with the staff, the HR team should take extra precautions in uploading all the laws and keep themselves updated with any changes in it.
Also Read: Statutory Compliances and Payroll in India: All an Employer should know


Expense Management

The Human Resource department is also in charge of managing the company expenses and the accounts team. The Human Resource team sets the budget for various aspects of the company related to employees, such as setting employees’ wages and compensation structure, additional benefits, training budgets, etc.


By adhering to the local labour laws, they also ensure that the company is safeguarded from lawsuits and penalties, which again helps the business.


Health & Safety

There are various work environments in any industry that are considered hazardous. In such scenarios, it is the company’s responsibility to provide the employees with adequate safety equipment and ensure that they have safe working conditions.


It helps reduce workplace accidents and ensures that the workers feel valued by their company. Having this understanding results in a more productive and engaged workforce.


Why is human resources important for an organization?

Now that we have understood the responsibilities of the HR team, let us discuss the importance of HR and its influence on businesses:


Strategic Planning

The primary function of Human Resources department is to manage employees by hiring and onboarding talented individuals, training and upskilling them, measuring their performance, recognizing their efforts and rewarding them, and undertaking any administrative tasks related to them. All these functions require strategic planning from the HR team to ensure that they are completed on time and within a pre-defined budget.


The HR team brainstorms with the upper management by evaluating the current staffing requirements and developing future projections. They are also required to create various designations and the compensation structure for every position in the company.


Maintaining Employee Satisfaction

It is a well-established fact that satisfied employees remain longer with the company, are more productive in their work and are actively engaged with their organization. Hence, the Human Resource department strives to develop and maintain employee satisfaction. They develop and implement creative strategies to strengthen the employee-employer bond.

The HR department maintains employee engagement with the help of employee surveys, focus group studies, training the under-performers and recognizing and rewarding the top performers. They also provide additional perks and benefits to the employees to ensure that they are retained longer in the company. The Human Resources team even conducts exit interviews to understand their shortcomings and rectify them so that no employee wishes to leave their organization.


Analyzing Employee Benefits

Many companies provide additional perks and benefits on top of the employee salary to ensure that their staff remain loyal to their company for longer. Hence, the Human Resources team sets the additional budget for implementing these extra benefits to reduce employee turnover. They also need to balance out that the budget spent on the extra perks should not be higher than the costs of hiring and training new employees.


The perks and benefits also need to be financially viable for the company as it reflects the current economic conditions of the company. Additionally, they must ensure that these benefits are not breaking any statutory laws.


Managing Risk Factors

As mentioned earlier, the Human Resources team works with other departments to minimise risk and ensure the company’s safety compliance and its premises. Hence, they need to be well-versed in business laws and best practices, the ethical side of things, the statistics involved and implement creative problem-solving practices to mitigate any workplace risks.


The Human Resources team also implements various company-wide and department-wide policies to ensure that all teams work in tandem towards the organisational goals. Developing these policies helps minimise the risks involved and ensure that everyone is following the rules set by the business for a safe work environment. Modern offices implement their ‘IT’ policies for the same purpose in the digital environment.


Ensuring Employee Retention

Retaining employees to work for you is a daily challenge that the HR personnels face. The HR team undertakes various tasks and drafts several policies to ensure that their employees stay with the company. However, due to the cut-throat competition in the business world, the battle has become quite challenging. HRs have started getting creative with the perks and benefits they provide to retain their employees.


Modern Human Resources needs to provide the new-age employee with creative and unique perks to ensure that they stay with the company. Hence, the benefits must be provided per the employee’s generation and designation. Moreover, one should also try to customize the perks to ensure that it caters to the employee and compels them to stay longer.

Also Read: What Is Employee Retention? Benefits, Strategies + Free E-book


Resolving Conflicts

A company is run by a group of individuals who are working towards the same goal. Hence, it is inevitable that certain differences in opinion might occur when trying to tackle a specific issue or resolve a problem. In such a scenario, the Human Resources department acts as a mediator to help resolve the conflicts, irrespective of the designation of the conflicting parties.


By actively monitoring and resolving conflicts, the Human Resources team ensures that the positivity of the work environment is maintained. They can also take a neutral stand in such cases as they can think from the perspective of both parties. The same philosophy applies to circumstances where the employee is at crossroads with their company. The HR acts as a neutral mediator in such cases too.


Organizing Events

The Human Resources department is also required to organize events for the office to help boost employee morale and have a festive environment. Human beings crave something different, and the HR team ensures that this craving is fulfilled with the help of festivities. The simple activities and the office decoration on special days are geared towards creating a festive environment and boosting the employees’ morale and engagement with the company.


The HR team also comes up with creative games to keep up the competitive spirit in the workplace and recognize the employees with a specific skill set. Hence, even while the rest of the employees are enjoying themselves, the HRs are actively doing their duty to ensure a great work environment for their employees.



The ‘Human Resources’ department exists for the sole reason of managing the ‘human resources’ of the company. However, one needs to understand that the employees are their company’s most valuable resource. Thus the query, ‘why is human resources important?’ becomes all the more relevant. The importance of human resource is evident in the fact that managing the employees effectively can be the difference between a successful workplace and a mediocre company.

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