HRM includes tasks such as recruiting, training, and compensating employees.
Since the COVID-19 pandemic, human resource (HR) departments have experienced a greater demand for support. 55% of HR leaders receive more requests for help on various topics—and these demands are becoming increasingly complex, as per Gartner research. The survey also found that only 9% of HR functions are highly efficient and aligned with the organization's needs.[1]
Current HR structures fail to meet modern-day challenges—and the consequences could be detrimental. As an SMB, it’s crucial that you prioritize human resource management from the start. Just as you invest in marketing and sales, effective HR management will be crucial as you grow and this article will help you understand why.
What is human resource management (HRM)?
Human resource management is the practice of recruiting, hiring, deploying, and managing a team of employees. However, successful HR managers do more than manage people—they set them up with essential tools and resources.
HRM involves the creation of policies and procedures that support business objectives. It is a strategic approach, and it's as critical as any other business operation, including financial or marketing operations.
The importance of HRM
HR covers your greatest asset—your people. The ultimate goal is to improve employee performance by developing a positive workplace culture that supports employee engagement. Your team is the foundation of your success, so everyone wins when you prioritize HR management. Your people feel safe, valued, and supported, and as a result, employee satisfaction fuels productivity and growth.
When you invest in HRM, your business can improve workplace efficiency and achieve key goals. However, when ignored, a string of HR disasters could end up sinking your business. From poor employee training to a non-compliant work environment, many SMBs cannot bounce back from costly penalties or a diminished reputation.
Regardless of HR management's importance, the true value of HR is not always immediately apparent—especially among SMBs. At first, you may only have a few employees, so you feel in control of the hiring and management process. As your business grows, the importance of day-to-day people management can get lost among marketing tasks, sales objectives, and financial considerations. Poor HR habits from the beginning can affect company culture and once you realize there’s an issue, the consequences could be detrimental. Your reputation as an employer is crucial in attracting and retaining top talent, which will be reflected in your bottom line.
The functions of HRM
In the last two years, 86% of HR leaders have, are in the process of, or plan to restructure HR functions.[2] As an SMB, it’s important to align your HRM functions with your business strategy.
HRM functions depend on the industry, types of workers, and business size. In most cases, the primary objective is to attract and retain talent, improve communication and collaboration, and ensure cooperation. Some other key functions include:
Understanding the required skills and experience when hiring the right people and determining appropriate compensation. These HRM functions matter when recruiting new hires, improving retention and engagement rates, etc.
Handling day-to-day operations surrounding health and safety policies, employee grievances, and other areas that support regulatory compliance.
Evaluating performance to foster employee growth through guided feedback while serving as a guide for promotions and raises.
Recognizing achievers and high performers, motivating them through bonuses and rewards. These incentive programs encourage employees to take greater ownership of business operations, fueling SMB growth.
Setting up training initiatives, whether orientation programs or advanced education, to help boost productivity, reduce turnover, and minimize risks.
The challenges and opportunities facing HRM
Many global HRM challenges continue to develop as businesses shift to hybrid models and talent landscapes become more dynamic—not to mention while technology and automation continue to evolve. HR must be more efficient, agile, and strategically aligned with the business. This transformation is top of mind among HR leaders.
Data shows that CHROs are seeking alternative models. Only 34% of HR leaders think their current structure allows HR to adapt quickly to changing business priorities, while 40% believe their structure separates strategic and transactional HR tasks appropriately, such as policy preparation or new employee recruitment.[2]
HR transformation is at an all-time high, and HRM is helping pave the way. While no singular "perfect" operating model exists, the most successful models blend flexibility, efficiency, and people-first technology.
Barriers to effectiveness—which have become more challenging since before the pandemic—have also become key concerns for HR leaders. Over 70% of leaders worry about HR employee burnout and 50% report that having limited financial resources is more challenging than it was before the pandemic.[1]
Focus on the challenges your HR associates are experiencing to develop your HRM strategy, opting for software options that simplify and automate the most crucial processes.
HRM systems and software
Many HR leaders have turned to the latest systems and software as HR functions and regulations evolve. This transition has helped them adapt to the changing workforce environment and more effectively manage their people.
Businesses of all sizes benefit from the latest HRM systems and tools, covering areas such as:
When investing in people-centric, data-powered solutions, such as HR software, businesses can:
Improve the hiring and onboarding process to engage and retain top talent.
Manage people more effectively to maintain compliance and optimize productivity.
Make more informed, data-driven decisions to drive growth within your SMB.
Invest in the future of your business
All businesses need effective human resources management, so investing in HRM software could be the missing piece if you aim to do more with fewer resources. Complete HR suite solutions offer everything from improved payroll processing accuracy and employee performance to greater task automation. You can also find standalone software options that focus on select tasks, such as recruiting software.
The key is finding a solution that meets your needs and fits within your budget. To learn more, check out these comprehensive resources: