"Human resources" (HR) is a term that is used in business to refer to the people who work for a company or organization. It also is used to refer to the department of a company that is responsible for managing those resources, such as hiring and training new employees and overseeing the benefits and compensation packages provided to all of the company's employees. This term was coined in the United States during the 1960s, when labor relations became a greater concern for U.S. businesses, and has since spread around the world.
Managing People
The people who make up a company's workforce — its human resources — are considered to be an asset to the company, just like its financial resources and material resources, such as buildings, machinery and other equipment. A company is more likely to be successful if it manages all of its resources well, including its people. This is why many companies have human resources departments, even though those departments do not directly contribute to the company's production, services, sales or profits. Rather, effective HR departments allow and encourage the companies' employees to do their best, which in turn contributes to the success of those companies.
Current Employees
One of the main roles of an HR department is managing current employees. Unlike managers who directly oversee the employees' day-to-day work, the HR department deals with concerns such as benefits, pay, company policies and training. Among the benefits that might be handled by the HR department are insurance plans, paid vacations, paid leave for illnesses and other health matters, pension plans and employee investments. The HR department also might settle conflicts between employees or between employees and their managers as well as grievances filed against the company by employees.
Prospective and New Employees
Human resources also involves the acquisition of new employees. HR workers might be involved in recruiting potential employees through advertisements or at job fairs. In some cases, the HR department will try to hire certain types of people — or at least ensure that certain types of people — to improve the diversity of the company's workforce. For example, a company might look for candidates who belong to a certain minority demographic.
The HR department often collects and reviews job applications before forwarding those of the best applicants to the appropriate managers in the organization. The hiring process might also include background checks, credit checks and drug testing. After a new employee is hired, the HR department typically provides orientation, including instruction in company policies, and ensures that the employee is properly trained for his or her job.
Outgoing Employees
A company's HR department also plays a role when an employee leaves the company for any reason. If an employee is fired or otherwise let go against his or her wishes, certain tasks must be performed by the HR department to ensure that the process was done legally. In some cases, severance pay must be offered or negotiated, and outstanding balances of paid vacation time and other benefits must be settled. The HR department might also need to collect all keys or other equipment from the employee and make sure that he or she no longer has access to the company's resources, including computer networks.
Improving Morale
Employee morale is another concern for many human resources departments. An HR department might be responsible for choosing an employee of the month, arranging holiday parties and other get-togethers for employees or otherwise rewarding employees for good performance. The HR department often is concerned with creating a positive, enjoyable work environment. This can improve employees' production and contribute to a lower rate of turnover among the company's workforce.