Why HR is Necessary to Manage Your Business

4 Minute Read

As an HR director, have you ever had to justify your existence?

Unfortunately, many HR professionals endure everything from annoyance to outright hostility.

In corporate America, Human Resources management gets a bad rap.

This is discussed in a Reddit thread with insights from HR professionals. I based this post on the thread because the contributors justify Human Resources brilliantly.

Bookmark this. You’ll be ready the next time you need to make the case for Human Resources management.

Why Human Resources Exists

CFOs get frustrated by revenue-sucking departments. Especially when their functions are not directly tied to sales. When you lump labor costs into HR, it does command the largest chunk of operating expenses. There’s no getting around that. You can’t hide HR on the balance sheet.

But many departments don’t generate revenue directly. What about marketing? What about accounting? What about R&D?

It’s helpful to think in terms of value rather than revenue. Human Resources management creates value. This value helps all the other departments perform at the highest levels.

HR Creates The Right Conditions

Smart executives understand that effective Human Resources management is a catalyst. It creates the conditions for all the other teams to succeed.

For example, talent acquisition experts attract employees that drive innovation. They find people with unique skill sets. This is especially critical if there is a skills shortage in your market.

HR handles employee management so everyone else can execute their roles. It resolves employee conflicts so they don’t threaten productivity.

HR Increase Employee Engagement

Human Resources increases employee engagement. Engaged employees sing your praises. Marketing can’t create a campaign as authentic and effective as the recommendations of engaged employees.

Engaged employees take care of your customers. This ensures repeat sales. Engaged employees are loyal. Cumulative workforce experience increases profitability. Engaged employees mentor new hires. This shortens the learning curve. New hires start contributing sooner.

Human Resources inspires employees to progress along their career path. They measure performance and create programs to improve.

HR Lowers Expenses

Let’s talk about how HR can directly impact revenue.

HR determines the best value in employee benefits. Many companies have faltered because they didn’t keep a pulse on the rising costs of benefits.

HR lowers your risk of a compliance fine. The Department of Labor audits businesses of all sizes. Even an average fine can sink a small business. I talk more about compliance below.

The Human Resources team evaluates the ROI of programs. HR can determine which ones to keep and which ones to kill.

They manage employee time and attendance so you don’t overpay for labor. Even modest savings on payroll makes an impact. These advantages compound as your workforce grows.

HR Protects The Company

This is how the Reddit commenters said they would answer ‘Why does HR exist?’ if challenged by their boss:

• ‘The reason you haven’t been sued into oblivion is in large part thanks to HR.’
• ‘Because I cover your [insert favorite synonym for butt]’

Your executive team might not understand the complexities of compliance. Probably because you’ve made sure they don’t have to. Compliance vigilance isn’t optional. Plenty of companies have learned that the hard, expensive way.

If your boss needs proof, suggest visiting the press release page of the Department of Labor website.

A quick glance on May 7 revealed the following settlements:

• $600,000 fine for Texas packing company for OSHA violations.
• $63,000 fine for Georgia gas station chain that failed to pay overtime.
• $23,000 settlement for Ohio company that violated Employee Retirement Income Security Act (ERISA).

Can a Company Succeed Without Human Resources Management?

Absolutely not. Hopefully, you will be prepared the next time you have to make your case.

In summary,

1. HR delivers value rather than revenue
2. HR creates an environment for business success
3. HR inspires employee performance
4. HR monitors and lowers operating expenses
5. HR protects against compliance violations

SwipeClock understands the power of strategic Human Resources management. We provide workforce management tools for HR professionals. Our solutions help small to mid-size businesses prosper. We help Human Resources claim its rightful place at the table. And command the respect it deserves.