Human Resources

Updated on March 20, 2024
Article byJyotsna Suthar
Edited byJyotsna Suthar
Reviewed byDheeraj Vaidya, CFA, FRM

What Is Human Resources (HR)?

Human resources, or HR, is a department in a business responsible for recruiting and maintaining employees for the company. The key role of the HR is to find, keep or terminate employees and take care of the best interests of both the company and the employee.

Human Resources

You are free to use this image on your website, templates, etc, Please provide us with an attribution linkHow to Provide Attribution?Article Link to be Hyperlinked
For eg:
Source: Human Resources (

The human resources department has the primary job of training candidates to perform certain roles. They also oversee the employee benefits program. HR also decides on the holiday plan and authorizes pay leaves. However, a wrong selection or elimination of any employee can lead to a certain loss for the company. 

Key Takeaways

  • Human resources, or HR, is a separate team that works to recruit, hire, and select the best employees for the organization. In addition, they aim to onboard the right candidates that add great value. 
  • The major functions of HR include recruitment, screening, hiring, onboarding, conducting interviews, and taking care of personnel are the prime ones. 
  • They also help frame and maintain budgetary control for the company, authorizing holidays and paydays, etc.
  • The concept of HR travels back to the start of the British Industrial Revolution during the 18th century. 

Human Resources Explained 

Human resources are a group of employees within the organization responsible for finding, screening, recruiting, onboarding, and training candidates to become suitable employees for the company. They strive to find potential people that will add great value to the organization. In addition, it forms a base for recruiting people to match the market’s increasing demand. 

The main aim or objective of the human resources department is to manage the personnel. The name “human resources” itself has a two-split meaning. Since humans work in the company, and their work adds value to the final product, they act as a major resource to them. Without them, all processes become stagnant. Therefore, it is necessary to take proper care of them. Thus, human resources development comes into play. They cater to the needs and address the issues faced by employees.

Also, human resources development provides proper training and development that boosts their career. 

However, there are certain criticisms or threats to this department. Since employees form the firm’s base, correctly recruiting them is vital. Nowadays, due to automation and robotics, recruitment is done through software. However, it impacts the quality of employees recruited. Sometimes, the right candidates need to be noticed, and more efficiency enters the organization. Also, replacing human resources with robots can be the wrong decision. Nevertheless, some tasks need employees to bring in more efficient people. 

Besides, the accounting standards allow companies to practice human resources accounting. However, the choice remains with them because some consider HR an asset and others a cost.

–>> If you want to learn Financial Modeling & Valuation professionally , then do check this ​Financial Modeling & Valuation Course Bundle​ (25+ hours of video tutorials with step by step McDonald’s Financial Model). Unlock the art of financial modeling and valuation with a comprehensive course covering McDonald’s forecast methodologies, advanced valuation techniques, and financial statements.


The origin of human resources jobs and departments dates back to the 18th century. It had three phases of development. The first phase happened during the British Industrial Revolution. As a result, there was a rise in the hiring and recruitment numbers in the factories. For example, the Factory Act of 1847 improved the health conditions of employees and young workers. The second phase flourished during the 20th century. 

Entrepreneurs adopted new human resource management techniques. First, there was the launch of personnel management for the welfare of the employees. However, major influence occurred after the World War or post-war period. During the 1970s, globalization was at its peak, and various models came into existence with the third phase. By this time, the personnel department got converted into the HR department. For example, HR Business Partnering Model, HR model, etc. Likewise, businesses modified their models with technology and trends applicable today. 


Let us look at the functions and responsibilities of the human resources department:

#1 – Recruitment Of New Employees

Human resources’ main role is finding new employees willing to join the company. The process involves setting up a hiring program and screening or filtering the right candidates among thousands of applicants. Later, they conduct various interview rounds and training programs to curate the candidate into an employee. 

#2 – Setting And Framing Policies

These professionals are involved with various data and paperwork. They work for the benefit and protection of the employee’s rights. Therefore, they are responsible for framing the offer letter and preparing the interview rounds. Also, they set up job requirements on various hiring platforms. 

#3 – Compensation And Benefit Programs

Human resource management allows its team to oversee all employees’ compensation and benefit plans. In addition, they work with supervisors and managers to decide the right CTC (Cost to the Company). Thus, they play an important role in managing and framing the company’s budget. 

#4 – Retention 

Retaining any employee is a crucial and equally important job for human resources. Therefore, they must find various ways to maintain a good corporate image in the employees’ minds. If the employees are unhappy with the environment, potential employees will leave the organization. Therefore, it is the HRs job to maintain a healthy culture and positive environment within the company. They also can plan programs and festivities to engage their participation. 

#5 – Setting Up Training Programs 

Every employee is eager to earn a higher position and acquire more knowledge about their field. Thus, human resources have the function of providing training programs to each employee. These programs must occur regularly to keep them updated with market trends. As a result, their morale, as well as their career, gets a boost. 

#6 – Worker’s Protection And Employment Laws

Among all, safeguarding the interests of the workers is the prime function. The HRs job is to resolve any fights or conflicts within the organization. 


Let us look at some of the examples to understand human resource management better:

Example #1

Suppose Aiden wants to turn his age-old coffee family business into a company. He did form a company with around 150 employees handling each department. However, Aiden noticed some unusual changes in the company. Employees faced a negative environment around them. There were rarely any functions or celebrations happening around. In addition, there was monotonous work from 9 to 6 pm.

Besides, there were conflicts within the department that made it difficult to handle work and meet deadlines. Therefore, Aiden hired a human resource team that would work for the benefit of the employees. With the implementation, there was a positive culture curated within them. Employees were far happy with the reduced working days. There were training programs. As a result, the organization’s overall efficiency was boosted by 50%.  

Example #2

According to a 2022 report by Zippia, a good onboarding strategy boosted around 70% of productivity, and retention improved by 82%. But a negative onboarding made double employees switch to another organization. A similar report by Grand View Research mentions that the global market share of human resources jobs in 2021 was $19.38 billion with a CAGR (Compound Annual Growth Rate) of 12.8% by 2030. 


Let us look at the importance of human resources:

  • Employees try to hire effective, talented, and efficient candidates perfect for the job roles. 
  • They try to maintain a positive aura within the organization. 
  • It helps in achieving the desired goals and company objectives. 
  • Human resources try to plan cultural, social, and festive vibes within the corporations. 
  • They act as a medium to resolve conflicts and fights between employees.
  • In addition, HRs work with top management to create a budget plan. As a result, the cost to the company can be managed. 
  • They provide subsidies and benefits through free membership, subscriptions, and others.  

Human Resources vs Human Capital vs Human Relations

Although human capital and human relations fall under the human resources category, they have different roles. So, let us look at the differences between them:

BasisHuman ResourcesHuman CapitalHuman Relations
MeaningIt is a department within the organization that recruits and hires candidates.Human capital is the benefit or values the employees provide to the company through their knowledge, talent, and skills.Human relations is a concept within the HR department that works to improve and boost employees’ morale.
PurposeTo recruit, hire, onboard, and train candidates into suitable employees. Also, take care of the personnel.  To help HRs realize the potential of their employees working hard to produce results.To develop a positive environment and retain good employees within the organization.
CategoryIt is a separate department in the corporation.  It falls under human resources.Likewise, it also falls under the HR department.
FunctionReleases payrolls and conducts hiring processes and interviews.Identify productive employees within the organization.  Develop packages, solve conflicts, and conduct cultural and social programs.

Frequently Asked Questions (FAQs)

Do human resources do the hiring?

Yes, they are primarily responsible for hiring new candidates for the company. They put job postings on various hiring platforms as a part of the process. Then, based on the number of applicants received, they start the screening process. Out of thousands, few get selected for another round of interviews. And finally, select one of them as their employee. 

Under what department are human resources? 

It acts as a separate department within the organization. Under this department, various levels include associate, assistant, executive, and manager positions.  

Does every company have human resources?

There is no compulsion to recruit or approach an HR team to conduct your small-scale business. However, as the number of employees increases, it becomes necessary to hire one. They look out for the welfare of the employees. 

Do schools have human resources?

Yes, schools often have an HR agency that works for them to hire teachers onboard. However, whether they consult an agency or hire a team depends on them. 

This has been a guide to what is Human Resources. We explain its examples, functions, importance, and compare it with human capital & human relations. You can learn more about from the following articles –

Reader Interactions

Leave a Reply

Your email address will not be published. Required fields are marked *