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Unlocking organizational potential: The vital role of human resource management

Talent Assessment | 6 Min Read

Unlocking organizational potential: The vital role of human resource management


People are an organization’s asset, and they ensure organizational success by contributing to the best of their abilities toward the company’s goals. It is essential to consider the employees’ health and well-being and treat them well to align their goals with the company’s growth. That’s where human resources play an essential part in developing organizational strategy and addressing an organization’s employee-centered needs.

Human resources (HR) is a crucial department in an organization responsible for scouting, screening, recruiting, onboarding new joiners, and implementing employee benefit programs. HR managers perform essential duties like recruitment, training, handling payroll and benefits, training and development, safety issues, employment law, and compliance. These HR practices are focused on creating a positive business culture and maximizing employee engagement and productivity.


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What is human resource management?

Human resource management is a strategic and systematic approach to managing an organization’s most vital asset, its workforce. It is a multifaceted system that involves strategic planning, organization, staffing, direction, control, and coordination. It entails managing HR functions in an organization, including hiring, training, compensating, managing, and retaining employees.

Human resource management streamlines employee functioning and maintains a healthy work culture. It is an essential department in the organization’s departmental hierarchy, piloted by HR managers.


Purpose of human resource management

Companies make high investments to fill an open position. As a result, when an unsuitable hiring decision is made, organizations and team productivity suffer.

HRM removes these concerns in the first place and helps companies make the appropriate hiring decisions.


Given below are some key responsibilities of HR managers, which are also dependent on the organization:

  • Recruitment (both internal and external) 
  • Selecting candidates
  • Onboarding and training employees  
  • Evaluating the performance of employees
  • Providing compensation, benefits, rewards and more
  • Complying with labor laws
  • Maintaining a strong employer-employee relationship 
  • Training and development
  • Recognizing employee contribution and engaging employees


What is the importance of HRM?

The HRM goals align with the company’s missions and objectives. These initiatives focus on supporting employee welfare and nurturing employees, which contributes to business growth. HR managers are critical in strategizing and decision-making for corporations and larger companies. They are responsible for identifying and onboarding skilled people, deciding on workforce planning, facilitating employee communication, and reducing absenteeism and employee turnover rates.

Human resources management is becoming synonymous with human capital management. This is because HR managers put substantial efforts and resources into human capital, such as assessing jobholders’ skills, education, training, and other important factors that positively impact employees’ performance. It also includes planning the employment life cycle and adopting measures to keep the company’s most valuable assets attuned to its culture.


Importance of human resource management in an organization

Human resource management focuses on maximizing employee performance with strategic objectives. Important functions of HR management are:


Quality of work life (QWL):

Quality of work life refers to how conducive or inconducive a job environment is for an organization’s employees. QWL relates to employees’ perceptions of their work environment and physical and psychological well-being. HRM-based processes improve the quality of work life for employees by facilitating work autonomy, freedom, work recognition, belongingness, etc.


Maximizing profit and productivity:

HR management focuses on the quality and quantity of employees in an organization. It also provides ample opportunities to motivate and enable employees to grow and advance their careers. Inspired employees strive hard to achieve their professional goals, influencing organizational productivity.


Employee adaptability:

Human resource management aims to enhance employees’ productivity and efficiency through training and development programs. Such programs update employees with skills imperative for keeping up with organizations’ ever-changing environment, structure, and technology.


Meeting the demand-supply gap of human resources:

Human resource management is essential in an organization because it involves managing employees and ascertaining the adequacy of available human resources. HR managers conduct recruitment and selection drives to fill the gap if the organization needs more employees. Similarly, laying off employees falls under the purview of human resource management.


Helping employees achieve the company’s goal:

Harnessing human resources to the fullest extent and building a sense of belonging among them is also essential to HRM. For this purpose, HRM offers rewards and compensation to top performers. Such activities boost employees’ morale and lead organizations closer to their objectives.


Employee recognition:

When employees are celebrated for their merits and contributions, they are motivated and find meaning and purpose in their jobs.


Infusing team spirit:

The onus to make every employee feel important is on human resource managers. They emphasize the importance of teamwork within departments and devise ample strategies that highlight teamwork. Hence, infusing team spirit is critical to help employees contribute best from their side.


Business sustenance:

Human resource management ensures that the organization gets the top employees. A talented and capable workforce strengthens the company.


Conflict resolution:

Organizations, whether big or small, cannot avoid conflicts that may arise between small teams or bigger groups. Such unforeseen instances cannot be eradicated. HR management is responsible for systematically sorting out such differences and facilitating smooth organizational operations.


Building a corporate image:

Sustainability for organizations means maintaining a venerable image in the market. Candidates prefer associating with a prominent company for its moral and social responsibility towards its employees.


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Objectives of human resources management

Human resource management objectives are multifaceted. Some of them are:


Optimizing organizational behavior:

Human resource management aims to enhance the overall behavior and performance of individuals and teams within an organization. This involves implementing strategies to improve communication, collaboration, and productivity, leading to a more efficient and effective workforce.


Achieving organizational goals:

HRM is crucial in aligning employees’ efforts with the organization’s strategic objectives. By ensuring that the right talent is in place and providing the necessary support and resources, HRM helps drive the achievement of key business goals and targets.


Creating a positive work culture:

HRM fosters a positive work environment where employees are valued, respected, and motivated. This involves promoting a culture of inclusivity and open communication, enhancing employee satisfaction, engagement, and overall well-being.


Implementing training and development:

HRM is responsible for identifying employees’ training and development needs and implementing programs to enhance their skills and knowledge. By investing in employee growth and professional development, HRM improves individual performance and contributes to the organization’s long-term success.


Supporting employee empowerment:

HRM is vital in empowering employees by providing them autonomy, decision-making, and career advancement opportunities. This includes creating a supportive and empowering work environment that motivates employees to take ownership of the work and contribute to the organization’s success.


Improving retention:

HRM focuses on implementing strategies to attract and retain top talent, which include designing competitive compensation packages, creating opportunities for career growth, and fostering a positive work culture. By improving employee retention, HRM helps reduce turnover costs and maintain a stable and skilled workforce.


Complying with employment law:

HRM ensures that the organization complies with employment laws and regulations. This includes managing employee contracts, ensuring equitable treatment, and addressing legal issues or concerns. By adhering to employment law, HRM helps protect the rights and well-being of employees while mitigating legal risks for the organization.


What are the roles and responsibilities of HRM?

The human resource management roles and responsibilities vary based on the company and its specific needs.

Some functions and responsibilities of HRM include:

Talent acquisition:

HRM is responsible for attracting and recruiting qualified candidates for open positions. This involves creating job descriptions, advertising job openings, screening resumes, conducting interviews, and choosing the appropriate fit.


Employee onboarding:

HRM ensures new employees have a smooth organizational transition. This includes conducting orientation programs, providing necessary paperwork and documentation, and facilitating training to help new employees understand their roles and responsibilities.


Training and development:

HRM identifies employees’ training and development needs and implements programs to enhance their skills and knowledge. This includes organizing workshops, seminars, and online training sessions to improve employee performance and promote professional growth.


Performance management:

HRM establishes performance management systems and processes to evaluate employee performance and provide feedback. This involves setting performance goals, conducting regular performance reviews, and recognizing and rewarding high-performing employees.


Employee relations:

HRM is crucial in maintaining positive employee relations. This includes addressing employee concerns, resolving conflicts, and promoting a healthy work environment.


Compensation and benefits:

HRM is responsible for designing and administering compensation and benefits programs. This involves determining salary structures, managing employee benefits packages, and ensuring equitable compensation practices.


Employee engagement:

HRM creates a work culture that fosters employee engagement. This includes organizing employee engagement activities, promoting work-life balance, and implementing initiatives to enhance employee satisfaction and motivation.


HR policies and compliance:

HRM develops and implements HR policies and ensures compliance with laws and regulations. This includes maintaining employee records, managing employee contracts, and addressing legal issues related to employment.


HR analytics:

HRM utilizes data and analytics to make informed decisions and improve HR processes. This includes analyzing workforce trends, identifying areas for improvement, and using data-driven insights to enhance HR practices and strategies.


Significance of human resources and talent management

Human resources and talent management are crucial in driving organizational success. Human resources manage the organization’s assets, its people. By effectively recruiting, developing, and retaining top talent, HR ensures that suitable individuals are in the appropriate roles, contributing to achieving business objectives. Talent management strategically aligns the organization’s talent with its goals, ensuring employees have the necessary skills, knowledge, and support to excel in their roles. Adequate human resources and talent management practices ultimately contribute to a competitive advantage, as organizations with a strong workforce are better positioned to adapt to change, innovate, and achieve long-term success.


What is the difference between HR and HRM?

The human resources department manages various tasks and resources related to employees. It is a central hub for handling employee-related matters and ensuring employment laws and regulations compliance. On the other hand, human resource management (HRM) is a broader concept encompassing the strategic planning and implementation of principles and practices to organize and optimize an organization’s workforce effectively. HRM aligns HR strategies with the organization’s business objectives and goals. It focuses on developing and implementing policies, procedures, and programs that attract, develop, motivate, and retain talented employees, contributing to the organization’s success.

HRM involves various functions, including talent acquisition, talent development and training, performance management, employee engagement, succession planning, and workforce analytics. It ensures a positive work culture, fosters diversity and inclusion, and manages employee relations and conflicts.


Skills and responsibilities of an HR manager

HR managers supervise staffing and collaborate with executives to make strategic choices. They need a degree in HR or a related field, experience in HR systems, databases, and metrics, and a comprehensive understanding of labor law and HR best practices. An HR manager’s responsibilities involve:

  • Supervising the entire talent acquisition process, from recruitment to training
  • Taking care of the daily operations of the HR department
  • Analyzing compensation and benefits trends
  • Coordinating staff professional development and growth initiatives
  • Ensuring compliance with labor laws and regulations
  • Collaborating with executives to align talent management with organizational objectives
  • Handling performance reviews, disciplinary matters, and terminations


Top HR specializations in demand today

Some of the human resources specializations that are in demand today are:

  • HR consulting: Some companies do not have an entire HR department, so they hire HR consulting experts to improve their effectiveness in attracting potential employees. These consultants also create appealing benefits packages to enhance employee recruitment and retention.
  • Executive recruitment: In executive recruitment, professionals are responsible for identifying qualified executives to fill senior-level positions such as CEO and CFO. This process differs from standard recruitment because it involves leveraging personal and professional networks to identify potential candidates.
  • Training specialist: Training specialists are crucial in ensuring employee safety and compliance with employment laws. They develop programs that educate employees on employment laws and health and safety policies and minimize the risk of workplace injuries. This helps companies avoid financial losses and retain capable employees.


Human resource management trends

Human resources management trends include the widespread adoption of remote work and flexible arrangements, a heightened focus on well-being and mental health, and an emphasis on diversity, equity, and inclusion (DEI) initiatives. There is also an integration of data-driven decision-making processes and a commitment to enhancing the overall employee experience by implementing agile HR practices and continuous learning. With AI and automation, skills-based hiring is trending, and a renewed focus on leadership development efforts to engage remote employees effectively can be seen. These trends collectively reflect the evolving workplace and the ongoing efforts to create inclusive, adaptable, and employee-centric work environments. There is a renewed emphasis on employee benefits and work/life balance. HRM has evolved into creating a work culture where employees feel supported and empowered to be their best personal and professional selves.


How Mercer| Mettl can help?

Human resources are indispensable for organizations of all sizes. They have the company’s best interests at heart and provide a conducive environment for employees to prosper. The Mercer | Mettl HR Manager Assessment is suited for finding the most qualified, passionate, and talented practitioners. It provides a holistic assessment of candidates’ expertise in HR practices and their aptitude for leading and managing diverse teams. This test helps hire top HR professionals for critical organizational roles.



Human resource management is the cornerstone of organizational success, playing a critical role in fostering employee engagement, enhancing productivity, and driving innovation. By strategically aligning HR practices with business objectives, organizations can cultivate a thriving workplace culture where employees feel motivated and empowered to contribute their best. Moreover, in today’s dynamic and competitive landscape, effective HR management ensures the recruitment and retention of top talent and facilitates adaptability and resilience in the face of change. In conclusion, recognizing the importance of human resource management underscores its significance as a catalyst for achieving sustainable development and maintaining a competitive edge in the global marketplace.



1. What is the importance of HRM?

2. What are the important functions of human resource management?

3. What are the benefits of HRM?

Originally published April 7 2024, Updated April 7 2024

Written by

Archita Bharadwaj has worked as a Content writer at Mercer | Mettl since April 2023. With her research background, she writes varied forms of content, including blogs, ebooks, and case studies, among other forms.

Human Resource Management

Importance of Human Resource Management

Human Resource Management, also known as HRM, is the function that manages employees, starting from their recruitment and induction to development, appraisals and promotions, with the aim of maximizing their performance in-line with organizational objectives.

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