7 Human Resource

Management Basics Every

HR Professional Should
Know
“Success in HR is not just about managing resources. It is about
inspiring and unleashing the full potential of individuals.” A powerful
reminder from AIHR’s Chief HR Scientist, Dr. Dieter Veldsman, that
HR Management is a true catalyst for professional and organizational
growth.

Effective Human Resource Management (HRM) is essential for

businesses of all sizes and starts with knowing the basics. In this
article, we dive into the seven Human Resource Management basics
you must know to understand the varied roles of HR within an
organization. We also look at the history of HRM and share some of
the most sought-after skills for effective Human Resource
Management. Let’s get started!

What is Human Resource

Management?
Human Resource Management, or HR Management, or HRM, is the
practice of managing people to achieve a better (organizational)
performance.

For example, if you hire people into a business, you are looking for
people who resonate with your company culture as they will be
happier, stay longer, and be more productive than people who don’t.
Another example is engagement. Engaged employees are more
productive, deliver higher quality work, and make customers
happier. This means that if HR can find ways to make employees
more engaged, this benefits the company.

The HR department aims to provide the knowledge, tools, training,

legal advice, administration, and talent management crucial to
supporting and advancing the company.

This is what Human Resource Management boils down to: optimizing

organizational performance through better management of human
resources.

The logical next question is, who are these human resources?

What is a human resource?

Referring to people as ‘human resources’ in the business
environment of today can feel weird and outdated. However, for
clarity and the context of this article, we’ll continue to use this term.
Besides, as one author rightly pointed out, ‘It’s not how you call it,
but what you do’ counts.

Human resources are all the people who work for or contribute to
the organization in one capacity or another. Together, these people
make up a company’s workforce. They can be full-time or part-time
salaried or hourly employees, for example, but also contingent
workers such as consultants, contractors, or freelancers. Ten years
ago, 15% of the U.S. workforce consisted of contingent workers;
today, they account for 35%.

Non-human resources

And then there is a relatively new, non-human element to consider

when we talk about human resources in the context of the
workforce: robots.

Machines and robots are increasingly involved in day-to-day work in

all industries, and the interaction between the human and the
machine is becoming increasingly important to the organization’s
success.

While these machines are not considered ‘human resources,’ there is

a case to be made that they should be included and taken into
account in some way as they are a part of the workforce.

Why is Human Resource Management

important?
HRM involves various activities, processes, and policies – tied
together in an HR strategy – that aim to align a company’s workforce
with its strategic (business) objectives.
As such, effective Human Resource Management is integral to any
organization’s success and plays a role in the following:

• Attracting and retaining talent: The HR department creates a

comprehensive talent strategy that helps the organization recruit,

develop, and retain the right people.

• Enabling managers: Managers play a crucial role in employee

retention and success. HR is there to equip managers with all the

tools, resources, and support they need to help their teams

flourish.

• Driving strategic planning: HR works with senior leaders to keep

the HR strategy in line with the organization’s objectives. This

enables the HR team to identify talent gaps and create workforce

plans to then proactively find the right talent for the right

position.

• Fostering organizational culture: HRM plays a vital role in

shaping and cultivating the company’s culture by establishing the

values, norms, and behaviors that correspond with the

organization’s mission and vision.

• Creating a productive work environment: A positive work

environment is good for employee productivity, which, in turn, is

critical to the success of the business. Various HRM practices,

therefore, aim to implement effective performance management

 systems, set clear job expectations, and provide regular feedback,

among other things.

The seven HR basics

When we talk about Human Resource Management, several
elements are considered cornerstones for effective HRM policies.
These cornerstones are:

1. Recruitment & selection

2. Performance management

3. Learning & development

4. Succession planning

5. Compensation and benefits

6. Human Resources Information System (HRIS)

 7. HR data and analytics

Let’s take a closer look at each of the seven HR Management basics.

1. Recruitment & selection

Recruitment and selection are the most visible elements of HR. Who
doesn’t remember their very first job interview, right?

The goal of the recruitment and selection process is to find and hire
the best candidate for the job, with the former focusing on attracting
potential candidates to apply for the role and the latter focusing on
evaluating and choosing the best candidate among the applicants.

The recruitment process usually involves the following steps in some

shape or form:
 • Preparing:

o Vacancy intake with the hiring manager

o Write job description

o Creating job adverts

• Sourcing:

o Sourcing candidates

o Checking the existing talent pool

o Keeping the hiring manager informed

• Screening:

o Screening resumes

o Phone screening

o Giving a realistic job preview

The last phase of the recruitment phase has some overlap with
the selection process, which then continues as follows:

• The job interview

• An assessment

• References and background check

• The hiring decision

• Job offer and contract

 • (Preboarding and onboarding)

2. Performance management

As we’ve mentioned earlier, an organization’s performance

management practices play an important role in creating a
productive and positive work environment and keeping employees
engaged. According to a report by the HR Research Institute, 67% of
leading organizations in performance management experienced
increased employee performance, compared to only 16% of so-called
performance laggards.

Performance management is the second HR Management

cornerstone. It is a set of processes and systems aimed at developing
employees in a way that enables them to perform their jobs to the
best of their ability. Employees who are empowered to their full
potential, improve the efficiency, sustainability, and profit margin of
a business.

The goal of performance management is threefold:

1. To help employees build on skills that enable them to perform

better in their roles

2. To reach their highest potential

3. To boost their success while accomplishing the strategic goals of

the organization.
Effective performance management is based on a continuous
conversation between employees, their managers, and HR.

A strategic and systematic performance management

process combines verbal and written components that take place
throughout the year. It involves the following actions:

• Establishing clear expectations

• Setting individual objectives and goals that align with team and

organizational goals

• Providing different types of feedback

• Regular performance conversations, such as performance

reviews and performance appraisals

• Evaluating results.

Important decisions regarding an employee’s career, such as

promotions, bonuses, and dismissals, should be linked to the
organization’s performance management process.

3. Learning & development

Learning and development (L&D) is another HR fundamental and an

essential part of an organization’s overall people
development strategy.

Put simply, L&D is a systematic process that enhances people’s skills,

knowledge, and competencies to improve their work performance.
Learning involves acquiring knowledge, skills, behaviors, and
attitudes that result in better job performance. Examples of what
learning activities can look like include:

• Reading blogs, articles, or books

• Hands-on experimentation

• Peer learning

• Lunch and learn sessions

• Attending seminars, conferences, or webinars

Development evolves around broadening and deepening a person’s

knowledge in line with their individual, long-term professional goals.
The idea here is to grow job-related abilities and expand someone’s
potential for future opportunities.

Activities focused on development include:

• Coaching

• Job shadowing

• Leadership training

• Mentoring

L&D helps employees to reskill and upskill. It is typically led by HR,

and a solid learning and development program can be very helpful in
advancing the organization toward its long-term goals.
This approach allows employees to bridge skill gaps and grow into
leaders. A well-known framework that connects performance
management with L&D activities is the 9-box grid. Based on people’s
performance and potential ratings, HR and the manager can advise
on various development plans in consultation with the employee.

4. Succession planning

Succession planning involves planning contingencies in case key

employees leave the organization. It is about proactively identifying
top performers and potential leaders and getting them ready to fill
(senior) positions as soon as someone leaves.

While crucial for the continuity – and sometimes even the survival –
of the business, many companies of all sizes still don’t have a solid
succession plan.

Succession planning is a complex process and if you want to navigate

it successfully, keep the following three things in mind:

• Critical roles only: Succession planning focuses on roles that are

vital to the organization’s competitiveness and continuity,

especially senior leadership roles.

• Key talent: Unsurprisingly, for those critical roles, only top

performers and potential leaders (usually internal candidates) are

selected to be mentored and developed.

 • Continuity: The ultimate purpose of succession planning is to

ensure that someone else is ready to take over immediately when

someone leaves to maintain business continuity.

Succession planning facts

• 70% of family-owned businesses don’t survive the transition from

founder to second generation. The primary reason for this is a

lack of succession planning.

• Poorly managed CEO transitions wipe out almost 1 trillion dollars

annually for S&P 1500 companies alone, according to HBR.

5. Compensation and benefits

Another fundamental component of HR management

is compensation and benefits, often called comp & ben. Fair
compensation is critical in attracting, motivating, and retaining
employees.

Compensation and benefits consist of all the monetary and non-

monetary rewards employees receive from their employer in
exchange for their labor. Examples include:

• Salary

• Bonuses

• Insurance

• Retirement contribution
 • Childcare benefits

• Flexible working options

• Etc.

Getting comp and ben right is important for two main reasons.

On the one hand, making a solid, attractive offer is key to attracting

the best talent. On the other hand, comp & ben and related taxes
can account for up to 70% of business costs, highlighting the
importance of balancing this with the organization’s budget and
profit margins. HR should, therefore, closely monitor the state of
compensation and benefits at their organization.

A final thing to note here is that employee satisfaction is mainly

driven by what they perceive as fair rather than by how much
someone is paid. How employees feel about the company’s pay
philosophy and process is more likely to impact their outlook than
the actual pay.

So, in addition to offering decent compensation, HR teams may want

to start paying more attention to how pay transparency works and
how to manage compensation perceptions at their company.
6. Human Resource Information System (HRIS)

The two final HR Management basics are not HR practices but tools
to improve HR. The first one is the Human Resources Information
System, or HRIS.

Most HRIS solutions support all the HR processes and practices we

discussed above. Sometimes, however, the management of these
functionalities is spread out over different HR systems. For example:

• HR professionals often use an Applicant Tracking System, or ATS,

for recruitment and selection to keep track of applicants and new

hires

• For performance management, a performance management

system is used to keep track of individual goals and insert

performance ratings

• In L&D, organizations utilize the Learning Management System

(LMS) to distribute learning content internally, and other HR

systems are used to keep track of budgets and training approvals

• Compensation specialists often use a payroll system

• There are digital tools that enable effective succession planning.

According to the annual Digital Employee Experience Audit, 30% of

companies still use more than ten different HR systems. The bottom
line here is that there is a significant digital element to working in HR,
which is why we need to mention the HRIS when talking about the
basic components of HRM.

7. HR data and analytics

The final HR fundamental revolves around data and analytics. In the

last decade, HR has made a significant leap towards becoming more
data-driven.

The HRIS we just discussed is essentially a data-entry system. The

data in these systems can be used to make better and more
informed decisions.

An easy way to keep track of critical data is through HR

metrics and/or HR KPIs. These are specific measurements showing
how a company performs on a given indicator. This is referred to
as HR reporting.

This type of reporting focuses on the current and past state of the
organization. Using HR and people analytics, HR can also make
predictions. Examples include workforce needs, employee turnover
intention, the impact of the employee experience on customer
satisfaction, and many others.

HR can make more data-driven decisions by actively measuring and

looking at this data. These decisions are more objective, which
makes it easier to find management support for them.
How has Human Resource
Management changed and evolved?
What Human Resource Management looks like today – and what is
expected of HR professionals – is vastly different from what it looked
like a hundred years ago.

From around 1900 until the 1940s, for example, HR teams were
mainly expected to keep employees healthy so that they would
remain productive.

During the 1980s and 1990s, HR departments ought to focus on

motivating and engaging the workforce while modernizing their HR
practices through technology implementations.

What we’ve seen from 1990 onwards, and still see today, is that HR is
expected to be a strategic partner and able to align the business
agenda and the HR agenda.

As for the (near) future, and as we enter the digital-human era of

work, things will shift further, and even more will be expected of HR
teams. They will have to guide the organization to adapt to workforce
changes and redefine the working relationship between talent and
employers.
Human Resource Management skills
To strategize and execute HR initiatives, HR professionals need to
possess the following skills:

1. HR specific skills, including:

o HRM knowledge and expertise

o Administrative expertise

o Employee experience expertise

2. Business acumen, including:

o Commercial awareness

o HR strategy creation and execution

o Advising

3. Soft skills, including:

o Communication skills

o Active listening

o Proactivity

4. Digital & data literacy, including:

o HR reporting skills

o Being analytical and data-driven

o Command of technology
However, as we’ve already pointed out, the field of Human Resource
Management is continuously evolving, and the skills and
competencies of HR practitioners have to evolve with it.

If we go beyond what’s currently expected of HR practitioners in

terms of skills and competencies and look at what they need to
develop they can start to future-proof their skill set, we get the
following picture:

On a final note
If there is one thing to take away from this article about the 7 Human
Resource Management basics, it’s that all of these HR fundamentals
are connected.
Think of these HR components as building blocks – strong
management of each core element contributes to the strength of the
next. Collectively, these HR fundamentals enable a workforce to
perform at its best.

FAQ
What does Human Resource Management do?

Human Resource Management, or HRM, is the practice of managing

people to achieve better performance. It’s about optimizing company
performance through better management of human resources,
which is the organization’s workforce. This involves HR practices like
recruitment and selection, performance management, and learning
and development.

What is Strategic Human Resource Management?

Strategic Human Resource Management is an approach to managing

human resources that aligns HR policies and practices with the long-
term goals of the organization. It focuses on proactive management
of people, ensuring that various HR initiatives such as recruitment,
compensation, and performance management contribute to the
overall business strategy and help improve organizational
performance.

What is the role of Human Resource Management?

The role of Human Resource Management (HRM) is to make sure

that the organization has the right talent to meet its objectives
through recruiting, developing, and retaining employees. HRM is
responsible for implementing HR strategies and practices that drive
productivity, engagement, and, ultimately, performance.