Why is Human Resources (HR) Important? 8 Reasons Why HR Matters

You and I both know every company talks about “people being their biggest asset.” But who actually manages those people? It’s the HR department. 

If you’ve ever asked yourself why is human resources important, here’s the short version: without HR, the whole system collapses. 

No hiring, no payroll, no growth, no order. Just chaos in meetings and confusion in inboxes.

Here’s what we’ll cover next:

• What Is Human Resources? A quick look at what HR does on a day-to-day basis.
• 8 Reasons Why HR Is Important and it’s much more than hiring and payroll.
• Challenges Faced by Companies without Effective Human Resources. The ugly side of skipping HR.
• How to Fully Leverage the Human Resources Benefits for Businesses? The process of making HR work smarter, not harder.
• Maximize the Human Resources Benefits with Remunance.

So, let’s get started without any further delay. Shall we?

What is Human Resources? 

In simple words, human resources (HR) is an integral department of any company or business. The main responsibility of this department is to manage the employees. 

Their day-to-day activities include hiring new talent for any open position and training them for specific projects.

Next, tasks include handling payroll, employee engagement activities, and conducting exit interviews.

The human resources department is involved in the entire employee lifecycle.

The primary importance of human resources lies in effectively and smoothly managing the company and its people.

However, HR has undergone significant evolution over the years. The modern-day HR looks nothing like a typical salary or attendance management department. Modern-day HR focuses on emotional intelligence. 

A strategy that connects both employers and employees to achieve a common goal. That’s why human resources is important for companies that want to grow with the right talent.

Key Responsibilities of Human Resources

• • Onboarding and Offboarding: HR is involved in the entire recruitment process, right from hiring the right candidates to onboarding them.
    It’s also involved in handling employee resignations and smoothly offboarding them.
  • Employee Pay and Benefits: Human resources decides employee compensation based on the market standards.
    They also make sure that the employees receive handsome perks and bonuses to attract and retain the right talent.
  • Learning and Career Growth: In many companies, HR arranges for skill development and project-specific training programs.
  • Performance Tracking and Review: The human resource department defines employees’ key roles and responsibilities right from day one.
    After that, they set milestones to track and review their performance regularly. They also keep updating the KRAs from time to time.
    This is particularly helpful in case of any promotion or appraisal.
  • Employee Engagement and Team Bonding: HRs not only hire people, but they also help employees connect with each other freely and respectfully.
    This builds a healthy relationship within teams, which in turn helps in better productivity.
  • Legal and Compliance: HRs make sure that companies follow labor laws properly and treat all employees equally and fairly.

Hence, the importance of human resources is not limited to one area. It has a wide and diverse spectrum of responsibilities that make day-to-day activities easier for businesses.   

8 Reasons Why HR Is Important

The importance of human resources is undeniable. It effectively handles the most valuable treasure of a company. 

Yes I’m talking about the employees. From talent management to team building, HR handles it all. 

Let’s look at some major reasons why human resources is important in this section.

1. Deciding on Competitive Salaries and Perks

• • HRs research for the most competitive compensation packages in the market.
    
  • They decide on the package based on the roles, industries, and cities they’re hiring for
    
  • They also design customized benefits packages like health insurance, retirement bonuses, work flexibility, etc.

2. Creating a Fair and Equal Workplace

• • HRs follow strict policies against discrimination and harassment.
    
  • They also make sure that all employees are paid appropriately and enjoy fair and equal opportunities.
    
  • They create a safe workplace where everyone is treated respectfully.

3. Maintain an Impressive Employee Experience 

• • HRs make sure an employee likes the workplace right from the onboarding.
    
  • They go the extra mile in keeping the workplace fun yet productive.
    
  • They conduct employee feedback and surveys from time to time to get insights on employee demands.

4. Involving Diversity, Equity, and Inclusion (DEI) in the Workplace

• • HRs embed inclusive hiring practices into the company culture.
    
  • They make sure that candidates from various races and creeds are interested in joining the company.
    
  • They build a diverse workforce and make sure everyone is respected equally.
    
  • This encourages innovation and diverse perspectives in the company.

5. Prioritizing Employee Health and Well-being

• • Modern-day HR takes care of the mental and emotional well-being of employees.
    
  • They arrange for one-on-one therapy sessions and group-engagement activities.
    
  • They devise employment policies that effectively maintain employees’ work-life balance.

6. Encouraging Career Development Activities

• • The more you support employees’ career growth plans, the more they’d be interested in staying back.
  • HRs grab this opportunity and plan for a structured career path for each employee.
  • HRs even organize highly recognized and certified workshops for employees.
  • They even grant educational leaves for high-potential employees.

7. Conflict Resolution

• • HRs are responsible for ensuring transparent communication between teams.
    
  • In case of any dispute or escalation, HRs are trained to act as an unbiased mediator.
    
  • They are responsible for maintaining harmony in the workplace.

8. Risk Management

• • HRs are responsible for keeping up with the updated labor laws.
    
  • They protect the company from any legal battles or penalties.
    
  • They draft ethical policies to prevent any operational or reputational disruption in the business.

Now that we know why is human resources important for all small and large businesses, let’s move on to our next section. 

There we’ll discuss about the challenges faced by companies without proper human resources.  

Challenges Faced by Companies without Effective Human Resources

When a company lacks a proper HR team, things can quickly fall apart. 

You might not notice it at first, but the damage builds up from legal messes to unhappy employees. 

And soon you realize the importance of human resources in your business. Here’s what usually goes wrong:

• • It’s challenging to stay current with the ever-changing employment laws. If you fall back on any one of these, such as salaries, safety protocols, or shift timings, you’re looking at lawsuits.
  • Without an effective HR department, any workplace misconduct can lead to reputational damage.
  • Payroll can be confusing. Late payments or incorrect deductions can quickly erode trust.
  • Employees start feeling ignored. Without recognition or career growth, motivation drops.
  • If you cannot retain quality talent, it will be difficult to bring in someone of equal caliber. It will cost you both time and money, as well as the effort of training the new ones.
  • Without HRs, employee well-being takes a hit. Mental stress resulting from work pressure can lead to low productivity.
  • Hiring becomes random. Without a proper plan, you end up hiring in a rush and often, the wrong person.
  • Skill development and the learning curve of employees come to a halt. It affects innovation and brainstorming within the company.
  • There is a lack of transparency and proper communication regarding company protocols, tools, and software. Transitioning to new policies becomes difficult.
  • Employee queries are left open-ended. Without their problems being resolved, tensions continue to build.
  • There is a lack of proper data on employee performance and achievements. You just have to decide on their promotions and recognitions in a rush.
  • The business loses direction. HR connects people strategy with company goals. Without it, everyone’s just working, not growing.

That sums up why human resources is important. HRs keep your company healthy and running without any obstacles. 

How to Fully Leverage the Human Resources Benefits for Businesses?

The human resources benefits help companies grow, employees retain, and businesses flourish. Let’s see how does that happen:

1. HRs Plan Your Workforce Smartly

They don’t just count heads. They think about who you’ll need next month or next year.

• • HRs look at your goals and plan skills accordingly. If new tech is coming, they train or hire employees early.
  • HRs help your people grow. They give them training or mentorship so they don’t look elsewhere.
  • HRs help employees stay flexible. They hire based on need and scale up or down as projects change.

The main importance of human resources lies in making sure that your team always fits your business needs.

2. Go digital with HR

Doing everything manually is tiring and slow. Use tech where you can.

• • Automate small stuff like payroll, leaves, or onboarding.
  • Give employees access to simple HR tools where they can manage things themselves.
  • Use data to track performance, engagement, and what’s not working.

This is where the importance of human resource management reflects.

3. Flexible or Hybrid Work

Managing remote employees can be challenging, especially when it’s international remote employees. However, HRs manage them effectively.

• • HRs set clear rules for how and when people work.
  • They give your team proper tools to connect and collaborate.
  • They arrange for regular group calls to help employees stay connected.

This is how the human resource benefits can truly be leveraged.

4. Build an Offshore Development Center (ODC)

This is how HRs manage remote hiring solutions if you want an international team.

• • They get access to skilled people without the high local costs.
  • They help you save money but still get top-quality work.
  • They effectively manage teams from different time zones.

It’s a smart move if you want to grow globally without huge overheads.

5. Outsource some HR work

If you feel overworked by your HR tasks or an in-house HR team is out of your budget, you can always opt for HR outsourcing.

• • Here, the HR experts will handle end-to-end processes for you.
  • You can focus on bigger things like strategy and people development.
  • You can also get access to better employee benefits through partners like international PEOs.

6. Partner with an Employer of Record (EOR)

An employer of record is undoubtedly the best solution for managing HR for international remote teams.

• • They hire for you legally and handle all the HR and admin tasks.
  • No worries about local laws or payroll.
  • You get access to the best local talent with a unique skillset.

EOR is literally a best friend to your global team. 

So, if anyone can truly do justice to the importance of human resources, it’s an EOR.  

Maximize the Human Resources Benefits with Remunance 

Want to make the most of your HR? Remunance is just the right place for you. We help you see why HR is important. It’s not just a department but a business driver.

With our 360-degree HR support, you get everything from payroll to compliance handled efficiently.

We work with over 100 clients across 16 countries, offering complete human resource management solutions. Our approach to providing solutions is both aspirational and practical. Our focus is simple: efficiency, ethics, and honesty.

We respond fast (within two business days) because we value time like no one else in the market.

As a thought leader in the Indian EOR market, we bring local expertise with a global mindset. Whether you’re growing, hiring, or managing teams in India, we make it smooth and compliant.

That’s the human resource management importance we bring to your business: reliable, ethical, and always on time.