Human resources (HR) is all about people. It shapes company culture, establishes fair workplace policies, and gives employees the support they need to do their best. HR also plays a key role in hiring top talent and ensuring that teams stay engaged, motivated, and set up for success.
Without HR, businesses risk high turnover, disengaged employees, and costly compliance mistakes. But HR isn’t just about avoiding problems—it’s also about creating an environment where people feel valued, supported, and inspired to do great work.
In this guide, we’ll explore why HR is important and how it helps employees at every stage—from recruitment and training to long-term growth and retention.
What is human resources? Why HR management matters
At its core, HR ensures that employees have what they need to do their jobs well while aligning with the company’s goals. Along with handling hiring and policies, a strong HR team shapes workplace culture, promotes career growth, and helps employees feel valued and motivated.
HR also plays a critical role in protecting both employees and the business. It manages pay and benefits, creates opportunities for professional development, and fosters a positive work environment. HR is also the first line of defense regarding labor laws, making sure businesses stay on top of regulations, updating policies as needed, and helping companies avoid costly mistakes.
Here’s a closer look at why HR management matters:
Strengthens company culture
HR sets the tone for how employees collaborate and communicate with each other and, in turn, how they grow both individually and as a collective team. From structuring workplace policies to facilitating opportunities for employee engagement, HR helps staff feel connected and motivated to contribute to the company's success.
Keeps employees engaged and retained
A strong company culture leads to happier employees, but engagement doesn’t happen automatically. HR works to improve employee satisfaction by conducting surveys to understand team needs and implementing structured recognition programs that reward great work. Human resources teams also create clear career development paths through mentorship, training, and promotion opportunities.
Builds the best team for today and the future
Retaining top talent is important, but businesses also need to think ahead. HR helps anticipate skill gaps and align hiring strategies with the company’s long-term goals so that the right people are in place when they’re needed most.
Ensures legal compliance
As businesses expand and evolve, so do labor laws and regulations. HR stays on top of these changes so that companies comply with payroll regulations, workplace policies, and employee rights. This minimizes legal risks and keeps operations running smoothly.
Promotes diversity, equity, and inclusion (DEI)
Creating a truly inclusive workplace is something every winning HR team does well. HR leads DEI initiatives by implementing fair hiring practices and fostering an environment where employees of all backgrounds feel valued. A diverse team isn’t just good ethics—it’s good business.
Prioritizes employee well-being
Whenever employees feel overwhelmed or need support, HR is there to help. That includes managing benefits and wellness programs and shaping work policies that prioritize the staff's well-being. It's also HR's job to make sure leadership is aware of what’s working and where improvements are needed.
Handles workplace conflicts
Even the best teams are bound to face conflicts, and when they arise, HR steps in. By acting as a neutral mediator, HR helps resolve disputes, maintain workplace harmony, and prevent small issues from turning into bigger problems.
Creates career development opportunities
HR helps employees grow within the company by providing training and leadership programs and outlining clear paths for internal advancement. This reduces turnover while strengthening the overall team, helping make sure that everyone is motivated and invested in the company in general.
Human resources functions that every business needs
HR’s main objective is to cultivate an environment where all staff members—employees, management and business leaders—work together as efficiently and effectively as possible. But how does that translate into daily practice? Here's a closer look at what human resources does on a regular basis:
- Recruitment and hiring: Finding great talent takes more than just posting a job listing. HR helps business leaders define hiring strategies and write clear job descriptions to attract candidates who are the right fit. When resumes and cover letters start to pour in, HR organizes and conducts new hire interviews, too.
- Onboarding and integration: A new hire’s first days often set the tone for their entire experience with the company. HR helps employees start off strong with training, onboarding sessions, and resources to get them up to speed. Many companies use HR management software, which simplifies the process by tracking training progress and automating administrative tasks.
- Performance management: When employees know what’s expected of them and receive meaningful feedback regularly, everyone wins. HR conducts performance reviews and offers feedback and coaching to help staff members grow while keeping the company moving forward.
- Training and development: HR offers employees ongoing opportunities to continue learning and advancing in their careers. Whether it’s leadership workshops, hands-on training sessions, or programs to help workers gain new skills, these efforts keep teams motivated and ready to confidently take on new challenges.
- Compensation and benefits: Competitive pay and strong benefits help companies attract and retain top talent. HR oversees payroll, health insurance, bonuses, and other perks while regularly reviewing benefits to align with industry standards and employee expectations, such as remote work flexibility or mental health support.
Challenges organizations face without effective HR
Without strong human resource management (HRM), businesses don’t just face administrative headaches—they also risk losing top talent, struggling with compliance issues, and creating an unstable work environment. Here’s what can happen without a dedicated HR team in place to support employees:
Low employee engagement and motivation
Employees who feel disconnected from their work don’t just underperform—they often leave for something better. Disengagement is a massive issue, costing businesses in the United States trillions every year due to absenteeism, turnover, and lost productivity. HR helps keep employees invested in their roles, whether through mentorship programs, career advancement opportunities, or simply ensuring that they feel recognized for their contributions.
High employee turnover rates
When employees depart, the impact goes beyond an empty desk. In fact, replacing a team member can cost a company up to twice their annual salary. Without HR to drive retention strategies—like career development programs, recognition initiatives, and efforts to foster a positive workplace culture through engagement programs, DEI initiatives, and work-life balance policies—businesses risk losing great talent and overspending on hiring.
Operational inefficiencies that slow growth
As businesses grow, leadership naturally turns its attention to automation, upskilling employees, and making strategic hires—all of which require strong HR support. Without HR to handle onboarding, training, performance tracking, employee relations, and compliance management, operations can easily become scattered and inefficient. A well-structured HR team keeps daily operations on track and helps companies scale efficiently and stay agile as workforce needs evolve.
Legal risks and costly compliance mistakes
Employment laws change constantly, and failing to keep up can lead to serious consequences. In 2023, the U.S. Equal Employment Opportunity Commission (EEOC) filed 143 workplace violation lawsuits across the United States that resulted in over $22.6 million in settlements. Without a dedicated HR function tracking legal updates and maintaining clear workplace policies, companies open themselves up to compliance issues, penalties, and lawsuits that could have been easily avoided.
Simplify HR management wherever you operate with Oyster
Strong HR practices drive retention to help your business grow, but managing a global team adds new challenges. Oyster simplifies compliance, payroll, and onboarding, taking the guesswork out of hiring in 180+ countries. Instead of getting lost in logistics, you can focus on what really matters—building and maintaining a team that feels supported, engaged, and set up for success.
Discover how Oyster can support your HR strategy by booking a free demo today.
About Oyster
Oyster is a global employment platform designed to enable visionary HR leaders to find, engage, pay, manage, develop, and take care of a thriving distributed workforce. Oyster lets growing companies give valued international team members the experience they deserve, without the usual headaches and expense.
Oyster enables hiring anywhere in the world—with reliable, compliant payroll, and great local benefits and perks.
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