8 Key Functional Areas of Human Resource Management

human resource functional areas

There are many different functional areas of human resources, with some companies and organizations having slightly different definitions and understandings of the different functional area of human resources depending on the type of business they run and how they conduct it.

No two employers are the same!

8 HR Functional Areas Every Organization Should Manage

Whether you’re in human resource management or you’re an employee who’s trying to get a better grasp of how your HR department works, here we talk about key functional areas of human resources that will help you to better understand how this department works to protect both you and your employer.

Let’s get to it!

1. Recruiting and Onboarding New Employees


Recruiting and staffing new employees is an essential part of any organization, especially when you’re working with a startup or a rapidly growing company. Most of the time, the human resources department will collaborate with the Hiring Manager throughout the recruitment process.

The HR team is usually in charge of selecting potential candidates for the Hiring Manager to vet. They often use special software called ATS (Applicant Tracking System) to help with this, automatically scanning hundreds of resumes to look for keywords essential to the job role.

If you’re a potential job candidate reading this, be sure to include keywords in your resume!

Once suitable candidates have been found, the Hiring Manager will interview them and (usually) pick one new employee who got the job. The HR team will then usually contact the new employee and organize a start date, onboarding process, and begin discussing their salary, benefits, workers compensation rights and more.

2. Organizational Structure

Sometimes on organization is so large and multifaceted that it’s hard for it to retain an accurate image of itself. Employees are often unhappy while management has no idea, and this is where human resources management can help to oversee the company and gain some perspective.

HR can help to define the company’s business goals and mission over the coming quarters, finding ways the business might improve by changing the way it treats some of its employees. The employees are the cogs in the machine of an organization that make it work, and HR needs to find the best way to keep everyone happy and working well.

If there are changes to employment pathways or employee job skills that aren’t being leveraged, HR can take this up and make suggestions with higher management.

3. Performance Management

As the name implies, performance management is all about reviewing the performance of employees and managers, making sure that people are doing well in their assigned roles and feel like they have adequate training and equipment to complete their job functions properly.

Sometimes people just don’t have the tools they need!

If staff members are underperforming, you’ll often find that both their Manager and the Human Resources Department will speak to them about their performance, seeing if there’s any way that they can make it easier for the employee to perform their job better.

4. Employee Compensation and Benefits

We don’t go to work for fun – we join the workforce because we need money, health care, and ideally some benefits.

Employee compensation, payroll and benefits is one of the key areas of human resources – HR team must organize the:

  • Employee pay
  • Health insurance coverage
  • Flexible spending accounts
  • Retirement savings
  • 401(k) payments
  • Sick leave compensation
  • Vacation time compensation
  • Company perks & freebies
  • Parking spaces & more

The benefits and compensation of employees varies widely from company to company, but you’ll find the HR department is in charge of regulating your pay (salary or hourly wages) and things like bonuses and raises too.

There may be a specific person who handles only payroll, depending on the size of the company.

It’s down to the HR department to determine a competitive compensation package for a certain job position, tempting potential members of the workforce away from competing organizations with similar jobs.

If you feel that your pay and/or benefits are not adequate for the skills you bring to your job, then the HR and payroll team is the place to go.

5. Training and Development

Human resources has a large role to play in the training and development of both new and existing employees, helping employees to expand their skills and envision future career planning in the workplace.

The HR team might create development and training programs with key members of management, looking for ways to expand the skills or employees and start treading career pathways that allow people in the company to progress into better and better positions over time.

That’s a great way to keep employees happy!

Part of this training and development might relate to holding performance reviews as discussed previously, asking personnel if there are any skills or training that they would personally like to learn to better their own career. This could lead to development in specialized HR software, customer service, team work, diversity training and more.

Employees should see a future at the organization – not a dead end.

6. Employee and Labor Relations

Employee relations is a complex area of human resources that mainly pertains to the laws surrounding employment in the United States. Both union and non-union workforces need HR teams that adhere to the laws and regulations surrounding how they can be legally treated and dismissed at work, among other things.

Human resources must be up to the date with the latest employment laws and how these rules differ for different types of employees. All contracts must be kept up to date and re-done if the laws or regulations change at any point.

New contracts may also have to be signed if an employee is promoted or demoted.

Employee relations also covers things like workplace disciplinaries are how the business can legally handle infractions. For example, some places have zero-tolerance “one time and you’re out” systems whereas others have more complex “three strikes” or warning systems to give employees a second chance after a mistake.

Whatever the rules at the particular business may be, the HR department is responsible for making sure that employees understand the code of conduct, their employment rights, and what will happen if they violate the code of conduct.

7. Workplace Safety and Health Issues

employee safety

Another one of the most important areas of human resources, workplace health and safety is essential for ensuring employee care and safety through all work environment and business activities, whether they’re on the premises or happening remotely during business hours.

The organization must comply with the Occupational Safety and Health Act of 1970, often referred to as OSHA.

Occupational safety varies with organizational needs and the type of company, but it may involve prominent warning signs, safe equipment within the workplace, personnel training programs, appropriate PPE, compliance checks, risk assessments, and more.

Even with all the right measures in place, some employees within the organization may have low compliance with health and safety training, at which point the HR team and management may need to consider termination.

8. Employee Satisfaction

One of the areas that doesn’t get discussed very often is employee satisfaction, but this is a key element to any human resource department worth its salt.

Management may think that their workforce is totally fine when in reality there is resentment and dissatisfaction growing within the organization. This is when human resources needs to step in and measure how satisfied employees are in their positions.

This can include important discussions on topics that include:

  • job functions & skills
  • training
  • development
  • pay
  • rewards programs
  • the staffing & recruitment process
  • succession planning & more

Happy employees are productive employees, so it’s in best interests of both the employee and the organization to make changes that ensure their employees are happy and able to do their jobs to the best of their ability.

The Bottom Line

There are so many important areas of human resource management that are essential for any organization to function properly while keeping its employees motivated and remaining in compliance with the law.

Although every business has unique structures, workforces, and organizational needs, these important tents of HR should be applicable across every business in the US, whether their industries are related or not.