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Why HR is important to the success of a business


The nature of business is competitive.

To gain an edge over the competition, you might consider new tools, software, or productivity hacks that enable your team to work harder and your company to reach more prospective customers. But one of the most crucial areas you can invest in is HR.

There are countless reasons why HR is important for businesses of every size and shape. But we’ll only cover seven—this time!

Why HR is important

When it comes to building a successful business, few ingredients are more important than your HR professionals.

Why is HR important

Profitable organizations know that the point of human resources management is to make your employees happier and more productive, which leads to more delighted customers. So now, as promised, here are the seven reasons why HR is important.

Reason #1: HR helps workers adjust to the new world of work

The past year has demonstrated why HR is important to keeping businesses afloat. 2020 brought unprecedented changes to the world of work as companies were forced to go digital and allow their employees to work remotely.

HR professionals were instrumental in keeping employees productive and engaged under stressful circumstances.

HR professionals are even more vital now that vaccinations are widespread, and companies are trying to figure out how they want to structure their business post-COVID. Understandably, many employees and companies are nervous about what the future of work will hold for them.

With employees’ return from remote work, companies are taking different routes to post-COVID operations.

Some businesses are going back to “business as usual” and want to return to their in-office model. On the other hand, many organizations are transitioning to a hybrid model, including Microsoft, Ford Motors, and Citigroup.

Human resources will be critical to ensuring a smooth transition out of remote work and into a hybrid or in-office model during these adjustments.

They will provide a valuable resource for employees as they can listen to the staff and make adjustments that will help keep workers positive and productive in the face of changes.

Reason #2: HR provides meaningful connections and engagement

Human Resources can play a vital role in encouraging engagement in the workplace. Gallup defines engagement as employees that are “involved in, enthusiastic about, and committed to their work and workplace.”

Engagement is an essential component of any company culture. In fact, researchers found that organizations with high employee engagement are 21% more profitable on average than other businesses.

When workers feel appreciated and a part of a team, they are far more likely to work hard: 69% of employees stated they would work harder if they were valued more.

Your HR representatives support your employees so that they feel appreciated and a part of the team. By addressing employee satisfaction and helping managers in their leadership roles, HR helps provide critical engagement to your business.

Reason #3: HR ensures better hires

Each member of your team is critical to the success of your company, no matter how large your organization. Even one bad hire can be an expensive mistake.

The U.S Department of Labor estimates that a bad hire can cost a business 30% of the employee’s first-year earnings, but many experts believe that it is even more than that. A bad hire can create a negative company culture, lost productivity for more than just the hire, and potentially lost customers. 

HR is instrumental in making sure that each hire is a productive one. They are instrumental to the recruitment process and ensuring that the right people apply for the position. They take employees through the hiring process to carefully weed through the candidates for the right one.

The success of a hire is not just finding the right person, though. The first days and weeks are a vital part of how well a new hire performs.  HR’s onboarding process is critical to the success of both the employee and company: one survey revealed that the onboarding process was essential for employee engagement, workplace culture, and performance. 

With companies working hard to find new hires post-COVID, the importance of HR can’t be overstated. They are central to not only finding employees but also making sure that they are the right fit for the company.

Reason #4: HR reduces turnover

For many companies, keeping good employees can be even more difficult than finding new ones. In a survey of over 600 companies with 50-500 employees, 63% responded that they had more trouble keeping employees than hiring them.

Reducing turnover not only reduces the cost of recruiting and onboarding but allows you to have a more significant number of experienced employees.

According to a report by the Work Institute, employers can prevent 77% of their turnover. HR management can help avoid unnecessary churn by investing in employees, giving them a place to air their concerns, and assisting management in their leadership roles. They can help companies avoid the mistakes that often make employees feel unappreciated and stuck at a company.

The onboarding process is crucial for retention: companies with a robust onboarding process can increase retention by 82%. HR also provides training and development, which are essential to retaining employees. In one LinkedIn workplace survey, 93% stated that they would stay at a company invested in their career.

The opportunities and training provided directly through HR have a large impact on whether or not your employees stay. Considering that almost a quarter of all workers plan to quit their jobs post-COVID, HR provides a crucial element in getting your best workers to stay.

Reason #5: HR improves company culture

Your company culture is crucial to the overall impact of your company because your employees’ enthusiasm and cooperation will directly affect their productivity and your bottom line.

Further, your customers can pick up on the excitement and happiness of your workers, which will either create loyal clients in the case of a positive culture or chase them away if employees are unhappy and disagreeable.

It’s no surprise, then, that many organizations take company culture seriously. In a survey of over 1400 CFOs, over 50% stated that corporate culture influences their productivity, creativity, and profitability. 

HR professionals are an essential part of keeping a positive company culture intact. Their ability to encourage engagement and connection amongst workers, provide leadership with valuable feedback, and create changes that improve morale contribute to a healthy company culture.

HR can also identify high-potential employees and provide them with the tools they need to continue their growth in the company. Employees that feel supported and can envision a future at their company are much more likely to have a positive attitude, leading to a better corporate culture.

By encouraging an employee-focused company and productive workplace, HR is an integral part of the company culture.

Reason #6: HR implements new technology

Technology is never a “one and done” process. It’s constantly evolving and provides companies with new ways to improve their operations and gain an edge over the competition. Research shows that digitally mature organizations are 23% more profitable than their peers. 

However, it can be challenging to get employees on board when it disrupts their routines. According to research from McKinsey, 70% of change programs fail and are primarily due to employee resistance.

By getting employee feedback and reviewing processes, HR can identify which technology could help improve collaboration, gathering information, and communicating with both customers and each other.

HR management also plays a crucial role in the implementation of new technology. The training that they provide employees helps create enthusiasm and a smooth transition.

When employees understand better how new processes and technology can serve them and receive thorough instructions on using it, they are much more likely to embrace it.

Reason #7: HR improves performance

Nearly everyone who starts a new company will have some skill gaps. And promoting from within creates a need for an effective means to train and support workers in new positions.

HR is critical to addressing these skill gaps. They provide crucial training and identify external training programs to ensure everyone has the preparation needed to succeed. It is especially critical to assist management in guiding on performance issues, compensation, and promotional opportunities.

By fully equipping everyone to fulfill their roles in the company best, HR can contribute mightily to the organization’s engagement, productivity, and positivity. The proper training and personal development help those employees directly and those who work with them so that there are no weak links.

Why HR is important to your company

As both employees and employers are nervous about what the future of work holds, the importance of HR is hard to overstate. They provide a critical link between employees and leadership and empower workers to be as productive and effective as possible.

Not only do they ensure that companies are full of the right people, but they make sure that they have all the tools and resources they need to be successful in their roles.

Human resources management is more critical than ever as companies look to be thriving in the future and gain an edge over their competition.

With TestGorilla, you’ll find the recruitment process to be simpler, faster, and much more effective.  Get started for free today and start making better hiring decisions, faster and bias-free.


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