Essential Guide: Why HR Is Important & Key Tips

The Human Resources (HR) department is the backbone of a successful company. According to a study by IceHrm, however, 26% of companies do not involve HR in executive leadership, leaving it out of strategic decision-making. This oversight can be costly. When implemented correctly, HR is not just a business function, but a true driver of growth. Strategic HR helps companies attract and retain top talent, foster a positive corporate culture, and improve overall performance. However, if HR efforts are insufficient, the consequences affect the entire company: high turnover, compliance risks, low employee engagement, and stagnant growth. In this article, we explain why HR is so important and how to do it right.

Why is human resource management important?

Every organization is different, but the basics of human resources remain the same. If you are wondering why human resource management is so important, here are some examples of how it contributes to success.

Applicant management and strategic recruitment

Finding the right personnel takes time. According to current statistics, the average time to fill a position is 41 days. For leadership positions, it can take significantly longer.

You should avoid hiring unsuitable employees, as this can later lead to conflicts and even result in losing the employee. In this case, you would have to fill the position again, and since hiring costs can range between $7,000 and $28,000, high turnover can place a significant financial burden on your company.HR experts support you in the recruitment process, making it easier for you to find talent, hire the right candidate, and ensure their quick onboarding.

Management of benefits and vacation entitlement

Compensation is only part of the overall package. Employees also value benefits and perks, such as:

• Vacation and paid leave
• Health and well-being
• Work-life balance
• Retirement plans and financial benefits

Without an HR professional, such offerings often lack strategy and consistency. A dedicated HR team ensures that your benefits are competitive and meet the needs of your employees.

Training for Managers and Employees

It is often said: 'Employees don’t leave companies, they leave their managers.' In fact, in 2024, 9% of employees quit because of their direct supervisor. While this may be true in some cases, the solution to the problem is not that simple. Few people are so passionate about their work that they want to spend their entire career in the same position. Most desire opportunities for advancement: additional challenges, more responsibility, and higher pay. When employees feel that their performance or talent is not recognized or appreciated, motivation can drop significantly, and they may consider resigning.

HR managers who support employees and leaders in their development can be crucial in this competition. Through employee training and development initiatives, employees can qualify for more demanding positions. At the same time, HR managers enable leaders to fully leverage the potential of their teams.

Optimizing the onboarding process

Often, onboarding is left to chance. However, an effective onboarding process can contribute to higher employee retention and productivity. The importance of human resource management is evident here in designing a more engaging and effective onboarding process. In addition, onboarding can be tailored to the specific role.

Conflict Resolution in the Office

Employees spend an average of 2.8 hours per week dealing with conflicts in the workplace. Nevertheless, only 30% of employees trust their leaders' ability to resolve conflicts effectively. That is why it is helpful for employees to have a contact person in the HR department. HR departments trained in conflict resolution are prepared to handle interpersonal conflicts. Additionally, training a single HR department is significantly easier (and more cost-effective) than training all the leaders in a company. The fewer conflicts there are in the office, the more satisfied and engaged the employees are.

Dealing with Legal Concerns

In 2024, the EEOC received 88,531 new discrimination complaints. This number does not account for all filed complaints. It is likely that many more incidents went unreported due to factors such as fear of retaliation, lack of evidence, and limited legal knowledge. Without a specialized HR department, it can be difficult to keep track of all applicable laws and regulations that can ensure a company stays on the right track. Additionally, problems may remain unresolved without such a contact person (and unnoticed by the company) until a lawsuit arises.

How do I calculate the ROI of HR?

There are some key performance indicators (KPIs) that you can use to measure the ROI of your HR initiatives: turnover rate, employee retention rate, and absenteeism. In 2024, the average absenteeism rate in the USA was 3.2%. Most industries aim for a ratio of about 85% employee retention to 15% turnover (or better).These metrics highlight the impact of your HR team. For example, lower turnover rates indicate a stable and healthy work environment, which can be associated with a strong HR team.

The Costs of a Missing HR Team

An HR strategy should not be underestimated, as it can have serious consequences, such as:

Poor Hiring Practices

Those who post job advertisements thoughtlessly probably do not give the actual application and hiring process the necessary attention. This can lead to the right talent not being found and the wrong employees being hired. And no company can afford bad hires.

Poor Personnel Management

Nowadays, it is no longer enough to simply offer a few vacation days and consider the matter done. You also cannot just rely on employees to secure their own health insurance. Without an effective HR team, you also risk being less competitive in terms of benefits and salary in the job market. Your HR team can ensure that your employees have access to the benefits they are entitled to and that these are handled promptly and efficiently.

Low Employee Retention

Half of employees worldwide would be willing to give up 20% of their salary to improve their quality of life. Without the support of a human resources department, they might consider changing jobs. An engaged and active HR team can increase employee retention and thus engagement.

Negative Employer Image

As mentioned, many employees are dissatisfied with their company's onboarding process, and a poor first impression can lead to problems. Missing onboarding processes often remain unresolved as long as no one is responsible for them. Without a human resources department, however, hardly anyone in the company has time for onboarding.

Stressful Work Environment

Stressful work environments can seriously affect your health. Whether it’s friction between colleagues, a supervisor who doesn’t listen, or a corporate culture that has turned into a real problem – all of this has a negative impact on your employees. Without a human resources strategy to improve corporate culture and de-escalate conflicts in the office, employee dissatisfaction and turnover will continue to remain high.

Implementation of Human Resource Management

Now that you have recognized the importance and value of HR professionals and an effective HR strategy for your company, the next step is to implement them. Key factors include developing a company culture, tracking important metrics, and being open to regular feedback. You can also use technology to make your HR processes as efficient as possible. In our HRIS guide, you will learn how to choose the best HR software for your company.

The success of any modern organization hinges on the strategic management of its people—a function that extends far beyond simple administration. HR is fundamentally important for driving growth, ensuring legal compliance, and fostering a positive culture that attracts and retains high performers. To transform HR from a cost center into a strategic asset, efficiency and data-driven insights are critical. IceHrm provides the ideal all-in-one HRIS solution to achieve this. By automating complex functions like applicant tracking, benefits administration, and performance reviews, IceHrm drastically reduces the administrative burden, freeing up HR professionals to focus on strategic recruitment, conflict resolution, and leadership development. This technological support ensures that all vital HR functions are managed efficiently, consistently, and compliantly, directly contributing to a lower turnover rate and a demonstrably higher ROI for the business.