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4 Human Resources Decisions That Affect Your Company
HR support is an essential element to company success. Learn how human resources decisions can impact your business.
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Business owners often say their company’s most valuable asset is its people, those who carry out the organization’s everyday operations. If that’s the case, it makes sense that employers place high importance on the team that manages and maintains the company’s human capital — the human resources (HR) department. While HR was once viewed primarily as an administrative function, modern businesses recognize that strategic HR leadership directly correlates with organizational performance and competitive advantage.
That’s because HR professionals make daily decisions that can profoundly shape your organization’s trajectory. For example, an effective HR department maintains legal compliance, attracts and retains highly skilled candidates and builds a reputation as an employer of choice through exceptional workplace culture. Companies without adequate HR support often struggle with compliance issues, face higher turnover rates and experience decreased productivity — costing them both money and talent.
HR decisions that affect your company
HR professionals typically are responsible for a myriad of business and employee-related functions and how they handle those functions can impact a business significantly — for good or for bad.
When structured correctly, HR leaders are essentially the “culture keepers” of the organization, said Todd Davis, senior consultant and thought leader at FranklinCovey.
“The chief people officer or CHRO should be in lock-step with the CEO regarding her/his vision for where the organization is going,” Davis told us. “When that happens, all recruiting, hiring and employee development is done through the lens of this vision and has a significant impact on the growth and success of the organization.”
Although numerous decisions HR managers make day in and day out can affect your company, here are four major ones to consider.
1. Deciding who to hire
Your HR department is mainly responsible for deciding who to hire. While the ultimate decision may fall to a particular leader, HR professionals are the ones who go through résumés, evaluate candidates and recommend the best applicants for the job. When skilled recruiters on your HR team successfully identify top talent, your company gains employees who not only meet technical requirements but also enhance team dynamics and drive innovation.
However, poor hiring decisions carry substantial financial consequences. According to the U.S. Department of Labor, the cost of a bad hire can reach up to 30 percent of the employee’s first-year earnings. These costs compound when you factor in lost productivity, damaged team morale and potential customer relationship issues. Additionally, remaining team members must shoulder extra responsibilities while positions remain vacant, potentially leading to burnout and further turnover.
2. Deciding how to hire
Before your HR department can point you in the direction of which candidates to hire, they have to make a set of decisions to set up a system that will find you the ideal applicants. If your hiring process is aimed at filling positions quickly rather than carefully, you may be hiring for the same job over and over. If your job listings are too generic and don’t describe exactly what skills and characteristics you’re looking for in detail, you may get bombarded with résumés from all the wrong people. The extra costs of using assessment testing or even hiring an external recruiter may ultimately save money, especially for higher-level jobs.
Your HR professionals should be able to point you to the best HR software equipped with recruiting and applicant-tracking tools. Once implemented, these systems can reduce administrative hiring tasks, allowing HR teams to focus on strategic candidate evaluation and relationship building. A skilled HR professional should direct each new hire through employee onboarding as well. This process can impact the longevity and success of each new hire at your company drastically.
“During the onboarding process with new hires, HR professionals can help new employees feel welcome and adapt to the company culture,” said Leila Saad, principal of Catalyst Lane. “HR departments can leverage tools and training for skills-based volunteering programs to enhance talent management, compliance and organizational development.”
How well they execute these procedures directly impacts your bottom line. Employees who receive effective onboarding are 18 times more likely to feel committed to their employer, ultimately improving both retention rates and organizational performance.
3. Deciding benefits packages
Another critical responsibility that often falls on the HR team is designing competitive benefits packages that attract and retain top talent. While core benefits like health insurance remain essential, today’s workforce increasingly values holistic well-being support like flextime scheduling and professional development opportunities. Other important benefits may depend on the demographic your employees fall into.
For example, companies that have a large number of younger employees might want to offer tuition reimbursement and other education benefits while businesses that employ mostly parents and families would likely find value in providing fringe benefits like life insurance, child care or elder care, paid parental leave and family planning services.
Your HR department will know your current employee demographics best as well as the target workers you’re hoping to attract. They can build packages that meet those workers’ needs, improving employee recruitment, satisfaction and retention.
4. Deciding company rules
A company’s HR policies form the foundation of workplace culture and employee experience. Clear, well-crafted policies protect both employees and employers while fostering a productive work environment. Your HR professionals should leverage their expertise to develop comprehensive guidelines that address modern workplace realities. This includes crafting policies around remote work, artificial intelligence use, social media conduct and workplace relationships — areas that require careful consideration and regular updates.
Your HR professionals should use their expertise and training to develop the right guidelines for your organization. For instance, decisions about company fraternization rules need to be made with special care. While romances between workers and their superiors can have destructive consequences, not all office romances do. Skilled HR workers can make policy decisions that promote an inclusive and productive company atmosphere.
“In well-structured, high-performing organizations, it is the responsibility of the HR department to ultimately determine and implement company policies and procedures,” said Davis. “When the HR department works to become true partners with the leaders of the organization vs. ‘policy wonks,’ the implementation of policies and procedures are seen and received as a way to benefit and not hinder the growth and success of the organization.”
How an HR department benefits your company
Whether you’re hiring your first HR person or employing an entire HR department, having internal HR professionals on staff can bring many benefits to your organization.
“HR professionals play a crucial role in creating and sustaining a positive work environment, directly impacting productivity and employee retention,” said Saad.
This is because an internal HR team knows the ins and outs of your organization. They understand your company culture, standard operating procedures, legal risks and best practices. They have insider knowledge of the specific HR needs of your business and employees, even as those needs evolve.
In addition to making the decisions highlighted above, here’s what an HR department can do for you:
- Develop accurate, unbiased job descriptions that attract the right candidates to each open position.
- Recruit and hire skilled employees who are right for their respective roles.
- Implement an effective onboarding process that successfully integrates new employees into your organization long term. [See the onboarding best practices that will impress new hires.]
- Develop and maintain a strong company culture that aligns with your mission and values.
- Foster employee engagement through recognition programs, feedback systems and career development initiatives.
- Strategically handle employee conflict in a way that best serves the employees and your organization.
- Build and administer competitive employee compensation, benefits packages and professional development opportunities that aid in employee recruitment, satisfaction and retention.
- Leverage HR analytics and workforce data to make informed decisions about talent management, succession planning and organizational design.
- Develop and enforce procedures that help you maintain HR compliance with federal, state and local employment and labor laws.
- Assess your organization and mitigate potential legal risks.
These strategic HR functions contribute directly to business success. By partnering closely with your HR team and aligning HR strategies with business objectives, you create a competitive advantage that drives sustainable growth and organizational resilience.
