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Five Functional Areas Of Human Resource Management

Five Functional Areas of Human Resource Management (HRM)

HRM has five functional areas that include: Staffing, Human Resource Development (HRD), Compensation and Benefits, Safety and Health, and Employee and Labor Relations.


Achieving organizational objectives requires having the proper number of employees with the appropriate skills.  Staffing accomplishes this objective through four tasks. The first task is job analysis, which examines specific job functions in determining the skills,  duties and knowledge required for each position. The second task is ensuring that the required numbers of employees, with the appropriate skills, are available when needed organizations engage in Human Resource Planning (HRP).  The third task is recruitment, which is the process of attracting enough skilled people to apply for jobs in the organization. Fourth, the last step in the staffing process, is selection. This involves choosing the best suited individuals to fill the open positions in the firm.

Human Resource Development (HRD)

Six functions, including training, development, career planning, career development, organization development and performance appraisal, make up Human Resource Development (HRD).

  • Training: is a process designed to provide employees with the knowledge and skills needed for their present job. Focusing on long-term learning needs is development. The ongoing process of career planning sets career goals for employees and identifies the means to achieve them. Career development is a formal approach used by firms to ensure that people with the proper qualifications and experiences are available when needed. A planned process for improving the firm by developing its structures, systems and processes to improve effectiveness and achieving desired goals is Organizational Development (OD). And finally,  performance appraisal is a formal system of review and evaluation of individual or team task performance.

Compensation and Benefits

Compensation includes all rewards that individuals receive as a result of their employment. Pay is the money that a person receives for performing a job.  Additional financial rewards other than base pay include paid vacations, sick leave, holidays and medical insurance, and they are called benefits. Non-financial rewards are non-monetary rewards, such as enjoyment of the work performed or a pleasant working environment.

Safety and Health

Employees who work in a healthy and safe environment are more likely to be productive.  Safety involves protecting employees from work-related accidents and injuries.  Health activities seek to prevent illness and provide for general physical and mental well being.

Employee and Labor Relations

Business firms are required by law to recognize a union and bargain with it in good faith if the firm’s employees want the union to represent them. This is still true despite the fact that the private-sector membership has fallen to 9 percent.

Restructuring Trends

The above five functions must be done by an organization to ensure satisfactory results, but many organizations are changing the way they approach it. While the traditional human resource manager may continue to be in place,  organizations are turning to other methods, including:

  • Shared Service Centers:  Take routine, transaction-based activities that are dispersed throughout the organization and consolidate them in one place.
  • Outsourcing Firms: The process of transferring responsibility for an area of service and its objectives to an external provider in order to reduce transaction time, reduce costs and improve quality.
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