Human resource (HR) functions and HR practices, while related, are distinct aspects of HR management. HR functions primarily involve transactional activities that can be managed internally or outsourced with relative ease. HR practices, on the other hand, combine conceptual planning with strategic implementation, encompassing systems that reflect the organization’s standard ways of operating. When people refer to “best practices” in HR, they are typically describing systems and strategies that have the most significant positive impact on both employees and the organization.
HR Functions: Transactional Activities
Transactional HR functions are essential day-to-day operations that keep the organization running smoothly. These include:
- Benefits administration – managing employee health insurance, retirement plans, and other perks
- Record keeping – maintaining accurate employee records and documentation
- New employee processing – onboarding tasks such as orientation, system access, and initial paperwork
- Payroll processing – calculating wages, taxes, and deductions
The scope of these transactional functions depends on factors such as the HR staff’s expertise, the size of the workforce, and the department’s budget. In many organizations, outsourcing certain transactional functions allows HR staff to focus on strategic management initiatives rather than routine administrative tasks, freeing time for long-term planning and employee engagement efforts.
Recruitment and Selection
Recruitment and selection practices are guided by the organization’s mission, values, and workplace culture. For instance, organizations that prioritize diversity implement recruitment strategies to attract candidates from a wide range of backgrounds. Recruitment practices support HR functions by including activities such as:
- Sponsoring career fairs at universities with diverse student populations
- Advertising job openings across multiple channels to reach a broad candidate pool
- Screening and shortlisting applicants based on organizational needs
These practices ensure that the organization attracts talent aligned with its goals and culture, contributing to workforce quality and inclusivity.
Achieving Work-Life Balance
HR practices that support work-life balance demonstrate an organization’s commitment to employee well-being. Examples include:
- Offering flexible work schedules
- Providing telecommuting options
- Training supervisors to recognize signs of workplace stress
While the operational aspects of these practices—such as scheduling, modifying technology for remote work, and conducting training sessions—are transactional in nature, their impact is strategic. By enabling employees to manage professional and personal responsibilities more effectively, organizations foster a results-oriented culture that improves productivity, retention, and overall satisfaction.
Training and Development
Training and development are core HR functions that contribute to employee growth and organizational success. These programs include:
- New employee orientation
- Job skills training
- Leadership and management training
- Professional development opportunities
Effective training not only enhances employees’ performance in their current roles but also prepares them for cross-functional responsibilities. Investing in professional development supports succession planning by equipping future leaders with the skills needed for advanced positions. Through training and development, HR promotes internal career growth, aligning employee goals with organizational objectives.
Compensation and Benefits
Compensation and benefits are closely linked elements of employee rewards, yet each has unique implications for HR management. Compensation encompasses wages, salaries, and related taxes, often representing up to 70% of an organization’s operating costs. Benefits alone can account for roughly 30% of total labor costs, with healthcare costs being a significant and rapidly increasing component.
While compensation is primarily a transactional function involving payroll and related administrative tasks, the overall design of compensation and benefits packages reflects strategic HR practices. Thoughtfully structured packages motivate employees, enhance retention, and demonstrate organizational commitment to employee well-being.
By understanding the distinction between HR functions and practices, organizations can balance transactional efficiency with strategic impact. This balance ensures that HR contributes both to the smooth operation of daily activities and to the long-term growth, engagement, and success of the workforce.
