The simplest definition of human resources (HR) that I can offer is that it's the management of employees as a capital asset. A business acquires and manages employees, in a manner similar to acquiring and managing any other capital asset. Now what exactly does this entail?

Employees are human and they are a business resource. However, in the same way that machinery or equipment is capital that is acquired, utilized, appreciates or depreciates in value, and which can be improved, sold or discarded, HR relates to the management of employees in a similar manner. Although this explanation may seem callous, under closer examination it is evident that HR pays as much attention to the "human" half of its name as it does to the "resources" aspect.

HR concerns the approach and ideology a business adopts for the life cycle of its employees and its company culture. Recruiting, selecting, compensating, motivating, maintaining and promoting employees are all part of HR. HR further includes strategic, budget and succession planning. Consequently, to some extent, all businesses with more than one employee have HR concerns and practice HR. Furthermore, a business’ HR philosophy may be multidisciplinary or singular in approach.

For example, an HR ideology may focus more on labor and employee relations than on organizational culture and development. Yet, an effective HR philosophy has to acknowledge that because employees affect every facet of business, and are the human face of business, employees have the greatest impact on productivity and profits.

HR affects profit and productivity.

Therefore, in order to improve productivity and profits and decrease employment related expenses, management must know how to treat employees in a fashion which enhances their value. Ultimately, effective HR helps to maximize profits and productivity by minimizing employment related expenses and maximizing employee performance.

In U.S. industry, modern HR theories date back to the Industrial Revolution. Moreover, since the Industrial Revolution, HR has evolved along with changes in production, distribution, finance and, perhaps most importantly, legal and civil rights. HR poses problems for a business when it fails to understand how these changes influence macro and micro HR practices.

More about Macro and Micro HR will be explained in my next article. Do look out for it.

As a labor and employment attorney and businessperson, Charles Krugel has represented management in hundreds of negotiations, in-house and 3rd party proceedings. Charles has over 13 years of experience in the field and he has run his own successful management side practice for the past 7 years.

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