What is Human Resources (HR) & Why is it Important to Businesses?

Human resources (HR) services are vital to the success of any business that has employees. From staff recruitment to staying on top of workplace health and safety regulations, HR professionals look after a wide range of essential business functions. 

This guide provides a comprehensive overview of HR roles and responsibilities. Read on for an in-depth explanation of HR and why it’s important, or use the links below to go directly to a specific section:

• What is HR?
• Why is Human Resources Important?
• What are the Duties of Human Resources (HR)?
• What are Human Resource Services?
• What is Human Resource Management (HRM)?
• HR Laws and Regulations in Australia
• Outsourcing HR Functions
• Key HR Metrics Businesses Should Track
• Common Human Resource Management Mistakes
• The Future of HR
• Common FAQs About HR

What is HR?

Human resources, or HR, is the team behind the people side of your business. From hiring and onboarding to managing exits, HR handles the full employee journey. Whether you're growing your team or building a great workplace culture, HR plays a key role in helping your people—and your business—thrive.

Looking after the entire employee experience is a good way to define a human resource professional’s role. It’s broader than simply hiring and firing—when done well, HR is about helping your staff develop their skills and make a meaningful contribution to your company.

Why is HR Important?

You might think you can manage employee matters yourself—and in very small businesses, that might work for a while. But as your team grows, so do the complexities. Here's why HR is important:

• Legal compliance: HR professionals stay up to date with changing employment laws, helping you avoid legal issues.
• Workplace conflict resolution: HR brings training in dispute resolution and knows how to handle sensitive employee matters fairly and professionally.
• Risk management: Without proper HR processes, you could be exposed to unnecessary risks, including legal claims or reputational damage.
• Efficiency and scalability: As your business grows, HR helps manage the increasing demands of employee support, training, and performance tracking.
• Employee wellbeing and engagement: A strong HR function helps build a positive workplace culture that attracts and retains great talent.

Trying to juggle all of this on your own can stretch your time and resources. That’s where HR services or support can make all the difference.

What are the duties of human resources (HR)?

So, what does HR do on a day-to-day basis? 

HR is responsible for a broad range of tasks. These responsibilities encompass various aspects of supporting employees and their success, performance, and job satisfaction. Some of the primary responsibilities of HR include:

• Recruiting and hiring employees
• Employee onboarding
• Processing payroll
• Enforcing personnel policies
• Creating and updating policies
• Maintaining employee records
• Developing and implementing employee benefits

Let’s dive a little deeper into each of these responsibilities so you can get a better sense of the function HR serves:

Recruiting and hiring employees

HR is responsible for talent management, meaning that they help you find (and keep) high-quality candidates for your company. This includes:

• Helping refine job descriptions and duties
• Creating and managing job listings
• Screening applicants
• Setting up interviews
• Facilitating job offers
• Gaining approval for and running background checks
• Providing hiring documentation

While this might seem fairly straightforward, there’s a lot of time and effort that goes into managing the recruiting process.

Recruiting and hiring employees

HR typically handles employee onboarding which can include the following tasks:

• Planning an onboarding schedule
• Preparing onboarding materials
• Collecting necessary documentation from new employees
• Setting up an employee file
• Welcoming new employees
• Establishing training programs

Enforcing personnel policies

An HR professional should have a solid understanding of appropriate policies and how to implement them without crossing boundaries. To enforce personnel policies, HR may need to:

• Research the latest legislation pertaining to each specific policy
• Set guidelines for enforcing policies
• Handle dispute resolution
• Determine how and when to implement disciplinary actions
• Follow the correct steps for termination of an employee

Processing payroll

HR is responsible for ensuring employees get paid on time and in full. Conducting payroll generally entails:

• Processing payroll
• Distributing paychecks or facilitating direct credit
• Handling payroll disputes
• Managing retroactive payments
• Documenting pay raises
• Updating employee pay so payroll is processed correctly

Creating and updating policies

HR also typically handles establishing personnel policies. This is because putting policies in place and enforcing them can get complicated quickly due to strict, ever-changing laws. 

Here are some examples of personnel policies that HR is responsible for setting: 

• Sexual harassment policies
• Nondiscrimination policies
• Meal and break policies
• Paid time off (PTO) policies
• Employee conduct policies
• Dress code requirements
• Pay policies
• Attendance requirements

It might seem easy enough to create policies for your business—after all, if you’ve built your business from the ground up, you already have. However, there are many factors, such as fairness, legal precedents and standardisation, to consider when developing new policies. That’s where HR-specific knowledge comes in handy.

Maintaining employee records

Companies should have comprehensive employee records for every individual who works or has worked (within the past three years) for the company. 

HR tasks related to employee records include:

• Creating an employee file
• Updating the file as needed with new documentation
• Having employees sign necessary documents
• Recording pay raises
• Keeping track of any disciplinary actions
• Adding employee performance documentation after each review

Developing and implementing employee benefits

Benefits are a major factor in job offer acceptance or rejection. Since HR is responsible for recruiting, it makes sense they’d be involved in establishing the benefits package—with your input and final approval, of course. 

Responsibilities related to employee benefits administration may include:

• Ensuring employees are given the required amount of leave required by law (this generally pertains to sick time and bereavement)
• Determining PTO offerings
• Organising superannuation funds
• Facilitating benefit enrolment and renewal
• Keeping employees updated about changes in benefits
• Making recommendations on changes to benefits that can improve recruitment or employee retention

What are human resource services?

Human resources isn’t the same as human resource services, meaning that you can’t use these terms interchangeably. Here’s a breakdown of the differences:

• Human resources: This usually refers to a team or person within a business who handles employee matters. 
• HR services: These are external providers or tools that perform the same functions as an in-house HR team.

Human resource services are an external solution that leverages the latest technology to help you manage HR responsibilities. HR services combine all the aspects of HR into one tool, making it easier for small businesses to handle these responsibilities. In a nutshell, HR services make it possible for you to handle HR tasks via an organised online platform with minimal time commitment.

What is human resource management (HRM)?

What’s human resource management (HRM), and why is it important for your business?

HRM is the process of effectively managing people within a business or organisation. It involves everything from hiring and onboarding to training, performance management, payroll, employee relations, and compliance with workplace laws. 

The goal of HRM is to build a productive, positive, and legally compliant work environment that helps both employees and the business succeed.

HR laws and regulations in Australia

HR laws and regulations are in place to protect employees and ensure employers uphold these obligations when hiring or during employment. One of the most important aspects of HR is having a good working knowledge of these laws. Otherwise, your company could face serious consequences—including fines and employee lawsuits.

Workplace discrimination laws

Workplace discrimination laws ensure that all individuals are given equal opportunities. For example, companies are not allowed to discriminate based on:

• Race, colour, religion, sex, or national origin when making staffing decisions
• Gender when it comes to equal pay for equal work
• Disabilities if the individual is qualified to do the job.

It’s essential that you have a thorough understanding of what practices are considered discriminatory.

Employee benefits

Most employee benefits are not required and may depend on the worker’s classification, hours and other factors. However, certain benefits are required by law, such as:

• Workers compensation
• Sick and carer’s leave
• Parental leave
• Superannuation
• Long service leave

Look into employee benefits laws to determine which benefits you’re required to provide.

Immigration laws

Immigration laws prevent employers from discriminating based on nationality or citizenship status when hiring. They also require employers to ensure that anyone they’re employing is able to legally work in Australia.

Workplace safety laws

Australian WHS laws require employers to provide safe working conditions. This includes training, providing the right protective gear, notifying workers about potential hazards on the job and keeping records of workplace injuries. Failing to meet these standards could result in severe workplace injuries that you can be held liable for.

Employee pay, leave, and entitlements

Employee pay, leave and entitlements laws dictate the required rate of pay. This can include minimum wage regulations, when overtime is due, when breaks are required and which employees are entitled to fringe benefits. Violating these laws even just once could result in penalties.

Outsourcing HR functions

It’s a common practice for businesses to outsource some HR functions so their internal teams can focus on more strategic priorities. Modern HR tools and cloud-based platforms also make it easier than ever to streamline routine processes.

Common HR functions that are often outsourced or automated include:

• Payroll processing
• Employee onboarding and offboarding
• Timesheet and leave management
• Superannuation and tax reporting
• Compliance with workplace laws and regulations
• Record keeping and document management
• Recruitment administration (e.g. posting job ads, initial screening)
• Employee benefits administration

By outsourcing some of these HR functions and using software to speed up processes and eliminate manual data entry, you can run your business more efficiently. 

Key HR metrics businesses should track

To manage people effectively, businesses need more than gut instinct—they need data. HR metrics offer valuable insights into how well your people strategies are supporting your business goals. 

Here are some of the key HR metrics your business should track, and why:

Common human resource management mistakes

HR functions are entangled with all kinds of complex tasks including best practices and legal requirements. So, inevitably, mistakes are going to happen—especially if you’re trying to tackle these duties on your own. Mistakes happen, but when it comes to your employees’ rights, pay and employment status, there isn’t a lot of room for error.

Some of the most common human resources management (HRM) mistakes include:

• Missing important deadlines
• Not keeping accurate employee records and information
• Neglecting employee onboarding
• Making payroll mistakes
• Misclassifying employees
• Using poor recruiting practices

To provide context for how these mistakes can impact your business, let’s explore them a little further:

Missing important deadlines

A major aspect of HR is complying with the requirements of different regulating bodies. This also means adhering to many different deadlines all year, which can be hard to keep track of—especially for a busy small business owner. Missing these deadlines can result in penalties, disgruntled employees, or even legal action against your company.

Not keeping accurate employee records and information

Many businesses keep poor employee records or dispose of them prematurely—which is a problem for several reasons. First and foremost, keeping employee records gives you a history to refer to when making decisions about the employee. From details like their start date and pay to performance information, keeping organised information about each worker is invaluable.

Not only are employee records important for your own purposes, but you’re also required to hold on to them. In general, employers are expected to keep basic employee records for seven years. 

Using human resource information services to help you maintain accurate records is recommended. You can outsource some of these HR functions, or use software such as QuickBooks Online to keep track of payroll, performance reviews, and other important records. 

Neglecting employee onboarding

Onboarding is an important step in the hiring process. It can be tempting to do a quick introduction, have new employees fill out a few pieces of paperwork, and turn them loose on the first day. However, that’s not a very effective way to get employees acquainted with your company.

An employee’s first day and how they’re integrated into the team can actually have a major impact on their experience—and your bottom line. The cost of replacing an employee can be very high. So it’s in your best interest to make the onboarding process a priority.

Making payroll mistakes

Even if you only have a few employees, payroll involves a lot of moving parts. Cloud payroll services can make a world of difference for small business owners who find themselves overwhelmed. With this online solution, you can automate most aspects of processing payroll, and breathe easy knowing your employees are getting paid correctly and on time.

Using poor recruiting practices

Recruiting the right candidates is no small feat; however, it’s one of the biggest HR challenges small businesses face. From placing job ads that lack key details to failing to screen prospective hires, there are a lot of little mistakes to be made. These small missteps can result in hiring people who are a poor fit or, worse, are a threat to your company.

The future of HR

The future of HR is being shaped by innovation, with emerging technology and AI playing a bigger role than ever before. Traditional HR tasks—like managing employee records, payroll, and recruitment—are becoming faster and more accurate thanks to smart automation. Tools powered by artificial intelligence can now help screen job candidates, predict workforce trends, and even support employee wellbeing through personalised recommendations.

HR is also becoming more data-driven, using real-time insights to improve decision-making and drive better outcomes for both employees and businesses. Remote work, flexible arrangements, and a stronger focus on mental health and inclusion are also influencing how HR operates.

As businesses continue to evolve, HR is shifting from an administrative function to a strategic partner—empowered by tech and focused on building a future-ready workforce.

Conclusion

HR plays a vital role in your business. That’s why it’s essential to find the right HR solution to help you manage these responsibilities, remain in compliance, and keep your employees happy.

QuickBooks accounting software makes it easy to manage payroll and stay legally compliant. Build the right plan for your business and discover the benefits of using streamlined, cloud-based technology.

Common FAQs about HR