The head of human resources shaking hands with a new employee.
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Human Resources Mega Guide

21 Feb 2024
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In this MEGA guide, we’ll discuss everything there is to know about human resources (HR), including everything the role involves and what it’s responsible for in business.

Many people believe HR is just there to keep employees happy, but it is so much more.

From creating legally compliant documents to dealing with the office ‘joker’, human resources get to be involved in everything a business does, by overseeing and supplying the vital staff necessary to run those functions. Furthermore, outsourcing HR can offer a wide range of services that can scale are your speed.

By the end of this guide, we hope you’ll understand just exactly what HR does to keep every aspect of a business running.

So, without further ado, let’s kick things off with the big question…


What is Human Resources?

Human resources (HR) is defined by Oxford Languages as the department of a business or organisation that deals with the hiring, administration, and training of staff.

But let’s not get bogged down in dictionary jargon. For us, human resources are the heartbeat of any business that keeps everything running.

The list of responsibilities is endless; let’s break it down: The human resources department deals with all things employees; this includes, but may not be limited to:

  • Recruitment
  • Redundancy
  • Disciplinary procedures
  • Grievances
  • Employee training
  • Employee well-being
  • Employment contracts
  • Employee handbooks.

Human resources directors manage the employee lifecycle and maintain staff turnover. Some human resources departments also manage a business’s payroll. However, most (61%) of businesses outsource their payroll externally.

Employees are one of the most important parts of any business, like an engine to a car; a business can’t run without it, with the human resources team acting as the mechanics making sure the engine is happy and healthy.

Because we work so closely with many UK small businesses, we see many going it alone, which can be a risky decision. Working without a human resources department can cause many issues, with the most damaging being legal problems that arise from not being prepared.

Human resources work tirelessly to make sure everything they do is kept in line with UK law and compliance. It’s free for an employee to take you to a tribunal, and human resources are there to protect business owners by working with employees fairly

As we’ve listed, the roles and responsibilities of the human resources department are extensive. This is why all business owners should consider hiring or outsourcing a human resources department.

Book an appointment for a free HR health check.


What does a human resources department do?

In short, the human resources department first attracts candidates to the business, hires people based on specific criteria, and then manages their journey throughout the business until they leave.

HR is responsible for reviewing productivity and looking for gaps in the business that could be filled with either training or more staff.

When reviewing the business’s training and staff needs, HR will also assess what future work (again training or hiring) will be needed to keep surprises to a minimum.

Read more: Employee Lifecycle


Talent Attraction

Talent attraction to a business is just as important as attracting customers. No staff means no service which means no customers.

When setting up a human resources department their first job will be to prioritise talent attraction, and there are many ways to do this, we’ve broken down our top five in one of our recent blogs.

Attracting Talent: Our Top Five Tips

So, how does a human resources department make a business more attractive to candidates?

Reviewing company benefits

An employment contract is a two-way agreement, not only do you have to find the employee who will provide you with the best ‘value added‘, but that candidate will also be looking for the company that gives the most in return for their skills and effort.

When reviewing talent attraction initiatives, there are multiple things a business can do, here’s a list of current popular benefits:

Share option schemes – Share option schemes allow employees to see a percentage of the business’s sales price should it be sold. An example of this would be the EMI scheme, which can be used by small business owners to incentivise hard work from employees, mainly senior members of staff. Selling shares also gives employees some tasty tax benefits vs a standard wage.

Healthcare – Providing free private healthcare can be attractive to some, there is a wide range of services that can be provided through this scheme, from free gyms to private dental appointments.

Pension contributions – By law, an employer must contribute 3% of an employee’s earnings to their pension pot, but some businesses can choose to pay more.

Working from home – A classic these days, working from home helps employees better manage their work-life balance and gets them out of those rush-hour traffic jams.

Training and development – Another very popular choice, training staff not only attracts but also retains talent, and should be high on any human resources team list.

Salary – lastly, a human resources department is in charge of reviewing salaries across the business the make sure they stay in line with industry standards.


Human resources workforce planning

Workforce planning is used by the human resources department to assess the personal manpower needs of the business.

Workforce planning pairs the objectives of the business with the staff’s capability to achieve these goals. If HR identify a gap in these metrics and deems the current talent pool will not be able to meet company objectives, it’s their job to bridge that gap.

When there is a skills shortage human resources will decide if new training or new hires will resolve the issue. A critical part of workforce planning is a gap analysis which is used to assess the supply and demand of labour within the business.

Hiring and training will occur when demand outweighs supply. On the flip side, restructuring or redundancies may occur when supply outweighs demand.

With effective workforce planning, the human resources department will be able to identify where and when new staff will be required.

If we think of a car, workforce planning is used to see what needs adding to a business, BEFORE it needs adding. For example, if two very senior members of staff a due to retire in two years, then human resources will need to plan for their replacement, either through promotion, new hires or merging their responsibilities into a new role.

Effective workforce planning means the business, as a whole, runs as smoothly as possible.

Without workforce planning a business may be hit with serious capacity issues which could result in them turning away business due to an inability to accommodate new sales. When an HR department fails to plan accordingly it can cause a last-minute recruitment scramble.



Once a gap has been identified the human resources department will begin the hiring process. If they have taken proactive steps to make their business more attractive to candidates, they’ll find this step a lot easier.

Recruitment is the process of first attracting and then selecting the right staff to work for your company. As part of workforce planning, the human resources department will work with managers of other departments to identify gaps that can be filled with new staff.

Once a gap has been identified the team will first start drawing out a specific job description for the role that needs to be filled, then taking active steps to find that candidate.

For most companies, two methods can be used to find candidates.

Using an agency 

The resources assigned to this process will depend on the company size and the urgency of the role. To support the hiring process, some businesses may reach out to an external recruitment agency to find a selection of candidates for them to interview.

For other businesses, they may put the recruitment agency in charge of the complete hiring process, from attracting candidates to making the final decision on the appointment.

Recruitment agencies are especially good for smaller businesses who may not have the time and reach to find the right candidate for them. Furthermore, if an SME has no human resources department whatsoever, recruitment agencies can be a great option to fill that gap.

Going in house

If the team decide to hire themselves, they will need to start advertising their roles, many times this is done through popular job boards like Indeed, Reed, LinkedIn etc (something a recruitment agency will do for you).

Once they’ve had some applications for the role, it’s time to start screening the candidates. This is usually done through interviews, but some companies may also decide to design tests to assess candidate suitability.

Finally, the human resource department will check the candidates’ references and do any necessary DBS and other background checks before offering them the role.

Going in-house is more suited to many larger businesses as they have the resources to source candidates themselves. Bigger brands also have an advantage as they can use their big name to attract more candidates.

Going in-house will give you more control over the entire process, you’ll have a better feel for what you’re after, and you’ll have full control over your brand image.



Onboarding is about setting up new employees, so they’re given the best chance of success at the company.

Once the recruitment process has concluded, and employees are hired, it’s time to onboard them, this involves the contract of employment, and a check of candidate documentation to bring them on as new employees.

Once completed, the new employee will need to be set up on the business’s internal systems and given log-ins. New hires will need to be assigned a laptop and a workspace if the company doesn’t operate on an open desk set-up.

Next, to help employees feel welcome, the team will show them around and introduce them to other staff. Failing to onboard employees properly can leave them not knowing what to do and who to speak to, which has some potential to make them consider leaving therefore increasing employee turnover.

For best practice, human resources should also set up employee check-ins along the first few months of their journey to make sure they’re settling in ok and have no concerns to raise. Regular check-ins will also give you a chance to discuss any concerns you may have with the employee, allowing you to assess performance and set goals along the way.



As a department, human resources will work closely with the rest of the senior management teams to identify knowledge gaps in the business.

As we’ve discussed when conducting workforce management, the team will conclude that a new hire is required to fill that gap, otherwise, they may decide to invest in training the team.

Additionally, the human resources department may identify a change in global trends and see an opportunity for training across the business. An example of a global trend could be the recent developments in AI and how it’s changing the workplace.

Providing training to employees plays two roles for a company, which is why it’s so important to function in a health business.

The first is the benefits it has for the employee. Training keeps staff happy by providing them with the skills to continue and grow in their roles and careers. Investing in employees’ personal development is one of the leading causes of low staff turnover.

Put simply, developing staff and showing commitment to their growth is a great way to keep staff.

The second benefit to training is for the employer; this is obvious but, well-trained staff will perform better at work. Training employees gives them a motivational boost and makes them better prepared for their roles.

When the team decides to train staff, it can be done in multiple ways, here are a few:

  • Mentoring
  • Shadowing
  • On-the-job training
  • Apprenticeships
  • Classes from external providers

Over time, the human resources team can monitor the effectiveness of their training by reviewing individual and company-wide performance through their performance management programs.


Human resources performance management

Performance management does what it says on the tin, it’s used to manage its employee’s output over time. Through initiatives such as company benefits, training and personal development, and a solid onboarding program, a business can expect to see an increase in employee productivity.

Managing performance can help streamline the effectiveness of the overall human resources strategy. Utilising data, the team can assess the effectiveness of their hiring and training policies.

To inform them in their workforce planning, a human resources department will use performance management to identify skill gaps.

For example, human resources may hire an accountant for the business to fill an identified skills gap, but through performance management, they may notice the accountant is overloaded with work and performing inefficiently.

Identifying the issue the new accountant is facing in the performance management stage will help inform the HR team in their decision to hire an additional accountant or a junior accountant.

However, to get the most out of a business’s initiatives a human resources department will set out clear objectives known famously as SMART targets for its employees. SMART stands for specific, measurable, achievable, relevant, and time-bound.

With the help of regular performance reviews the team can track the success of its hiring and training strategy and adjust accordingly.

If goals are met, it’s important to recognise and reward employees for their work to retain them and boost their performance in the next year.

In short, here are the steps to great performance management:

  1. Set goals for employees that align with business goals.
  2. Assess hiring and training needs within the business.
  3. Provide training and hire the correct staff for the business needs.
  4. Assess the effectiveness of training and hiring through performance reviews.
  5. Recognise and reward outstanding achievement.

Overall performance management is vital and informs everything the HR department does. Effective performance management helps develop talent and increase the success of the overall business.

By using performance management, the HR team will know where and when it has to spend its money, and what hiring, and recruitment practices are working.


Grievance procedures

Even though the human resources department’s role is to set clear plans in place to improve employee output, things don’t always go according to plan, that’s because humans can be so unpredictable.

Employees don’t always get along, and when internal relations get sour, someone may raise a grievance. Some reasons an employee may raise a grievance against another include:

  • An issue with a contract of employment
  • The way an employer is being treated at work.
  • Workplace bullying
  • Workplace discrimination

A grievance occurs when a problem between employees can’t be resolved informally. In the case of a grievance being brought forward, the human resources department should organize an official meeting to try and resolve the issue.

When an employee wishes to raise a grievance it’s up to the HR department to guide employees through the process, explaining their rights. After encouragement from human resources, if the employees still cannot solve the issue informally then a full grievance procedure will commence.

The full grievance procedure goes as follows:

  1. A grievance is formally raised.
  2. The HR team encourages the grievance to be resolved informally.
  3. The HR team will then try to resolve the grievance formally.
  4. The HR team will conduct a formal investigation.
  5. An outcome is chosen.

The employee can decide whether to take to grievance to an employment tribunal if they are not happy with the outcome.

The procedure an employee should take when seeking to raise a grievance should be outlined clearly by the human resources department in the employee handbook.

The grievance procedure doesn’t need to be put in the employment contract, but if it is, it must be followed, or the employee can claim a break of contract.

Similar to redundancies, emotions can run high during a grievance procedure, and the human resources team should be there to carefully manage complex situations like this to achieve the best result.

However, thoughtful and well-thought-out grievance procedures will contribute a large part to the overall company’s positive workplace culture.


Disciplinary process

Grievances occur when two employees have a dispute, and disciplinary can occur when the grievance spirals into allegations. Once a grievance has been thoroughly investigated the human resources team may decide to start a disciplinary.

However, disciplinaries aren’t only for grievances, they can also be used for the following:

  • Performance issues/ underperformance
  • Safety violations
  • Misconduct

Disciplinary processes are there to keep order within the business and to deal with difficult staff. The rules that would need to be broken to cause a disciplinary procedure are usually outlined within the employee handbook.

Some examples of rules commonly found in an employee handbook are attendance (so making sure you’re working your assigned hours), or negligence (which is very broadly described as mistakes that can cause harm). Additionally, there may be other rules such as dress code and smoking policies which must be followed.

However, some obvious rules may not be mentioned as they’re expected; for example, breaking the law or being abusive towards others. Breaking these set rules is called misconduct or gross misconduct.

Misconduct is usually a minor issue that is normally unintentional whereas gross misconduct is usually when an employee commits a crime.

The steps taken by human resources for a disciplinary action are similar to those of a grievance:

  1. An incident class as gross/misconduct occurs.
  2. Human resources start their investigation.
  3. A meeting helps to discuss the findings.
  4. A final decision is made.
  5. The employee can decide to appeal the decision but only has a limited timeframe.

If an employee commits misconduct, then they will most likely be put through the company’s disciplinary procedure. If the misconduct committed is an employee’s first offence, they will most likely be given a verbal warning.

However, if the employee commits gross misconduct, they’re more likely to face dismissal without notice.


Human resources policies

As a department human resources will set policies for the rest of the business to follow, and most of these HR policies will be compliant with the law.

An example of a legally required policy would be the need to have a written health and safety policy if you have five or more employees.

A lot of the policies made by human resources are made in line with the rest of the function of the team. For example, human resources will make policies regarding the aforementioned recruitment, performance management, workforce planning, and much more.

Other policies will cover how employees are rewarded and trained an example of this may be salary banding that you tend to see in a lot of public sector organisations

Having a clear written policy makes any grievance and disciplinary process a lot simpler. If a business has clearly defined rules, there’s less chance of there being a grey area when one of those rules is broken.

The policies created by a human resources department are also there to protect the business from disgruntled employees seeking an employment tribunal.

For greater accuracy and protection, HR will consult with the business’s legal team to make sure they’re fully compliant with the law.


Redundancy policies

At some point throughout the business’s life, you may be forced to make redundancies.

An unfortunate process that no one enjoys, and one which must be handled with care by the human resources department.

Throughout the redundancy process, there will be a large set of laws you must be compliant with; this is to protect the employee from unfair dismissal.

For a bit more background, here are the laws an HR team must be compliant with:

Unfair dismissal could cause a potential employment tribunal. The human resource’s role throughout this is to support the manager of the department where the redundancies are taking place.

The redundancy process can be a very emotional time for everyone; having to reduce staff numbers, even if those staff members have done nothing wrong, meaning it can be very stressful for all parties involved.

Human resources are there to manage the redundancy process with care and respect while remaining legally compliant.


Employee engagement & team building

The famous line goes, “It’s not where you work, it’s who you work with.” No matter your role, if an employee doesn’t like the people they work with, they will be less likely to stay.

For an employee who works with their best friends, even the worst workplaces aren’t enough for them to leave.

But if you can foster a great workplace and help people build strong friendships at the same time, you’re much more likely to keep staff for longer than if you didn’t put the effort in.

Human resources play a critical role in building relationships among employees.

From feedback surveys to organising team building events, human resources are at the heart of making sure everyone is connected in the business.

Human resources can also use engagement events as opportunities to promote the success of the business and to help employees feel more connected to their role and the company.


Employee communication

Human resources play a key role in the internal communications of a business. Working with employees across the entire business HR will devise strategies to keep everyone in the loop of what the business is up to.

The are many reasons why it’s so important for HR to build an effective communication strategy, but here are some of the key ones:

First, giving employees an increased sense of belonging: When you communicate with employees, having them know what’s going on around them makes them feel like they’re part of the journey, which can massively increase motivation, especially if you follow this up by requesting suggestions and feedback from staff. Actively seeking employee engagement not only helps employees feel more connected to each other but, they in turn feel more connected to the business.


Diversity, equality and inclusion

Vital to a company’s success, human resources constantly focus on building diverse workplaces for several reasons.

The stand-out benefit of building diverse workplaces is the diverse experience and knowledge that comes with it.

Having staff from different backgrounds brings a diversity of experiences and thoughts. With diversity of thought, businesses will find it easier to solve problems, as there will be more suggestions to work off.

Diverse workforces increase profitability, and it’s the role of HR to foster a workplace that actively attracts diverse opinions and people to help the business succeed.


Final thoughts on human resources

Well, there you have it folks, human resources are responsible for a lot of what goes on within a business. With no staff, there’s no business. In other words, HR is the heartbeat or engine of a business, providing power (staffing) to the rest of the business.

From planning for future staff requirements to making sure those new hires are settled into their role while remaining legally compliant HR play a critical role in making sure the business can staff where and when needed, trained to the right level.

For most small businesses, human resources will be thought of as ‘we’ll cross that bridge when we get there.’ However, when businesses finally ‘get there’ it’s already too late. If you’re not sure, why not look into outsourcing your HR today?

Don’t wait, start looking into HR services for your business now and build a team the Avengers would be proud of. Speak to our experts if you need assistance with your human resources today.