Five Fundamental HR Policies and Their Benefits

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Human resource policies are the formal rules and guidelines that businesses put in place to hire, train, assess and reward the members of their workforce. These policies, when organised and disseminated in an easily used form, can serve to deter many misunderstandings between employees and employers about their rights and obligations in the business place. The formulation of the policies gives practical information to organisations.

Underlying effective human resources management policies is collaboration on strategy between HR and the organisation’s leadership because the company’s success rests on its human capital. HR management policies are essential for sustaining a viable business.


Small business owners who have prepared and updated right personnel management policies have cited several essential ways in which they contribute to the success of the business enterprises. Many observers have pointed out that even the best strategies will falter if the business owners or managers who are charged with administering those policies are careless or incompetent in doing so. But for those businesses that can manage their HR policies in an intelligent and consistent manner, benefits can be there in several ways:


A well written and thoughtfully presented human resource policy can establish the tone that a new business person aspires to maintain his business. It also serves to disseminate information about what employees may expect from the company as well as what the employer expects from the employees regarding work experience on the job.


Formal policies can be helpful to the managers and other supervisory staff with the promotion, reward, decisions concerning people who work under them.


Cautious and comprehensive human resource management policies can save companies significant amounts of management time that can then be spent on other business activities such as new product development, competitive analysis, marketing campaigns etc.


Members of the legal and business communities agree that organisations can do a lot to cut off legal threats from disgruntled current or ex-employees simply by creating and applying a fair and comprehensive set of personnel policies.



A fundamental step in creating HR management policies and procedures in ensuring that HR and executive leadership are working towards the same goals. Too often, Hr functions as a focused administrative extension of the business instead of collaborating with upper management as a strategic partner.

Building a high-performance workforce supports the organisation’s goals to become profitable and successful. Your organisation need not have a dedicated HR department to identify workforce goals. In a small business, the person responsible for Hr matters should be a part of the company’s leadership team.


Setting the foundation for HR management is where the company stands concerning compliance with federal and state labour and employment laws. For example, ensure that you adhere to fair labour standards act provisions for minimum wage, overtime pay, and exempt and non-exempt employee classification.


Workplace policies and standard operating procedures provide the organisation with much-needed structure. Working hours pay information, safety measures, benefits and performance expectations are core topics to address in an employee handbook. An equal opportunity employment policy and a statement about the company’s zero-tolerance for discrimination or harassment should be part of the organisation’s code of conduct. These policies acknowledge the employer’s obligation to provide a safe working environment where employees feel like valued contributors.


Compensation and benefits policies and procedures begin with developing a compensation strategy. Compensation strategy should be documented plans with functional steps for implementation. The basic compensation strategies are the market leader, competitive with the market and below market. The organisational strategy is a significant factor in determining compensation strategy and policies, which is another reason for the collaboration with upper management as a strategic business partner. Employers whose goals are to attract the best-qualified workers may decide that becoming the market leader in compensation practices given them a distinct advantage over their competitors. Below-market compensation strategy puts the company at risk for high employee turnover and less-qualified workers.


Improving the value of its human capital rests on the organisation’s recruitment and selection procedures. The philosophy of all recruitment policies is equal opportunity, but the recruitment procedures being more specific including HR communication with department leaders about their staffing needs, job postings and interview steps. Recruitment and selection policies are based in part on the compensation strategy. More importantly, the organisation’s overall strategy for success drives HR management’s policy development and implementation.

Thus, we can say that the policies need in-depth study before their formulation.