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What are Human Resources Labor Employment Law Labor Employee Relations and Why Should It Matter to You

Written by: Charles Krugel

Article Overview: An article defining human resources and human capital, labor and employment law, and labor and employee relations, and discusses their importance to business. Explains theory and applies the concepts to the real world.

What are Human Resources Labor Employment Law Labor Employee Relations and Why Should It Matter to You

My definition of human resources (HR) is that it's the management of employees as if they’re 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 fashion. Although this explanation may seem callous, when further scrutinized it is evident that HR pays as much attention to the "human" half of its name as it does to the "resources" half.

HR concerns the approach and ideology a business adopts for its company culture and the life cycle of its employees. Recruiting, selecting, compensating, motivating, maintaining and promoting employees are all part of HR. Consequently, to some extent, all businesses with more than one employee practice HR. Yet, an effective HR philosophy has to acknowledge that because employees affect every facet of business, employees have enormous impact on profit.

HR AFFECTS PROFIT

Therefore, in order to improve profit and decrease expenses, management must know how to treat employees in a way which enhances their value. Ultimately, effective HR helps to maximize profit 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.

Micro and Macro HR

Macro HR is the strategic function of HR in a particular work environment. It encompasses the understanding of what HR means to a business; that is, how HR fits into the organization’s structure, mission and planning. Macro HR further incorporates policy and practice development. It’s the “big picture” stuff of HR.

Micro HR is the actual execution of duties as delineated at the macro level. These duties include the administration of policies regarding the selection, hiring, compensation, placement, performance management, promotion, conflict resolution, discipline and discharge of employees.

How Macro and Micro HR Impact the Bottom Line
As stated above, a business will encounter difficulties when it fails to account for changes to macro and micro HR practices and changes to our labor and employment laws. Such difficulties include an unsafe workplace, attendance issues, conflict, misconduct and litigation. Simply stated, when a business encounters HR related problems, money is lost.

Businesses have money coming in through the "front door" via revenue, venture capital, grants, investors, etc. However, much of this money can exit through the "back door" because
of poor HR practices. For instance, time and money is lost when a business realizes that it hired the wrong employee and may now have to discharge that employee. Consequently, that business will have to spend money and time finding and training a new employee and may even have to defend its treatment and discharge of the former employee. Recognizing and efficiently resolving these problems often costs a great deal of time, energy and money.

However, time and energy spent upfront, proactively, on HR related matters could help to reduce, and in certain instances eliminate, the loss of money out the "back door." Thus, HR becomes an investment in capital. Time, energy and money are saved and increased productivity and profits result.

Knowing which HR practices to adopt and which HR disciplines to focus on is crucial in resolving macro and micro HR issues. Effective HR helps transform business from just a place to work into an environment which provides employees varied opportunities for meaningful contributions. Meaningful employee contributions lead to decreased operating costs, innovation and increased profits. Implicit in this explanation is the fact that results are measurable via means such as before and after analyses and time and expense audits.

Labor & Employment Law Defined

Labor & employment law generally refers to the body of law regulating the workplace and all human resources and human capital related matters.

However, labor law and employment law are two distinct categories which are often confused with one another because they somewhat overlap.

Generally, labor law refers to the body of laws regulating labor unions and associations and their relationship with management. Such laws include the National Labor Relations Act and other similar federal, state and local labor laws. These laws permit employee organizing, electing representation and entering into legally binding contracts with management.

Generally, employment law concerns the body of laws and rules regulating civil rights and non-union related conduct in the workplace. Civil rights include a workplace free from discrimination and harassment for people (it need not be an employee, it could be customers or the public) who fit into one of the legally protected classes (e.g., race, gender, disability, national origin, religion, military status, pregnancy, and in some instances sexual or gender orientation). Conduct laws refer to the employer’s treatment of its employees. Like labor laws, these are federal, state and local laws.

Labor & Employee Relations Defined

On the macro HR level, labor relations refers to the philosophy a business adopts for dealing with labor unions, union organizing and employee associations. On the micro level, this refers to practices and rules for dealing with individual employee issues concerning unions and associations.

Employee relations refers to the ideology (macro) a business adopts for dealing with harassment and discrimination and other employee issues, unrelated to labor unions or employee associations. This may include communication, discipline, recognition and payroll policies. On the micro level, it generally refers to how laws and rules are applied to employees.

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