What are the 7 Key Functions of HR?

Many SMEs — Small to Medium Size Businesses — don’t see the value of HR (Human Resources) in their business. The most common mindset is: “We’re a small business, we’re too small to have a dedicated HR person.” Or there’s the attitude: “We haven’t had any issues so far, so we’re fine.”

Typically, HR ends up being managed by someone without formal HR qualifications—often someone from administration, finance, or payroll. But HR needs to be seen as a positive part of your business. At KBA, we encourage our clients to view HR as a key element that will support your company in becoming an Employer of Choice.

Wages are usually the biggest—if not the highest—cost to a business. That’s why it’s so important to put strategy, structure, and attention behind your investment in people. Being proactive instead of reactive is the key. Problems usually arise when there’s a lack of company structure, unclear roles, missing policies and procedures, or inconsistent employee performance conversations. Too often, businesses only put things in place after something has gone wrong—whether it’s a WorkCover claim, bullying or harassment incident, unfair dismissal, or general protections claim.

So, what are the 7 Key Functions of HR?

1. Organisation Structure and Role Clarity A HR Consultant will ensure that your organisational chart clearly outlines your business hierarchy—who reports to who, and how departments fit together. This clarity is vital for achieving business objectives and ensuring staff alignment. Position descriptions are practical tools to help employees understand their responsibilities and how their role fits into the bigger picture. Keeping job descriptions updated—especially through performance conversations—is an effective way to align staff with business goals.
2. Recruitment: Pre-employment Due Diligence A HR Consultant can manage recruitment, but before hiring, proper due diligence must be done. That includes reference checks, understanding modern award conditions, and ensuring the job offer and position description are aligned. A clear orientation and induction process should be in place so expectations and workplace standards are communicated from the start.
3. Employment Contracts and Agreements HR Consultants review employment contracts and agreements to ensure they set a clear foundation for the employment relationship. What’s in these contracts can significantly impact how the relationship with your employee develops over time.
4. Payroll & Rostering Payroll and rostering can be time-consuming and costly if not done correctly. HR Consultants can assess and improve your payroll processes to ensure compliance with award rates, penalty rates, annualised salaries, loadings, and superannuation obligations. Mistakes here can disengage employees and lead to serious internal conflict or even fines and back pay issues.
5. Legislative Company Policies and Procedures A major part of a HR Consultant’s role is risk management. Having clear policies and procedures in place creates a standard of behaviour and values for your business. They also help improve the way your team and your customers interact with your company. Policies ensure proper conduct, clarify responsibilities, and help businesses stay compliant with legislation—especially in difficult situations.
6. Staff Performance HR Consultants can help you set up or facilitate performance reviews to ensure staff are aligned with your mission, vision, purpose, and values. These reviews provide opportunities to recognise achievements, highlight areas for improvement, and motivate staff toward personal and professional growth. They also play a key role in performance counselling—addressing behaviour or performance issues before they escalate. Done correctly, this process supports employees in improving, rather than rushing to termination. There’s also a process to follow for misconduct, and skipping it can lead to expensive legal consequences.
7. Termination Process and Record Keeping When employment ends—whether due to resignation or dismissal—it’s important to follow correct procedures for notice, dismissal, and final pay. A HR Consultant can support you through the process and ensure compliance. For long-serving or valued team members, conducting an exit interview is essential to gain insights and feedback for improvement. Proper record keeping is also essential. A good HR system will allow you to manage and store employment contracts, policies, performance templates, and exit checklists. This strengthens internal processes and protects confidentiality, which is key to building trust between management and staff.

At Key Business Advisors, our team of HR Consultants work with you across every HR function—from recruitment and onboarding to performance management and terminations. We help you protect and grow your business using best practice HR processes, while ensuring compliance with Fair Work legislation and enhancing your internal culture and teamwork.

If you need help, why not give us a call? Let us help you implement HR best practices in your business. Don’t hesitate to contact Key Business Advisors on 1300 4 ADVICE

To learn more about our company and access valuable information to help your business grow and improve, check out our FREE resources:

• KBA HR Advice and Support – https://keyba.com.au/hr-advice-support/
• Download our FREE HR Information – HR Documents & Checklists – Key Business Advisors – Free Download