The role of human resources (HR) in working capital management

The role of human resources (HR) in working capital management is to ensure that the company has the necessary talent and resources to support its operations and meet its financial obligations. 

HR can play a key role in working capital management by:

1. Attracting and retaining top talent: 

  HR plays a vital role in attracting and retaining top talent, as a skilled and motivated workforce is essential for the efficient operation of the business. By implementing effective recruitment and retention strategies, HR can help to ensure that the company has the necessary personnel to support its operations and meet its financial obligations.

2. Managing employee performance: 

  HR can also play a role in managing employee performance, which can impact the company's working capital. By setting clear performance goals and providing ongoing feedback and support, HR can help to ensure that employees are productive and contributing to the success of the business.

3. Managing employee benefits and compensation:

  HR is also responsible for managing employee benefits and compensation, which can have a significant impact on the company's working capital. By negotiating favorable benefit and compensation packages, HR can help to minimize the company's expenses and improve its cash flow.

4. Ensuring compliance with labor laws and regulations: 

  HR is also responsible for ensuring compliance with labor laws and regulations, which can have an impact on the company's working capital. By staying up-to-date on relevant laws and regulations and implementing effective compliance policies, HR can help to minimize the risk of financial penalties and other negative consequences.

Overall, the role of HR in working capital management is to ensure that the company has the necessary talent and resources to support its operations and meet its financial obligations. By effectively managing the human capital of the organization, HR can help to optimize the company's working capital and contribute to its financial success.

Ahsan Tariq
Preston university
Department of management science