Every person your company deals with gets one record. Colleagues carry their job history and pay, and outside contacts sit next to them instead of in a second list.
When somebody starts, HR creates them once, here, and every app that needs a person points at that record: leave, timesheets, resource planning. Colleagues carry their employment history, pay, emergency contacts, documents and HR notes, and the team page draws the org chart from reporting lines. Freelancers and the people you know at customers are people too, so they live in the same directory rather than in a CRM of their own.
Each of these points at People instead of keeping a copy of its own, and says what for.