Fundamentals of
Human Resource Management 11e
Chapter 2
Fundamentals of Strategic HRM
Importance of HRM
HRM has a dual nature:
supports the
organization’s strategy
represents and advocates
for the employees
Strategic HRM provides a clear connection between the
organization’s goals and the activities of employees.
Fundamentals of Human Resource Management 11e
HR and Organizational Strategy
Strategy Type
What It Looks Like
Implications for HR
Cost differentiation: Provide
great value and low cost.
Emphasize acquiring low cost
materials, streamlining
processes, reducing waste,
maximizing efficiencies (e.g., WalMart, Hyundai).
Structure jobs, departments to maximize
cross training, knowledge sharing.
Design compensation programs to reward
efficiency, cost savings.
Select employees with versatile skill sets.
Product differentiation:
Deliver product/service that
is similar to competitors
but incorporates a
feature(s) that differentiates
it.
Emphasize creativity and
innovation. Consumers faced
with multiple choices; identify
those features that make the
product/service stand out (e.g.,
Apple, Netflix, Aveda).
Design compensation systems to reward
creativity, innovation.
Educate employees about product/service
differentiating features.
Create marketing campaign to promote
special product features.
Customer Intimacy
Strong personal
relationship between
provider of product or
service and customer.
Emphasize relationship between
consumers, point person.
Personalized service
differentiates the product/service
from competitors (e.g., local hair
salon, Pandora, Nordstrom).
Recruit and select job candidates with
strong customer service and customer
relations skills to help fortify the
provider/consumer relationship.
Focus reward strategies on customer
attraction, satisfaction and retention.
Customer/Market Focus
Unique target market
characteristics
Emphasize the needs of a specific
target market, like generational or
lifestyle (e.g., Abercrombie &
Fitch. Harley-Davidson, Urban
Outfitters).
Use strong market research to drive
recruitment and selection so employees
have a strong understanding of the target
market.
Emphasize versatility and adaptability as
products and services are subject to rapid
change.
Fundamentals of Human Resource Management 11e
The HRM Functions
HRM has four basic functions:
staffing
training and
development
motivation
maintenance
In other words, hiring people, preparing them, stimulating
them, and keeping them.
Fundamentals of Human Resource Management 11e
The HRM Functions
 Strategic human resource
planning
• Match prospects’ skills to the
company’s strategy needs
 Recruiting
• Use accurate job descriptions
to obtain an appropriate pool
of applicants
 Selection
• Thin out pool of applicants to
find the best choice
Fundamentals of Human Resource Management
11e
staffing
The HRM Functions
training and
development
 Orientation
•
Teach the rules, regulations, goals, and culture of the company
 Employee training
•
Help employees acquire better skills for the job
 Employee development
•
Prepare employee for future position(s) in the company
The goal is to have
competent, well
adapted
employees.
 Organizational development
•
Help employees adapt to the company’s changing strategic directions
 Career development
•
Provide necessary information and assessment in helping employees realize career goals
Fundamentals of Human Resource Management 11e
The HRM Functions
motivation
Theories and job design:
 Environment and well-constructed jobs factor heavily
in employee performance
 Performance appraisals:
• Standards for each employee; must provide feedback
 Rewards and compensation:
• Must be link between compensation and performance
 Employee benefits:
• Should coordinate with a pay-for-performance plan
Fundamentals of Human Resource Management
11e
The HRM Functions
maintenance
Safety and health:
 Caring for employees’ well-being has
a big effect on their commitment
 Communications and employee
relations:
• Keep employees well-informed of company
doings, and provide a means of venting
frustrations
Job loyalty has declined over the past decade.
Fundamentals of Human Resource Management 11e
External Influences on HRM
dynamic
environment
management
thought
HRM
laws and
regulations
labor
unions
External influences affect HRM functions.
Fundamentals of Human Resource Management 11e
Dynamic Environment
Globalization
Workforce
diversity
Ethics
HR Professionals
need to keep current
with classes,
workshops and
seminars
Employee
involvement
Teams
Dynamic
environment
Changing
skill
requirements
Technology
Decentralized
work sites
Fundamentals of Human Resource Management
11e
Continuous
improvement
External Influences on HRM
laws and
regulations
 Legislation has an enormous effect on HRM
 Laws protect employee rights to union representation, fair
wages, family medical leave, and freedom from discrimination
based on conditions unrelated to job performance
 The U.S. Equal Employment Opportunity Commission
www.eeoc.gov enforces federal laws on civil rights at work.
Fundamentals of Human Resource Management
11e
External Influences on HRM
labor unions
 Assist workers in dealing with
company management
 Negotiate wages, hours, and other
terms of employment
 Promote and foster a grievance
procedure between workers and
management
When a union is present, employers can
not fire workers for unjustified reasons.
Fundamentals of Human Resource Management
11e
External Influences on HRM
management
thought
 Frederick Taylor developed principles to enhance worker productivity
 Hugo Munsterberg devised improvements to worker testing, training,
evaluations, and efficiency
 Mary Parker Follet advocated people-oriented organizations
 Elton Mayo’s Hawthorne Studies: dynamics of informal work groups
have a bigger effect on worker performance than do wage incentives
The Hawthorne Studies gave rise to the human relations movement:
benefits, healthy work conditions, concern for employee well-being.
Fundamentals of Human Resource Management
11e
Structure of the HR Department
Employment
• Promotes staffing activities, recruits new employees, but does not make hiring decision
Training and development
• Helps workers adapt to change in the company’s external and internal environments
Compensation/benefits
• Pays employees and administers their benefits package
Employee relations
• Ensures open communication within the company by fostering top management
commitment, upward and accurate communication, feedback, and effective information
sources
Fundamentals of Human Resource Management
11e
Careers in HR
HR positions include:
Assistants
• support other
HR
professionals
Generalists
• who provide
service in all
four HR
functions
Specialists
Executives
• work in one of
the four HR
functions
• report to top
management
and coordinate
HR functions
to
organizational
strategy
Interpersonal communication skills and ambition are two
factors that HR professionals say advance their careers.
Fundamentals of Human Resource Management 11e
HR Certification
 Human Resource Certification Institute has
established these certifications for HR Professionals:
•
•
•
•
•
PHR
SPHR
GPHR
PHR-CA/SPHR CA
To learn more about the requirements, go to HRCI.org
Fundamentals of Human Resource Management
11e
Careers in HR
 Organizations that spend money for quality HR
programs perform better than those that don’t.
(HCI study)
 Quality programs:
•
•
•
•
reward productive work
offer a flexible, work-friendly environment
properly recruit and retain quality employees
provide effective communications
Make sure HR services match the overall
organizational strategy.
Fundamentals of Human Resource Management
11e
Exhibit 2-6
Fundamentals of Human Resource Management 11e
HR Trends and Opportunities
 Outsourcing
• More than half of all companies outsource all or some parts
of their HR functions
 Professional Employer Organizations (PEO)
• Help small- to medium-size companies attract stronger
candidates and handle new laws in HR
 Shared Services
• Allow organizations with several divisions or locations to
consolidate some HR functions into one central location
while retaining certain functions in divisional locations

Fundamentals of Human Resource Management
11e
Entrepreneurial, Global, Ethical
HR
 Small business HR
• Managers in small businesses perform the same
functions of those in larger businesses, but on a
smaller scale
 Global HRM
• Growing area of HR
• Complex environment
Fundamentals of Human Resource Management
11e
Entrepreneurial, Global, Ethical
HR
 Ethics
• Sarbanes-Oxley act (sox) enacted in response to
ethical failures in several large companies
• Seeks to hold top management responsible for
ethical practices
• HR is responsible for much employee ethics
training
• HR communicates employee legal rights
Fundamentals of Human Resource Management
11e
Match the Fours
Four major HR positions
staffing, training, motivation, maintenance
Four HR department
areas
environment, laws, labor unions, management
thought
Four quality programs
employment, training, compensation,
employee relations
Four HRM functions
assistants, generalists, specialists, executives
Four external influences
on HRM
reward productive work
offer a flexible, work-friendly environment
properly recruit and retain quality employees
provide effective communications
Fundamentals of Human Resource Management 11e