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
Cost differentiation: Provide
great value and low cost.
Product differentiation:
Deliver product/service that
is similar to competitors
but incorporates a
feature(s) that differentiates
it.
Customer Intimacy
Strong personal
relationship between
provider of product or
service and customer.
Customer/Market Focus
Unique target market
characteristics
Fundamentals of Human Resource Management 11e
What It Looks Like
Emphasize acquiring low cost
materials, streamlining
processes, reducing waste,
maximizing efficiencies (e.g., Wal-
Mart, Hyundai).
Emphasize creativity and
innovation. Consumers faced
with multiple choices; identify
those features that make the
product/service stand out (e.g.,
Apple, Netflix, Aveda).
Emphasize relationship between
consumers, point person.
Personalized service
differentiates the product/service
from competitors (e.g., local hair
salon, Pandora, Nordstrom).
Emphasize the needs of a specific
target market, like generational or
lifestyle (e.g., Abercrombie &
Fitch. Harley-Davidson, Urban
Outfitters).
Implications for HR
Structure jobs, departments to maximize
cross training, knowledge sharing.
Design compensation programs to reward
efficiency, cost savings.
Select employees with versatile skill sets.
Design compensation systems to reward
creativity, innovation.
Educate employees about product/service
differentiating features.
Create marketing campaign to promote
special product features.
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.
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.
 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 staffing
• 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
 The HRM Functions

training and
development
 Orientation
• Teach the rules, regulations, goals, and culture of the company
 Employee training The goal is to have
• Help employees acquire better skills for the job competent, well
 Employee development adapted
• Prepare employee for future position(s) in the company
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 laws and

thought
HRM
regulations

labor
unions

External influences affect HRM functions.

Fundamentals of Human Resource Management 11e
 Dynamic Environment

HR Professionals
need to keep current
with classes,
workshops and
seminars

Fundamentals of Human Resource

Management 11e
 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

Fundamentals of Human Resource

Management 11e
 Careers in HR
HR positions include:

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 environment, laws, labor unions, management

areas thought

employment, training, compensation,

Four quality programs
employee relations

Four HRM functions assistants, generalists, specialists, executives

reward productive work

Four external influences offer a flexible, work-friendly environment
on HRM properly recruit and retain quality employees
provide effective communications

Fundamentals of Human Resource Management 11e