Chapter 2: Functions and Strategy
Chapter 2:
Functions and Strategy
Learning Outcomes
After reading this chapter, students should be able to:
1. Identify advances in management leading to modern human resource management practices.
2. Describe the functions of management.
3. Explain the role of human resource management in the strategic management process and
how strategic human resource management practices align with organizational strategy.
4. Outline the components and the goals of the staffing, training and development, motivation
and maintenance functions of human resource management.
5. Explain the structure of a typical human resource management department.
6. Discuss talent management and how it benefits organizations.
7. Outline current trends and opportunities in human resource management.
8. Explain how human resource management practices differ in international settings.
Chapter Overview
Billy Beane transformed baseball by rethinking the way statistics were used to evaluate talent,
resulting in an amazing turnaround for the Oakland A’s. This chapter opener and the movie
“Moneyball” are great illustrations of how strategy and HR practices can be linked to make
impressive gains toward organizational goals.
The chapter continues by stressing the importance of human resources to all organizations, and
the fact that human resource management is an integral part of the broader practice of
management is explained. The increasingly important role and professional status of HRM in
organizations is presented, and an overview given of the four HRM functions — staffing, training
and development, motivation and maintenance. Typical organizational structures and work roles
for HRM departments representing each of the four functions are summarized, as well as trends
toward outsourcing and shared services. Talent management is introduced.
Additional features of this chapter:
Exhibits
2 – 1 Strategic Management
2 – 2 Costco Mission Statement
2 – 3 Strategic HR Aligns with Organizational Strategy
2 – 4 Key HR Metrics
2 – 5 HR Dashboard
2 – 6 Human Resource Management Primary Activities
2 – 7 Training and Development Activities
2 – 8 Selected HR Salaries
Boxed Features
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Chapter 2: Functions and Strategy
These features are located within the text and address current issues in HRM within the context
of the relevant learning outcomes. They are short and thought provoking with thought questions
at the end providing a great opportunity to provide a break in class lecture to check student
understanding. Questions may be posed to students individually, in small groups, as quick
cooperative learning assignments or as large group discussions.
Diversity Topics – How Nike Does It page 35 Nike’s mission statement is a bit
provocative at first, but it’s a way to get student’s attention.
Tips for Success: HRM Certification page 41 HR certification can open doorways for
those who take time (and money) to pursue it. The certifications of SHRM, HRCI and
ATD are explained.
Making Concepts Relevant in Your Classroom
In addition to the activities provided in the lecture notes, these suggested activities help students
apply chapter 2 concepts:
Introductory “Bingo”: Each box in a Bingo grid format can represent a personal
attribute or experience relevant to HR (e.g., “wants to work with people,” “is a business
major,” “speaks a foreign language”). Students mingle with each other, putting an
individual’s name in a box if the student matches the description. Each name can only be
used once. The first student to get six names across, down, or diagonally is the “winner”
of the Bingo game. This is a great ice-breaker. Box descriptions can be used as the basis
for an introductory discussion; e.g., you can discuss the nature of HR work, the education
required, the relevance of foreign languages, etc.
This is an excellent time to talk about HR career paths and the relevance of different
majors. The profession of HR has many career paths, and HR practitioners come from a
variety of academic and work backgrounds. In most introductory HR classes you will
have individuals from a variety of majors who often do not fully understand the
similarities, differences, and ways that different academic areas complement each other.
Consider assigning this as a brief interview of a local HR professional or member of their
employer’s HR organization.
If your school has a chapter of the Society for Human Resource Management (SHRM)
this is a good time to introduce students to the benefits of a professional association. If
you do not have a chapter, perhaps there may be a local chapter which welcomes students
at its meetings or which will provide a speaker who can give an overview of HR activities
in the area. Make sure students investigate student memberships, which usually have
discounted membership fees.
Chapter Outline and Lecture Suggestions
Introduction Slide 3
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Chapter 2: Functions and Strategy
HR is a subset of the science and practice of management, but it is gaining in recognition
and importance as a valuable strategic partner.
HR skills are important to organizations of any size.
Evolution of Management Slide 4
Learning Outcome 1: Identify advances in management leading to modern human
resource management practices.
Management has evolved significantly in the last 100 years from the view that workers
only had value for their physical labor to our modern system of laws and practices that
value talent.
Significant Advances in Management
Frederick Taylor and scientific management
Pioneered worker screening and training.
Productivity tracking.
Still used today in a variety of industries.
Hugo Munsterberg
Matching worker personality and abilities to jobs.
Improved testing, training and performance evaluation.
Mary Parker Follett
Emphasized organizations as communities.
Employee groups
Community involvement
Elton Mayo and Hawthorne Studies
Relationship of supervisor and work group influence productivity.
Informal work groups affect worker performance.
Functions of Management Slide 5
Learning Outcome 2: Describe the functions of management.
Management achieves objectives of the organization with and through people. The major
responsibilities of managers are divided into four major functions.
Planning
Establishing objectives and determining what needs to be done to accomplish
them.
Strategic planning and strategic HRM are linked.
Organizing
Determining what activities must be completed to accomplish goals.
Equipment
Work groups
Financial resources
Technology
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Chapter 2: Functions and Strategy
Supplies
Services
Leading
Inspiring effort
Establishing and maintaining culture
Controlling
Monitoring activities
Measuring progress toward goals.
Comparing results to objectives.
The Role of HR in the Strategic Management Process Slide 6
Learning Outcome 3: Explain how HRM aligns human resource management processes
and practices with organizational strategy.
Planning and strategy help organizations react quickly to changes in the external
environment and actions of competitors.
Competitive advantage is a unique quality of the organization that is hard for
competitors to imitate, such as a talented workforce.
Class Activity: Exhibit 2 -1 Strategic Management Process page 29 illustrates how the
strategic process starts with analysis, develops strategies and implements those strategies.
This is a great opportunity to look up mission statements for familiar companies, such as
your college or another popular enterprise and have students evaluate how well the steps
in the process are executed.
HRM Department Responsibilities Slide 7
Transactional work
Payroll
Benefits
Tactical work
Performance coaching
Conflict resolution
Strategic work
Aligning HR functions to support goals and strategy
Strategic Analysis Slide 9
Mission
Mission statements describe why the organization exists.
Basis for strategic goals.
The chapter includes Google’s mission statement. YouTube has many short
videos that illustrate Google’s talent management initiatives.
Core Values and Culture
Core values are beliefs about behavior and ethics
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Chapter 2: Functions and Strategy
Culture is how values are demonstrated on a daily basis, “the way we act
around here.”
Work ethic
Dress
Speech
Humor
How outsiders are treated
Communicated and maintained through HRM activities:
Employment brand
Orientation
Discipline
Rewards
Analyze the Environment
SWOT Analysis looks at internal and external strengths and weaknesses.
Strengths – internal
Weaknesses – internal
Opportunities – external
Threats – external
Core competencies are unique skills and strengths of the organization.
Strategy Formulation Slide 11
Corporate Level Strategy includes the organizational goals for the future.
Growth
Restructuring
Business Level Strategies involve building a competitive advantage for the
business unit.
Functional Strategies establish the way functional units support corporate level
strategy.
Strategy Implementation Slide 12
HR designs jobs that support strategy with necessary KSAs:
Knowledge
Skills
Abilities
Strategic Human Resource Management establishes a connection between the
organizational goals and activities of employees.
HR activities and decisions aligned to support strategy:
Recruiting
Hiring
Onboarding
Training
Performance management
Career planning
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Chapter 2: Functions and Strategy
Development
Compensation
Benefits
Evaluating Results Slide 13
An old management saying goes “What gets measured, gets done.”
HRM metrics measure effectiveness of business and HRM practices.
Dashboards are visual displays that represent metrics and allow quick
interpretation.
Benchmarks are comparisons to metrics of other businesses.
Exhibit 2 – 4 Key HR Metrics on page 35 lists some key says that HR can
measure the results of important activities.
Exhibit 2 – 5 HR Dashboard on page 35 illustrates a how HRIS provider SAP
graphically represents metrics for employee turnover and succession planning.
Diversity Topics: How Nike Does It on page 35 explains the diversity and inclusion
efforts of Nike and asks students what metrics would be appropriate to measure this
strategic initiative.
The HRM Functions Slide 15
Learning Outcome 4: Outline the components and the goals of the staffing, training and
development, motivation and maintenance functions of human resource management.
Every manager is an HR manager with responsibility for all four functions.
Exhibit 2 – 2 Human Resource Management: Primary Activities on page 36
shows the four primary functions of HRM: staffing, training and development,
motivation, and maintenance along with some of the important activities and
responsibilities of each function.
Staffing Function Slide 16
Goal: To locate competent employees and bring them into the organization.
Employment planning ensures that staffing will contribute to the
organization’s mission and strategy.
Recruitment is the process of attracting a pool of qualified applicants that
is representative of all groups in the labor market.
Employment branding assists candidates in selecting an employer
they perceive to be a good fit with their values, personality, and
work ethic.
Job analysis is used to determine the specific knowledge, skills, and
abilities (KSAs) needed to be successful in a particular job and to define
the essential functions of the job.
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Chapter 2: Functions and Strategy
Selection refers to the process of assessing who will be successful on the
job and the communication of information to assist job candidates in their
decision to accept an offer.
Training and Development Function Slide 17
Goal: To have competent, adapted employees who possess up-to-date skills,
knowledge, and abilities needed to perform their jobs successfully.
Orientation and socialization help employees to adapt and become
100-percent performers.
Activities include:
Employee Training
Employee Development
Career Development
Organization Development
Exhibit 2 – 7 Training and Development Activities on page 37 lists and explains
how HRM uses training and development to meet strategic needs.
Motivation Function Slide 18
Goal: To have highly productive, competent, and adapted employees with
up-to-date skills, knowledge, and abilities.
Motivation is a multifaceted process that involves understanding complex
human behavior to influence employees so that they will exert high energy
levels.
Managing motivation includes job design, access to
productivity-enhancing resources, management and worker relationships,
setting performance standards, and establishing effective compensation
and benefits programs.
Maintenance Function Slide 19
Goal: To retain highly productive, competent and adapted employees, with
up-to-date skills, knowledge, and abilities, who are willing to maintain their
commitment and loyalty to the company.
Employees are more likely to be productive, committed and loyal if you
provide a safe and healthy work environment and care for their well-being.
Effective communications programs provide for 2-way communication to
ensure that employees are well informed and that their voices are heard.
Structure of the HR Department Slide 20
Learning Outcome 5: Explain the structure of a typical human resource management
department.
Employment
Employment specialists coordinate the staffing function
Advertise vacancies
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Chapter 2: Functions and Strategy
Complete initial screening
Conduct interviews
Background checks
Make job offers based on management input
Complete paperwork related to hiring.
Training and Development
Training and development specialists help employees maximize their potential,
serve as internal change agents to the organization, and provide counseling and
career development.
Compensation and Benefits
Compensation and benefits staffs establish objective and equitable pay systems
and design cost-effective benefits packages that help attract and retain
high-quality employees. Benefits administrators also help employees effectively
utilize their benefits, such as by providing information on retirement planning.
Employee Relations
Employee relations activities are concerned with
Effective communications among organizational members.
Fair application of policies and procedures.
Resolving workplace conflicts.
Investigating complaints.
Ensuring due process throughout disciplinary actions.
Coordination of activities and services that enhance employee
commitment and loyalty.
Reinforcing organizational culture.
Talent Management Slide 22
Learning Outcome 6: Discuss talent management and how it benefits organizations.
Talent management focuses on getting and keeping the best talent available as a
competitive advantage.
Talent Management
“Deliberate and ongoing process that systematically identifies, assesses develops
and retains talent to meet …organizational objectives.” that involves:
Workforce planning
Recruiting
Applicant tracking
Onboarding
Performance management
Compensation
Workforce development
Career and succession planning.
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Is a Career in HR for Me? Slide 23
Demand for HRM professionals is expected to grow through 2022.
Positions include:
Assistant
Generalist
Recruiter
Specialist
Executive
Professional Certification Slide 24
Class Activity: Exhibit 2 – 8 Selected HR Salaries page 42 Survey students on their
opinions of the HR salaries listed. Do they create interest in HR careers? Compare them
to salaries of similar positions in your area on sites like Glassdoor, Payscale or Indeed.
Class Activity: Tips for Success – HRM Certification page 41 HR certification has
undergone a controversial transition in recent years. SHRM dropped affiliation with its
certification branch, the HRCI with little notice and launched its own certification. Ask
SHRM members or local SHRM chapter officers to discuss their views
HR Trends and Opportunities Slide 25
Learning Outcome 7: Outline current trends and opportunities in human resource
management.
Outsourcing HR Functions
There is a trend to outsource some or all HR functions.
Staffing agencies to perform the recruiting and selection activities.
Consulting firms to provide training services.
Financial organizations to handle benefits administration.
Professional Employer Organization (PEO)
Assumes all HR functions of a client company by hiring all of its employees and
leasing them back to the company.
May allow access to more cost effective popular benefits which helps with
recruiting and retention.
PEO handles legal compliance and reporting.
Shared Services
Specialized HR services, like compensation and benefits, are handled by staff in a
centralized location, while other functions, like training, are handled in the
divisional business unit.
The format of shared services models varies depending on the needs of the
organizations.
They may include:
Center of Excellence that handles a wide range of activities.
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Service Centers that handle transactional HR duties, such as payroll.
Business Partners who work directly with business unit mangers in
strategic roles.
HRM in a Small Business Slide 26
HRM in a small business requires keeping current in the field, especially
regarding laws and regulations that may or may not affect the organization.
Approaches vary depending on the needs and size of the business
Owner-managers may perform HRM functions
HRM activities may be outsourced
Generalist may handle all the HRM functions
HRM in a Global Environment Slide 27
Learning Outcome 8: Explain how human resource management practices differ in
international settings.
HRM functions are more complex when employees are located around the world.
Consideration must be given to
Foreign language training
Relocation
Orientation processes
Diverse cultural values
HRM also involves considering the needs of employees’ families when they are sent
overseas.
HRM Workshop
The HRM Workshop includes several different types of activities requiring students to apply
chapter concepts aligned with the learning outcomes. Suggested answers are provided.
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