Fundamentals of Human Resource Management Chapter 2 Overview

This document provides a comprehensive overview of the key concepts presented in Chapter 2 of a Human Resource Management textbook, focusing on the fundamentals of Strategic HRM. It explores the dual nature of HRM, emphasizing its role in supporting organizational strategy and advocating for employees. The content covers the connection between organizational goals and employee activities, strategy types (cost differentiation, product differentiation, customer intimacy, and customer/market focus), and their implications for HR practices. The document outlines the four basic functions of HRM: staffing, training and development, motivation, and maintenance, detailing the key activities within each function such as strategic human resource planning, recruiting, selection, orientation, employee training, performance appraisals, and compensation strategies. It also addresses external influences on HRM, including the dynamic environment, laws and regulations, labor unions, and management thought. Furthermore, it discusses the structure of the HR department, various HR positions (assistants, generalists, specialists, and executives), HR certifications, and current HR trends and opportunities like outsourcing, professional employer organizations, and shared services. The document concludes with a brief overview of entrepreneurial, global, and ethical HR considerations.

Fundamentals of
Human Resource Management 11e
Chapter 2
Fundamentals of Strategic HRM

HRM has a dual nature:
Importance of HRM
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

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., Wal-
Mart, 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.

The HRM Functions
HRM has four basic functions:
In other words, hiring people, preparing them, stimulating
them, and keeping them.
staffing
training and
development
motivation
maintenance
Fundamentals of Human Resource Management 11e

▪ 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
The HRM Functions
Fundamentals of Human Resource Management
11e
staffing

▪ 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
▪ 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
The HRM Functions
Fundamentals of Human Resource Management 11e
training and
development
The goal is to have
competent, well
adapted
employees.

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
The HRM Functions
Fundamentals of Human Resource Management
11e

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
The HRM Functions
Fundamentals of Human Resource Management 11e
maintenance
Job loyalty has declined over the past decade.

External Influences on HRM
management
thought
labor
unions
laws and
regulationsHRM
dynamic
environment
External influences affect HRM functions.
Fundamentals of Human Resource Management 11e

Dynamic
environment
Globalization
Workforce
diversity
Teams
Changing
skill
requirements
Continuous
improvement
Decentralized
work sites
Technology
Employee
involvement
Ethics
Dynamic Environment
Fundamentals of Human Resource Management
11e
HR Professionals
need to keep current
with classes,
workshops and
seminars

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.
External Influences on HRM
Fundamentals of Human Resource Management
11e

External Influences on HRM
labor unions
When a union is present, employers can
not fire workers for unjustified reasons.
▪ 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
Fundamentals of Human Resource Management
11e

management
thought
The Hawthorne Studies gave rise to the human relations movement:
benefits, healthy work conditions, concern for employee well-being.
External Influences on HRM
Fundamentals of Human Resource Management
11e
▪ 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

• Promotes staffing activities, recruits new employees, but does not make hiring decision
Employment
• Helps workers adapt to change in the company’s external and internal environments
Training and development
• Pays employees and administers their benefits package
Compensation/benefits
• Ensures open communication within the company by fostering top management
commitment, upward and accurate communication, feedback, and effective information
sources
Employee relations
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
Assistants
• support other
HR
professionals
Generalists
• who provide
service in all
four HR
functions
Specialists
• work in one of
the four HR
functions
Executives
• report to top
management
and coordinate
HR functions
to
organizational
strategy

▪ 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
HR Certification
Fundamentals of Human Resource Management
11e

Make sure HR services match the overall
organizational strategy.
▪ 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
Careers in HR
Fundamentals of Human Resource Management
11e

Exhibit 2-6
Fundamentals of Human Resource Management 11e

▪ 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
▪
HR Trends and Opportunities
Fundamentals of Human Resource Management
11e

▪ 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
Entrepreneurial, Global, Ethical
HR
Fundamentals of Human Resource Management
11e

▪ 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
Entrepreneurial, Global, Ethical
HR
Fundamentals of Human Resource Management
11e

Match the Fours
Four major HR positions
Four HR department
areas
Four quality programs
Four HRM functions
Four external influences
on HRM
staffing, training, motivation, maintenance
environment, laws, labor unions, management
thought
employment, training, compensation,
employee relations
assistants, generalists, specialists, executives
reward productive work
offer a flexible, work-friendly environment
properly recruit and retain quality employees
provide effective communications
Fundamentals of Human Resource Management 11e