Functional Strategies and Their Impact on HRM

In the previous section, we discussed the importance of business strategies and their impact on human resource management (HRM). Now, let’s delve deeper into functional strategies and how they influence HRM practices within an organisation.

Understanding Functional Strategies

Functional strategies refer to the specific plans and actions taken by different functional areas within an organisation to achieve the overall business objectives. These functional areas may include marketing, finance, operations, and of course, human resources.

Functional strategies are developed based on the organisation’s business strategies and are designed to align the activities of each functional area with the overall goals of the organisation. By doing so, functional strategies ensure that the resources and capabilities of each department are utilized effectively to contribute to the success of the organisation.

The Impact on HRM

Functional strategies have a significant impact on HRM practices within an organisation. Let’s explore some of the key areas where functional strategies influence HRM:

1. Workforce Planning and Recruitment

Functional strategies determine the workforce requirements of an organisation. For example, if the marketing department plans to expand its operations into new markets, it will require additional marketing professionals. HRM needs to align its recruitment efforts with the functional strategies to ensure the right talent is hired to support the department’s objectives.

2. Training and Development

Functional strategies also influence the training and development initiatives within an organisation. If the finance department plans to implement a new financial software, HRM needs to provide the necessary training to ensure employees have the skills and knowledge to effectively use the software. Similarly, if the operations department aims to improve its manufacturing processes, HRM may need to arrange training programs on lean manufacturing techniques.

3. Performance Management

Functional strategies play a crucial role in defining performance expectations and goals for employees. HRM needs to align its performance management systems with the functional strategies to ensure that employees are evaluated based on the objectives set by their respective departments.

4. Compensation and Rewards

Functional strategies also impact the compensation and rewards programs within an organisation. If the sales department plans to increase sales in a particular region, HRM may need to design a commission-based incentive scheme to motivate the sales team. On the other hand, if the finance department aims to reduce costs, HRM may need to implement cost-saving measures, such as reducing bonuses or freezing salary increments.

Examples

Let’s look at some real-life examples to better understand the impact of functional strategies on HRM:

1. Google:Google’s functional strategy of innovation and continuous improvement has a direct impact on HRM. The company encourages its employees to spend 20% of their working time on personal projects, which fosters a culture of learning and development. HRM supports this strategy by providing various training and development programs to enhance employees’ skills and knowledge.
2. Amazon:Amazon’s functional strategy of customer-centricity drives its recruitment and selection process. The company looks for candidates who possess customer service skills and a strong customer focus. HRM ensures that the hiring process is aligned with this strategy to attract individuals who can contribute to Amazon’s customer-centric culture.

Conclusion

Functional strategies are an integral part of business strategies and have a significant impact on HRM practices. By aligning HRM practices with the functional strategies, organisations can ensure that their human resources are effectively utilized to achieve the overall goals of the organisation. Understanding the relationship between functional strategies and HRM is crucial for HR professionals to contribute strategically to the success of their organisations.