Posted: February 26th, 2023
Please see the attached documents and let me know if any questions arise. The resource links are added to each class resource.
Learning Topic
The Role of HR in the
Organization
The role of HR in the organization is to develop strategy for human
resources that aligns with the larger business strategy, to contribute to
the creation of the business strategy, and to help other business functions
in their strategic roles. There are many internal and external factors that
influence the role of HR, such as globalization, changes in the workforce
and in the workplace, increased accountability, and increased focus on
metrics.
Within an organization, HR may fall under Finance or Management, or it
may be a department of its own.
Let’s take a look at some of the other functions in an organization:
In general, executive management is responsible for the overall
organizational performance.
Finance and accounting departments plan for, account for, document, and
distribute financial resources according to the organizational strategy.
Marketing helps to bring in information about customers, sales, and
competitors, as well as to guide the organization’s position in the market.
Management, or operations, is responsible for logistics, planning and
distributing resources.
The Role of HR in the Organization
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Resource Link: https://leocontent.umgc.edu/content/umuc/tus/hrmn/hrmn495/2225/learning-topic-list/the-role-of-hr-in-the-organization-.html
IT makes business intelligence available and manages systems for
effectiveness and efficiency.
HR is a cross‐functional role that serves as a bridge between the different
functions, helps align human capital with business strategies, and
manages the life cycle of employees.
• Functional Areas of Business (/content/umuc/tus
/hrmn/hrmn495/2225/learning‐resource‐
list/functional‐areas‐of‐business‐.html)
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All links to external sites were verified at the time of publication. UMGC is not responsible for the
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Resources
The Role of HR in the Organization https://leocontent.umgc.edu/content/umuc/tus/hrmn/hrmn495/2225/lear…
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https://leocontent.umgc.edu/content/umuc/tus/hrmn/hrmn495/2225/learning-resource-list/functional-areas-of-business-.html
https://leocontent.umgc.edu/content/umuc/tus/hrmn/hrmn495/2225/learning-resource-list/functional-areas-of-business-.html
https://leocontent.umgc.edu/content/umuc/tus/hrmn/hrmn495/2225/learning-resource-list/functional-areas-of-business-.html
https://leocontent.umgc.edu/content/umuc/tus/hrmn/hrmn495/2225/learning-resource-list/functional-areas-of-business-.html
https://leocontent.umgc.edu/content/umuc/tus/hrmn/hrmn495/2225/learning-resource-list/functional-areas-of-business-.html
https://leocontent.umgc.edu/content/umuc/tus/hrmn/hrmn495/2225/learning-resource-list/functional-areas-of-business-.html
https://leocontent.umgc.edu/content/umuc/tus/hrmn/hrmn495/2225/learning-resource-list/functional-areas-of-business-.html
https://leocontent.umgc.edu/content/umuc/tus/hrmn/hrmn495/2225/learning-resource-list/functional-areas-of-business-.html
https://leocontent.umgc.edu/content/umuc/tus/hrmn/hrmn495/2225/learning-resource-list/functional-areas-of-business-.html
https://leocontent.umgc.edu/content/umuc/tus/hrmn/hrmn495/2225/learning-resource-list/functional-areas-of-business-.html
https://leocontent.umgc.edu/content/umuc/tus/hrmn/hrmn495/2225/learning-resource-list/functional-areas-of-business-.html
https://leocontent.umgc.edu/content/umuc/tus/hrmn/hrmn495/2225/learning-resource-list/functional-areas-of-business-.html
Functional Areas of Business
What you’ll learn to do: Identify the primary
functional areas within a business and describe
their contribution to the organization
The decisions about how best to use the factors of production to provide
the goods or services of the business require a team of people working in
a variety of jobs. As businesses grow larger and their products and
services become more complex, the number of functional areas within a
business grows. Each functional area makes specific and valuable
contributions to the organization as a whole. In this section we will
explore some of the most common functional areas in a business and how
each contributes to the overall success
of the business.
Learning Outcomes
• Identify the primary functional areas within a business
• Identify key people and explain the activities within each
functional area
Introduction
Learning Resource
Functional Areas of Business
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Resource Link: https://leocontent.umgc.edu/content/umuc/tus/hrmn/hrmn495/2225/learning-resource-list/functional-areas-of-business-.html#
Just as different functions in the human body are performed and
regulated by different organs, different functions within a business are
performed and controlled by different parts of the business. One of the
reasons for separating business operations into functional areas is to
allow each to operate within its area of expertise, thus building efficiency
and effectiveness across the business as a whole. The key functional
areas of a business are the following:
•
Management
•
Operations
•
Marketing
•
Accounting
•
Finance
Management
The primary role of managers in business is to supervise other people’s
performance. Most management activities fall into the following
categories:
• Planning: Managers plan by setting long‐term goals for the business,
as well short‐term strategies needed to execute against those goals.
• Organizing: Managers are responsible for organizing the
operations
of a business in the most efficient way, enabling the business to use
its resources effectively.
• Controlling: A large percentage of a manager’s time is spent
controlling the activities within the business to ensure that it’s on
track to achieve its goals. When people or processes stray from the
path, managers are often the first ones to notice and take corrective
action.
• Leading: Managers serve as leaders for the organization, in practical
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as well as symbolic ways. The manager may lead work teams or
groups through a new process or the development of a new product.
The manager may also be seen as the leader of the organization
when it interacts with the community, customers, and suppliers.
Operations
Operations is where inputs (factors of production) are converted to
outputs (goods and services). Operations is like the heart of a business,
pumping out goods and services in a quantity and of a quality that meets
the needs of the customers. The operations manager is responsible for
overseeing the day‐to‐day business operations, which can encompass
everything from ordering raw materials to scheduling workers to produce
tangible goods.
Marketing
Marketing consists of all that a company does to identify customers’
needs and design products and services that meet those needs. The
marketing function also includes promoting goods and services,
determining how the goods and services will be delivered, and developing
a pricing strategy to capture market share while remaining competitive. In
today’s technology‐driven business environment, marketing is also
responsible for building and overseeing a company’s Internet presence
(e.g., the company website, blogs, social media campaigns, etc.). Today,
social media marketing is one of the fastest growing sectors within the
marketing function.
Accounting
Accountants provide managers with information needed to make
decisions about the allocation of company resources. This area is
ultimately responsible for accurately representing the financial
transactions of a business to internal and external parties, government
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agencies, and owners/investors. Financial accountants are primarily
responsible for the preparation of financial statements to help entities
both inside and outside the organization assess the financial strength of
the company. Managerial accountants provide information regarding
costs, budgets, asset allocation, and performance appraisal for internal
use by management for the purpose of decision‐making.
Finance
Although related to accounting, the finance function involves planning
for, obtaining, and managing a company’s funds. Finance managers plan
for both short‐ and long‐term financial capital needs and analyze the
impact that borrowing will have on the financial well‐being of the
business. A company’s finance department answers questions about how
funds should be raised (loans vs. stocks), the long‐term cost of borrowing
funds, and the implications of financing decisions for the long‐term health
of the business.
Functional Areas of Business https://leocontent.umgc.edu/content/umuc/tus/hrmn/hrmn495/2225/lear…
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Answer the following questions to see how well you
understand the topics covered in this chapter. This short
quiz does not count toward your grade in the class, and you
can retake it as many times as you wish.
Use this quiz to decide whether to study the chapter
further or move on.
Choose the BEST answer.
Question 1
What business function is responsible for making sure that
organizational strategies and goals are aligned with staffing
plans?
operations
management
accounting
Question 2
InfoTech is a computer application firm based in Silicon
Valley and has been responsible for introducing some of
the highest rated applications available for personal
productivity. Two brothers originally founded the company,
but they quickly realized they needed to convert the
Check Your Knowledge
Correct!
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business into a corporation and establish functional areas
within the company to handle various aspects of
operations. The company is now considering expanding
operations by building a production facility in another
country. The Board of Directors has approved this move,
and now it will become the responsibility of which
functional area to secure the necessary funding for the
expansion?
marketing
accounting
finance
Question 3
What function is responsible for ensuring that products and
services, which are produced or provided, meet high quality
standards?
finance
accounting
operations
Licenses and Attributions
Correct!
Correct!
Functional Areas of Business https://leocontent.umgc.edu/content/umuc/tus/hrmn/hrmn495/2225/lear…
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Introduction to Functional Areas (https://courses.lumenlearning.com
/wmopen‐introbusiness/chapter/functional‐areas/) from Introduction
to Business by Linda Williams and Lumen Learning is available under
a Creative Commons Attribution 4.0 International
(https://creativecommons.org/licenses/by/4.0/) license. UMGC has
modified this work and it is available under the original license.
Functional Areas of Business (https://courses.lumenlearning.com
/wmopen‐introbusiness/chapter/functional‐areas‐of‐business‐2/)
from Introduction to Business by Linda Williams and Lumen Learning is
available under a Creative Commons Attribution 4.0 International
(https://creativecommons.org/licenses/by/4.0/) license. UMGC has
modified this work and it is available under the original license.
© 2023 University of Maryland Global Campus
All links to external sites were verified at the time of publication. UMGC is not responsible for the
validity or integrity of information located at external sites.
Functional Areas of Business https://leocontent.umgc.edu/content/umuc/tus/hrmn/hrmn495/2225/lear…
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https://courses.lumenlearning.com/wmopen-introbusiness/chapter/functional-areas/
https://courses.lumenlearning.com/wmopen-introbusiness/chapter/functional-areas/
https://courses.lumenlearning.com/wmopen-introbusiness/chapter/functional-areas/
https://courses.lumenlearning.com/wmopen-introbusiness/chapter/functional-areas/
https://courses.lumenlearning.com/wmopen-introbusiness/chapter/functional-areas/
https://courses.lumenlearning.com/wmopen-introbusiness/chapter/functional-areas/
https://courses.lumenlearning.com/wmopen-introbusiness/chapter/functional-areas/
https://courses.lumenlearning.com/wmopen-introbusiness/chapter/functional-areas/
https://courses.lumenlearning.com/wmopen-introbusiness/chapter/functional-areas/
https://creativecommons.org/licenses/by/4.0/
https://creativecommons.org/licenses/by/4.0/
https://creativecommons.org/licenses/by/4.0/
https://creativecommons.org/licenses/by/4.0/
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https://creativecommons.org/licenses/by/4.0/
https://creativecommons.org/licenses/by/4.0/
https://courses.lumenlearning.com/wmopen-introbusiness/chapter/functional-areas-of-business-2/
https://courses.lumenlearning.com/wmopen-introbusiness/chapter/functional-areas-of-business-2/
https://courses.lumenlearning.com/wmopen-introbusiness/chapter/functional-areas-of-business-2/
https://courses.lumenlearning.com/wmopen-introbusiness/chapter/functional-areas-of-business-2/
https://courses.lumenlearning.com/wmopen-introbusiness/chapter/functional-areas-of-business-2/
https://courses.lumenlearning.com/wmopen-introbusiness/chapter/functional-areas-of-business-2/
https://courses.lumenlearning.com/wmopen-introbusiness/chapter/functional-areas-of-business-2/
https://courses.lumenlearning.com/wmopen-introbusiness/chapter/functional-areas-of-business-2/
https://courses.lumenlearning.com/wmopen-introbusiness/chapter/functional-areas-of-business-2/
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https://creativecommons.org/licenses/by/4.0/
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https://creativecommons.org/licenses/by/4.0/
Learning Topic
SHRM Body of Competency and
Knowledge
SHRM Body of Competency and Knowledge
The SHRM Body of Competency and Knowledge (SHRM BoCK) is based
on the SHRM Competency Model. This competency model identifies the
knowledge areas, skills, and abilities that are essential for HR
professionals to succeed in the field. Beginning in 2011, this list of skills
and competencies was developed through research and consultation with
a broad range of HR professionals (Society for Human Resource
Management, n.d.). In addition to listing key behavioral competencies and
knowledge areas, the SHRM BoCK provides information about the
structure and content of SHRM’s certification examinations, including the
SHRM Certified Professional (SHRM‐CP) exam.
SHRM Body of Competency and Knowledge https://leocontent.umgc.edu/content/umuc/tus/hrmn/hrmn495/2225/lear…
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https://leocontent.umgc.edu/content/umuc/tus/hrmn/hrmn495/2225/learning-topic-list/shrm-body-of-competency-and-knowledge.html#
The SHRM BoCK has two main sections: business competencies and HR
functional areas of expertise. This combination of active behaviors and
conceptual knowledge is key to this competency model because
successful HR practitioners go beyond theory to skilled application.
Through SHRM BoCK’s core areas, HR professionals can facilitate a
strategic mindset, influence individual performance, and help achieve
successful business outcomes (Society for Human Resource Management,
n.d.).
As you prepare for the SHRM‐CP exam, you may find it valuable to use
this SHRM‐CP Exam Study Guide (/content/dam/course‐content
/tus/hrmn/hrmn‐495/document/SHRM‐
CP%20Exam%20Study%20Guide x) to make note of what you
already know and what you need to revisit in each of the competency
areas. As you review the study material and conduct your own research,
you can use the final column to capture notes of what you learn along the
way. (/content/dam/course‐content/tus/hrmn/hrmn‐495/document
/SHRM‐CP%20Exam%20Study%20Guide x)
The following information and resources provide additional details about
the SHRM BoCK, including how to use the framework as a study resource
for the SHRM‐CP exam:
SHRM BoCK Behavioral Competencies
SHRM Body of Competency and Knowledge https://leocontent.umgc.edu/content/umuc/tus/hrmn/hrmn495/2225/lear…
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https://leocontent.umgc.edu/content/dam/course-content/tus/hrmn/hrmn-495/document/SHRM-CP%20Exam%20Study%20Guide x
https://leocontent.umgc.edu/content/dam/course-content/tus/hrmn/hrmn-495/document/SHRM-CP%20Exam%20Study%20Guide x
https://leocontent.umgc.edu/content/dam/course-content/tus/hrmn/hrmn-495/document/SHRM-CP%20Exam%20Study%20Guide x
https://leocontent.umgc.edu/content/dam/course-content/tus/hrmn/hrmn-495/document/SHRM-CP%20Exam%20Study%20Guide x
https://leocontent.umgc.edu/content/dam/course-content/tus/hrmn/hrmn-495/document/SHRM-CP%20Exam%20Study%20Guide x
https://leocontent.umgc.edu/content/dam/course-content/tus/hrmn/hrmn-495/document/SHRM-CP%20Exam%20Study%20Guide x
https://leocontent.umgc.edu/content/dam/course-content/tus/hrmn/hrmn-495/document/SHRM-CP%20Exam%20Study%20Guide x
https://leocontent.umgc.edu/content/dam/course-content/tus/hrmn/hrmn-495/document/SHRM-CP%20Exam%20Study%20Guide x
https://leocontent.umgc.edu/content/dam/course-content/tus/hrmn/hrmn-495/document/SHRM-CP%20Exam%20Study%20Guide x
https://leocontent.umgc.edu/content/dam/course-content/tus/hrmn/hrmn-495/document/SHRM-CP%20Exam%20Study%20Guide x
https://leocontent.umgc.edu/content/dam/course-content/tus/hrmn/hrmn-495/document/SHRM-CP%20Exam%20Study%20Guide x
https://leocontent.umgc.edu/content/dam/course-content/tus/hrmn/hrmn-495/document/SHRM-CP%20Exam%20Study%20Guide x
https://leocontent.umgc.edu/content/dam/course-content/tus/hrmn/hrmn-495/document/SHRM-CP%20Exam%20Study%20Guide x
https://leocontent.umgc.edu/content/dam/course-content/tus/hrmn/hrmn-495/document/SHRM-CP%20Exam%20Study%20Guide x
https://leocontent.umgc.edu/content/dam/course-content/tus/hrmn/hrmn-495/document/SHRM-CP%20Exam%20Study%20Guide x
https://leocontent.umgc.edu/content/dam/course-content/tus/hrmn/hrmn-495/document/SHRM-CP%20Exam%20Study%20Guide x
https://leocontent.umgc.edu/content/dam/course-content/tus/hrmn/hrmn-495/document/SHRM-CP%20Exam%20Study%20Guide x
https://leocontent.umgc.edu/content/dam/course-content/tus/hrmn/hrmn-495/document/SHRM-CP%20Exam%20Study%20Guide x
https://leocontent.umgc.edu/content/dam/course-content/tus/hrmn/hrmn-495/document/SHRM-CP%20Exam%20Study%20Guide x
https://leocontent.umgc.edu/content/dam/course-content/tus/hrmn/hrmn-495/document/SHRM-CP%20Exam%20Study%20Guide x
Leadership
The first cluster, or grouping of behavioral
competencies, includes two sub‐
competencies: (1) leadership and navigation
and (2) ethical practice. This cluster
emphasizes the HR professional’s ability to
act as a leader within an organization and
influence the strategic direction and culture
of the organization. A successful HR
professional balances a keen strategic
mindset with a commitment to promoting
high ethical standards.
Interpersonal
The second cluster includes three
competencies specific to interpersonal
dynamics: relationship management,
communication, and global and cultural
effectiveness. This grouping of
competencies focuses on the HR
professional’s ability to build strong
relationships among members of the
organization, navigate conflict,
communicate with clarity and empathy, and
promote diversity and inclusion in the
workplace.
SHRM Body of Competency and Knowledge https://leocontent.umgc.edu/content/umuc/tus/hrmn/hrmn495/2225/lear…
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Business
The final cluster of behavioral competencies
includes three sub‐competencies: business
acumen, consultation, and critical
evaluation. These competencies require HR
professionals to understand business and
operational best practices, work
collaboratively within the organization, use
data to identify opportunities for growth,
facilitate change management, and garner
support from key stakeholders.
SHRM BoCK Knowledge Competencies
People
The first area of HR knowledge, People,
includes five functional areas: HR strategic
planning, talent acquisition, employee
engagement and retention, learning and
development, and total rewards. These
areas are united in their emphasis on
identifying, retaining, and engaging high‐
quality employees. HR professionals play a
central role in defining the strategy that
helps businesses achieve these goals. As the
champion for the employees, it is essential
that an HR professional has deep
knowledge of the activities and best
practices associated with each of these
functional areas.
SHRM Body of Competency and Knowledge https://leocontent.umgc.edu/content/umuc/tus/hrmn/hrmn495/2225/lear…
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References
Organization
The second domain within the HR
knowledge competencies is Organization.
The five functional areas in this domain
focus on the structure and procedures
deployed by HR professionals to help
support the functioning of the business.
They are the structure of the HR function,
organizational effectiveness and
development, workforce management,
employee and labor relations, and
technology management.
Workplace
The final area within the knowledge
competencies is Workplace. There are five
functional areas in this domain: HR in the
global context, diversity and inclusion, risk
management, corporate social responsibility
(CSR), and US employment law and
regulations. Successful HR professionals
must have a strong knowledge of the laws,
regulations, ethical principles, and cultural
dynamics that play a role in business and
employee relations. This knowledge,
combined with the behavioral
competencies, equips HR professionals to
be champions for justice, equality, and
inclusivity within the workforce.
SHRM Body of Competency and Knowledge https://leocontent.umgc.edu/content/umuc/tus/hrmn/hrmn495/2225/lear…
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Society for Human Resource Management. (n.d.). The SHRM Body of
Competency and Knowledge. https://www.shrm.org/certification
/Documents/SHRM‐BoCK‐FINAL
• SHRM BoCK Model (https://www.shrm.org
/certification/Documents/SHRM‐BoCK‐FINAL )
• SHRM HR Competency Model
(https://www.youtube.com/watch?v=985lM_Nzjgg&
feature=emb_logo)
• 2021 SHRM Certification Handbook
(https://pages.shrm.org
/certhandbook?utm_source=marketo&
utm_medium=email&
utm_campaign=cert_certification~Academic%20Alig
nment~Alignment%20Program%20News%20‐%20J
une&linktext=LEARN‐MORE&
mkt_tok=ODIzLVRXUy05ODQAAAF9kOeJBTrxdtu
MjM_u5xLwZbvXasenVMGP8vul4HUe_nsAcRhLY3Z
‐Nw6hsIL‐
AYCJYAjB7hwNOXmEkforGMmZ2CTt_qOcGLIU9p
MS9NNTwo98)
© 2023 University of Maryland Global Campus
All links to external sites were verified at the time of publication. UMGC is not responsible for the
validity or integrity of information located at external sites.
Resources
SHRM Body of Competency and Knowledge https://leocontent.umgc.edu/content/umuc/tus/hrmn/hrmn495/2225/lear…
6 of 6 2/15/2023, 11:42 PM
https://www.shrm.org/certification/Documents/SHRM-BoCK-FINAL
https://www.shrm.org/certification/Documents/SHRM-BoCK-FINAL
https://www.shrm.org/certification/Documents/SHRM-BoCK-FINAL
https://www.shrm.org/certification/Documents/SHRM-BoCK-FINAL
https://www.shrm.org/certification/Documents/SHRM-BoCK-FINAL
https://www.shrm.org/certification/Documents/SHRM-BoCK-FINAL
https://www.shrm.org/certification/Documents/SHRM-BoCK-FINAL
https://www.shrm.org/certification/Documents/SHRM-BoCK-FINAL
https://www.shrm.org/certification/Documents/SHRM-BoCK-FINAL
https://pages.shrm.org/certhandbook?utm_source=marketo&utm_medium=email&utm_campaign=cert_certification~Academic%20Alignment~Alignment%20Program%20News%20-%20June&linktext=LEARN-MORE&mkt_tok=ODIzLVRXUy05ODQAAAF9kOeJBTrxdtuMjM_u5xLwZbvXasenVMGP8vul4HUe_nsAcRhLY3Z-Nw6hsIL-AYCJYAjB7hwNOXmEkforGMmZ2CTt_qOcGLIU9pMS9NNTwo98
https://pages.shrm.org/certhandbook?utm_source=marketo&utm_medium=email&utm_campaign=cert_certification~Academic%20Alignment~Alignment%20Program%20News%20-%20June&linktext=LEARN-MORE&mkt_tok=ODIzLVRXUy05ODQAAAF9kOeJBTrxdtuMjM_u5xLwZbvXasenVMGP8vul4HUe_nsAcRhLY3Z-Nw6hsIL-AYCJYAjB7hwNOXmEkforGMmZ2CTt_qOcGLIU9pMS9NNTwo98
https://pages.shrm.org/certhandbook?utm_source=marketo&utm_medium=email&utm_campaign=cert_certification~Academic%20Alignment~Alignment%20Program%20News%20-%20June&linktext=LEARN-MORE&mkt_tok=ODIzLVRXUy05ODQAAAF9kOeJBTrxdtuMjM_u5xLwZbvXasenVMGP8vul4HUe_nsAcRhLY3Z-Nw6hsIL-AYCJYAjB7hwNOXmEkforGMmZ2CTt_qOcGLIU9pMS9NNTwo98
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Common Organizational Structures
Organizations can be structured in various ways. The structure of an
organization determines how it operates and performs.
Functional Structure
Key Terms
• silo—in business, a unit or department in which communication
and collaboration occur vertically, with limited cooperation
outside the unit
• departmentalization—organization into groups by function,
geographic location, or other factors
Organizations commonly use a functional structure, which divides people
into smaller groups by areas of specialty such as IT, finance, operations,
and marketing. Some refer to these functional areas as silos because they
are operate vertically and are disconnected from each other. In a
functional organizational structure, the company’s top management team
typically consists of several functional heads, such as the chief financial
officer and the chief operating officer. Communication generally occurs
within each department and is transmitted across departments through
the department heads.
Learning Resource
Common Organizational Structures
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Resource Link: https://leocontent.umgc.edu/content/umuc/tus/hrmn/hrmn495/2225/learning-resource-list/common-organizationalstructures.html
Functional structures appear in a variety of organizations across many
industries. They may be most effective within large corporations that
produce relatively homogeneous goods. Smaller companies that require
more adaptability and creativity may feel confined by the silos that
functional structures tend to produce.
Advantages of a Functional Structure
Functional Structure at FedEx
This organizational chart shows a broad functional structure at FedEx. Each function—
such as HR, finance, and marketing—is managed from the top down via functional
heads (CFO, CIO, vice presidents, etc.).
Functional departments arguably permit greater operational efficiency,
because employees with shared skills and knowledge are grouped
together. Each group of specialists can therefore operate independently.
Management acts as the point of cross‐communication between
functional areas. This arrangement enables specialization.
Disadvantages of a Functional Structure
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A disadvantage of this structure is the tendency for functional groups to
not communicate with one another, potentially decreasing flexibility and
innovation. Functional structures may also be susceptible to tunnel vision,
with each function perceiving the organization only from its group’s frame
of reference. Recent trends to mitigate these disadvantages include using
cross‐departmental teams and promoting cross‐functional
communication.
Divisional Structure
Key Terms
• parent company—an entity that owns or controls another entity
• division—a section of a large
company
• subsidiary—a company owned by a parent company or holding
company
A divisional structure groups organizational functions into divisions by
product or region. Each division contains all the necessary resources and
functions to support a particular product line or geography (e.g., its own
finance, IT, and marketing departments). Product and geographic
divisional structures may be characterized as follows:
• Product departmentalization. A divisional structure organized by
product departmentalization means that the various activities related
to the product or service are under the authority of one manager. If
the division builds luxury sedans or SUVs, for example, the SUV
division will have its own sales, engineering, and marketing
departments distinct from the departments within the luxury sedan
division.
• Geographic departmentalization. Geographic departmentalization
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involves grouping activities based on geography, such as an
Asia/Pacific or Latin America division. Geographic
departmentalization is particularly important if tastes and brand
responses differ across regions, as it allows for flexibility in product
offerings and marketing strategies (an approach known as
localization).
A common legal structure known as the multidivisional form (M‐form)
also uses the divisional structure. In this form, a parent company owns
subsidiary companies, each of which uses its brand and name. The whole
organization is ultimately controlled by central management; however,
most decisions are left to autonomous divisions. This business structure is
typically found in companies that operate worldwide—for example, Virgin
Group is the parent company of Virgin Mobile and Virgin Records.
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US Department of Energy Organizational Chart
DOE divisions are organized under three undersecretaries. Each DOE division has a
specific responsibility: nuclear security, science, or energy.
Advantages of a Divisional Structure
Generally, divisions work best for companies with wide variance in
product offerings or regions of geographic operation. The divisional
structure can be useful because it affords the company greater
operational flexibility. In addition, the failure of one division does not
directly threaten the others. In the multidivisional structure, subsidiaries
benefit from the use of the brand and capital of the parent company.
Disadvantages of a Divisional Structure
Some disadvantages of this structure include operational inefficiencies
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from separating specialized functions—for example, finance personnel in
one division not communicating with those in other divisions.
Disadvantages of the multidivisional structure can include increased
accounting and tax implications.
Matrix Structure
The matrix structure is a type of organizational structure in which
individuals are grouped by two different operational perspectives
simultaneously. This structure has both advantages and disadvantages but
is generally best employed by companies large enough to justify the
increased complexity.
In matrix management, the organization is grouped by two perspectives
the company deems most appropriate. Common organizational
perspectives include function and product, function and region, or region
and product. In an organization grouped by function and product, for
example, each product line will have management that corresponds to
each function. If the organization has three functions and three products,
the matrix structure will have nine (3 × 3) potential managerial
interactions. Thus, matrix structures are inherently more complex than
other more linear structures.
Advantages of a Matrix Structure
Proponents of matrix management suggest that it allows team members
to share information more readily across task boundaries, countering the
tendency to construct silos within functional management. Matrix
structures also allow for specialization that can both increase depth of
knowledge and assign individuals according to project needs.
Disadvantages of a Matrix Structure
A disadvantage of the matrix structure is the increased complexity in
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chain of command when employees are assigned to both functional and
project managers. The higher manager‐to‐worker ratio that sometimes
results can increase costs or lead to conflicting employee loyalties. It can
also create a gridlock in decision making if a manager on one end of the
matrix disagrees with another manager. Blurred authority in a matrix
structure can reduce agility in decision making and conflict resolution.
A matrix structure should generally only be used when the operational
complexity of the organization demands it. A company that operates in
various regions with various products may require interaction between
product development teams and geographic marketing specialists
—suggesting a matrix may be applicable. Generally, larger companies with
a need for a great deal of cross‐departmental communication benefit
most from this model.
Team‐Based Structure
The team structure is considered a newer structure for large
organizations. It is less hierarchical, less structured, and more fluid than
traditional structures like functional or divisional organization. A team is a
group of employees—ideally with complementary skills and synergistic
efforts—working toward a common goal. Teams are created by grouping
employees in a way that generates a variety of expertise and addresses a
specific operational component of an organization. These teams can
change and adapt to fulfill group and organizational objectives.
Some teams endure over time, while others—such as project teams—are
disbanded when a project ends. Teams that include members from
different functions are known as cross‐functional teams. Although teams
are described as less hierarchical, they typically still include a
management structure.
Critics argue that using the word team to describe modern organizational
structures is a fad, and that some teams are not really teams at all but
rather groups of staff. That said, team‐building is now a frequent practice
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of many organizations and can include activities such as bonding
exercises and even overnight retreats to foster team cohesion. To the
extent that these exercises are meaningful to employees, they can be
effective in improving employee motivation and company productivity.
Integration With Other Structures
One aspect of team‐based structures that will likely persist indefinitely is
the integration of team cultures within a broader structure (e.g., a
functional structure with teams interspersed). Such integration allows for
the authority and organization of a more concrete structure while at the
same time capturing the cross‐functional and projected‐oriented
advantages of teams.
For example, imagine Procter & Gamble brings together a group of
employees from finance, marketing, and research and development—all
representing different geographic regions. This newly created team is
tasked with creating a laundry detergent that is convenient, economical,
and aligned with the company’s manufacturing capabilities. The project
team might be allocated a certain number of hours a month to devote to
team objectives; however, members of the team would still be expected
to continue with their responsibilities within their functional departments.
Network Structure
Key Terms
• synergistic—cooperative, working together, interacting,
mutually stimulating
• hierarchical—classified or arranged according to various criteria
into successive ranks or grades
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In the network structure, managers coordinate and control both internal
and external relationships with their firm. The network structure is a
newer type of organizational structure often viewed as less hierarchical
(i.e., more flat), more decentralized, and more flexible than other
structures. Managers coordinate and control relations that are both
internal and external to the
firm.
The concept underlying the network structure is the social network—a
social structure of interactions. At the organizational level, social
networks can include intraorganizational or interorganizational ties
representing either formal or informal relationships. At the industry level,
complex networks may include technological and innovation networks
that may span several geographic areas and organizations. From a
management perspective, the network structure is unique among the
other structures in that it focuses on the internal dynamics within the
firm.
A network organization sounds complex, but it is a simple concept. Take,
for example, a T‐shirt design company. Because the company is mainly
interested in design, it may not want to get too heavily involved in either
manufacturing or retail—both necessary aspects of the business. So,
although the company may rent retail space, it may purchase production
capabilities from partner organizations with manufacturing facilities.
While the core company focuses mainly on designing products and
tracking finances, this network of partnerships enables much more than
just a design operation.
Advantages of a Network Structure
Proponents argue that the network structure is more agile compared to
other structures (functional, division, and even some team structures).
Silos are minimized and communication flows freely, possibly opening up
more opportunities for innovation. Because the network structure is
decentralized, it has fewer tiers in its organizational makeup, a wider span
of control, and a bottom‐up flow of decision making and ideas.
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Disadvantages of a Network Structure
On the other hand, this more fluid structure can lead to more complex
relationships in the organization. For example, lines of accountability may
be less clear, and reliance on external vendors can be quite high. These
potentially unpredictable variables essentially reduce the core company’s
control over operational success.
Modular Structure
Key Terms
• disaggregation—division or breaking up into constituent parts,
particularly categories which have been lumped together
• modular—consisting of separate units, especially where each
unit performs a specified function and can then be mixed and
matched with other units to connect, interact, or exchange
resources
In the modular structure, an organization focuses on developing
specialized and relatively autonomous strategic business units (SBUs). The
modular structure divides a business into small, tightly knit SBUs that
focus on specific elements of the organizational process. Interdependence
among the units is limited because the focus of many SBUs is more
inward than outward, and loyalty within SBUs tends to be very strong.
The term modularity is widely used in studies of technological and
organizational systems. Product systems are deemed modular when they
can be broken down into a number of components that can then be
mixed and matched to connect, interact, or exchange resources.
Modularization leads to disaggregating the traditional form of hierarchical
governance into relatively small, autonomous organizational units, or
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modules. Modules are not generally interdependent, so the modular
organization is extremely flexible.
For example, a firm that employs contract manufacturing rather than in‐
house manufacturing is using an independent organizational component.
The organization can switch between different contract manufacturers
that perform different functions (and the contract manufacturer can
similarly work for different companies). Another modular model, one that
is more internally focused, involves various consumer services catering to
dramatically different needs or demographics. In health care, for example,
the surgery unit may interact with various other hospital departments at
different times for different reasons.
Advantages of a Modular Structure
One advantage of the modular structure is that loosely coupled structures
can enable organizations to be more flexible and restructure more easily.
For example, a company using a modular structure can respond more
quickly to different market needs. An organization can also fill its internal
corporate needs by creating a new modular department that operates
interdependently with the whole.
Disadvantages of a Modular Structure
On the other hand, more internalization and more tightly coupled
structures can produce better communication and intellectual property
gains. As a result, critics of the modular organization argue that a firm’s
modularity should be limited to the extent that its flexible nature affords
gains. Various degrees of modularity are possible but not necessarily
useful if the pros do not outweigh the cons. Managers must carefully
consider whether or not a modular structure would be useful, either
entirely or partially, for their own organizations.
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PLEASE READ CAREFULLY
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Minimum 1.5 Pages
Discussion 1 – Strategic HR
Strategic planning is a process that helps an organization allocate its resources to capitalize on opportunities in the marketplace. Let’s look at a fictitious example of strategic decision making:
ABC Corporation has an organizational objective to implement new technologies to streamline various processes. HR notices a trend toward applicants with excellent customer service skills but without the technical skills that align with this organizational goal. Given this information, HR might inform senior management of this gap in skills an offer the strategic solution to hire these candidates, but also provide them with technical training to give them the skills necessary to serve the organizational objective.
Questions 1:
Post an example of how HR might use knowledge of external and/or internal forces to inform strategic decision making in an organization, including the following:
· Choose an external or internal force that affects HR – for example, changing demographics, globalization, technology
· Identify an organizational goal that relates to that force.
· Identify a potential challenge related to that goal that HR may face.
· Assess the gap between the force you’ve chosen and the relevant organizational goal.
· Suggest an approach to bridging that gap.
· Include in-text citations to support your post
.
Questions 2:
Describe an example of an organizational structure in use and explain how the structure aligns with the mission and vision of the organization.
· Include in-text citations to support your post
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