Professional in Human Resources (PHR) Practice Exam

What does strategic business management focus on in an organization?

1. Setting employee pay rates

2. Formulating HR objectives and policies

3. Conducting performance appraisals

4. Handling employee grievances

The correct answer is: Formulating HR objectives and policies

Strategic business management is primarily concerned with aligning an organization's resources, capabilities, and actions with its overall mission and objectives. This focus includes formulating HR objectives and policies that support the organization's strategic goals. By developing clear HR strategies and policies, an organization can ensure that its human resources are effectively managed to contribute to its long-term success. In the context of human resource management, this means that strategic business management goes beyond operational tasks to influence how the organization attracts, retains, and develops talent in a way that drives overall performance. The formulation of HR objectives involves understanding the organization’s strategy and determining how HR practices can be structured to achieve those goals, making it a foundational aspect of strategic management. The other options, while important aspects of HR management, are more tactical in nature and do not directly reflect the overarching strategic focus that guides an organization's direction and competitive advantage. For instance, setting employee pay rates, conducting performance appraisals, and handling employee grievances, although significant, are typically part of the operational framework and daily management rather than the strategic planning process that defines how the organization intends to grow or succeed in the future.