How do record labels work?

I am interested in how new talent is discovered. In my research I found out that record labels have a department called A+R. This stands for artists and repertoire. Their jobs are considered the most glamorous position in the record label. These are the people responsible for finding new talent and signing new artists. They are also responsible for as much as song selection, to choosing the song producers.

Source: http://entertainment.howstuffworks.com/record-label1.htm
 Source: http://recorddealmarketing.com/KSL/