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Human Resources Management
10
McGraw-Hill/Irwin
Management, 7/e Copyright 2007 The McGraw-Hill Companies, Inc. All rights reserved.
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Learning Objectives
After Studying Chapter 10, You will know:
How companies use human resources management to gain
competitive advantage.
Why companies recruit both internally and externally for
new hires.
The various methods available for selecting new
employees.
Why companies spend so much on training and
development.
How to determine who should appraise an employees
performance.
How to analyze the fundamental aspects of a reward
system.
How unions influence human resources management.
How the legal system influences human resources
management.
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Strategic Human Resources Management
Human Resource Management deals with
formal systems for managing people at work
Strategic Human Resources Management
Creates Value
Is Rare people are a source of competitive
advantage when their skills, knowledge, and
abilities are not equally available to all
competitors
Is difficult to imitate
Is organized
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The HR Planning Process
Meeting an organizations staffing needs
requires strategic human resources planning
An activity with a strategic purpose derived
from the organizations plans
The HR planning process occurs in three
stages
Planning
Programming
Evaluating
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The HR Planning Process
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The HR Planning Process
Demand Forecasts:
Determining how many and
what type of people are
needed to achieve
organizational goals is
perhaps the most difficult
part of HR planning
Labor Supply Forecasts
estimate how many and what
types of employees the
organization will actually
have
10-8
The HR Planning Process
Reconciling Supply and Demand occurs when
managers decide what must be done to ensure
that the right amount of labor will be available to
the organization when needed
Job Analysis is a tool for determining what is
done on a given job and what should be done on
that job
Job descriptions will provide the manager with
essential tasks, duties, and responsibilities
involved in performing the job
Job specifications will describe the skills,
knowledge, abilities, and other characteristics
needed to perform the job
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Staffing the Organization
Once the planning
phase has been
completed managers
will focus on staffing
the organization
Staffing consists of
three activities
Recruitment
Selection
Outplacement
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Recruitment
Recruitment activities help increase the pool
of candidates that might be selected for a job
Internal Recruiting
External Recruiting
10-11
Selection
Selection builds on the recruiting process and
involves decisions about whom to hire
There are a number of selesction instruments
from which to chose
Regardless of the method used to select
employees managers must ensure that the
process is reliable and valid
Reliability refers to the consistency of test scores
over time and across alternative measurements
Validity refers to the degree to which a test
actually predicts or correlates with job
performance
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Workforce Reductions
Managers will at times need to make
decisions to terminate an individuals
employment
The demand for certain types of employees
rises and falls as organizations and markets
change
Some employees simply do not perform at a
level required to justify continued employment
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Workforce Reductions: Layoffs
Layoffs have occurred
in organizations
because of mergers and
acquisitions,
divestiture, and
increased competition
When laying off
employees some firms
have tried to help
people find employment
elsewhere through
outplacement programs
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Workforce Reductions: Termination
People sometimes get fired for poor performance
or other reasons
Employment-at-will is the legal concept that an
employee may be terminated for any reason
To avoid pitfalls associated with dismissal
employers should develop a progressive and
positive disciplinary procedure
A termination interview is a discussion between a
manager and an employee about the employees
dismissal
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Termination Advice
Do
Give as much warning as
possible for mass layoffs
Sit down one on one with the
individual, in a private office
Complete a termination session
within 15 minutes
Provide written explanations of
severance benefits
Provide outplacement services
away from company
headquarters
Be sure the employee hears
about his or her termination
from a manager, not a colleague
Express appreciation for what
the employee has contributed, if
appropriate
Dont
Dont leave room for confusion
when firing; Tell the individual
in the first sentence that he or
she is terminated
Dont allow time for debate
during a termination session
Dont make personal comments
when firing someone; keep the
conversation professional.
Dont rush a fired employee
offsite unless security is an issue
Dont fire people on significant
dates, like the 25th anniversary
of their employment or the day
their mother died
Dont fire employees when they
are on vacation or have just
returned
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Legal Issues
Many laws have been passed
governing employment decisions
and practices
Failure to comply with any these
laws may expose the organization
to charges of unfair practices,
expensive lawsuits, and
civil/criminal penalties
One common reasons employers
are sued is due to adverse impact
An adverse impact occurs when
a seemingly neutral employment
practice has a disproportionately
negative effect on a group
protected by the Civil Rights Act
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Developing the Workforce
US businesses spend more than $50 billion to
provide each of their employees with an
average of 26 hours of formal training
annually
The American Society for Training and
Development has argued that as a percentage
of total payroll, the average organizational
investment in training is too small
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Training and Development
Training usually refers to teaching lower-level
employees how to perform their present jobs
Development involves teaching managers and
professional employees broader skills needed for
their present and future jobs
Training is generally a four step process
Assess the need
Design the training program based upon the need
Decide which training method should be used
Evaluate the training programs effectiveness
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Methods of Training
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Types of Training
Orientation training is designed to introduce new
employees to the company and familiarize them
with policies, procedures, culture, and the like
Team training provides employees with the skills
and perspectives they need to work in
collaboration with others
Diversity training focuses on identifying and
reducing hidden biases against people with
differences and developing the skills needed to
manage a diversified workforce
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Performance Appraisal
Performance appraisal is the assessment of an
employees job performance
The performance appraisal has two basic purposes
Administrative purpose: it provides managers with
the information they need to make salary,
promotion, and dismissal decisions
Developmental purpose: the information gathered
can be used to identify and plan additional
training, learning, experience, or other areas of
improvement
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Performance Appraisal
There are three basic categories of performance
appraisals
Trait appraisals involve subjective judgments
about employee performance and include
dimensions such as initiative, leadership, and
attitude
Behavioral appraisals focus on observable aspects
of performance
Results appraisals tend to be more objective and
can focus on production data such s sales volume,
units produced, profits, etc.
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Performance Appraisal
Seven guidelines to choosing a system
Base performance standards on job analysis
Communicate performance standards to employees
Evaluate employees on specific performance-
related behaviors rather than on a single global or
overall measure.
Document the PA process carefully
If possible, use more than one rater
Develop a formal appeal process
Always take legal considerations into account
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Performance Appraisal
Who should conduct the
Performance Appraisal?
Managers and supervisors
Peers
Customers
360 Degree Appraisal is a
process that uses multiple
sources of appraisal to gain
a comprehensive
perspective on ones
performance
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How to Give Feedback
Appraisal feedback works best when it is
Specific and constructive
Related to clear goals or behaviors
Intended to help the employee
When giving negative feedback
Summarize the employees specific performance
Describe the expectations and standards, and be specific
Determine the causes for the low performance; get the
employees input
Discuss solutions to the problem, and have the employee
play a major role in the process
Agree to a solution. As a supervisor, you have input into
the solution. Raise issues and questions, but also provide
support
Agree to a timetable for improvement
Document the meeting
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Designing Reward Systems
Traditionally pay has been the primary
monetary reward considered
In recent years benefits have received
increased attention
Benefits currently make up a far greater
percentage of the total payroll than they did in
the past
The typical employer today pays nearly 40% of
payroll costs in benefits
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Designing Reward Systems
Reward systems serve the strategic purposes
of attracting, motivating, and retaining
people
Three types of decisions are crucial
Pay level refers to the choice of whether to be a
high-, average-, or low-paying company
Pay structure is the choice of how to price
different jobs within the organization
Individual pay decisions concern different pay
rates for jobs of similar worth within the same
family
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Designing Reward Systems
Individual incentive plans are the most
common type of incentive plan and is based
on the employees performance
Gain-sharing plan concentrate on rewarding
employees for increasing productivity or
saving money in areas under their direct
control
Profit-sharing plans are usually implemented
in the division or organization as a whole,
Merit Pay Systems are based on the
judgmental merit rating they receive from
their boss
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Employee Benefits
Three basic required benefits
Workers compensation provides financial support
to employees suffering a work-related injury
Social Security provides financial support to
retirees
Unemployment insurance provides financial
support to employees who are laid off for reasons
they cannot control
Because of the wide variety of possible benefits
and the considerable differences in employee
preferences and needs companies often use
cafeteria or flexible benefit programs
10-30
Legal Issues
The Equal Pay Act of 1963prohibts unequal
pay for equal work
Comparable-worth doctrine implies that
women who perform different jobs of equal
worth as those performed by men should be
paid the same wage
The Pregnancy Discrimination Act states that
pregnancy is a disability and qualifies a
woman to receive the same benefits that she
would with any other disability
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Legal Issues
The Employee Retirement Income Security
Act of 1974 protects private pension
programs from mismanagement
The Occupational Safety and health Act of
1970 requires employers to pursue workplace
safety
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Labor Relations
Labor relations is the system of relations
between workers and management
The National Labor Relations Act ushered in
an era of rapid unionization
Declaring labor organizations legal
Establishing five unfair employer labor
practices
Creating a National Labor Relations Board
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Labor Relations
Why do employees unionize?
Economic Factors are important unions attempt
to raise the average wage rate for members
Job dissatisfaction poor supervisory practices,
favoritism, lack of communication, etc
A belief that the union can obtain desired benefits
The image of the union
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Collective Bargaining
A process of negotiating an agreement over
wages, hours, and working conditions
Two types of disputes can arise during the
process
Prior to the agreement being reached, the
workers may go on strike to compel agreement
on their terms
After the agreement is signed management
and the union sometimes disagree over the
interpretation of the agreement
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Collective Bargaining
To settle a dispute organizations will use the
process of arbitration
Arbitration is the use of a neutral third party to
resolve the dispute
Collective bargaining agreement will normally
specify if the organization is
Union Shop is an organization with a union and a
union security clause specifying that workers must
join the union after a set period of time
Right-to-Work is legislation that allows employees
to work without having to join a union
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Looking Ahead
Chapter 11 Managing the Diverse Workforce
How changes in the U.S. workforce make diversity
a critical organizational and managerial issue.
The distinction between affirmative action and
managing diversity.
How managers can gain a competitive edge by
managing diversity effectively.
What challenges a manager is likely to encounter
with a diverse workforce.
How managers and their organizations can take
steps to cultivate diversity
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Selection Instruments
Applications and Resumes
Interviews
Reference checks
Background checks
Personality tests
Drug testing
Cognitive ability tests
Performance tests
Integrity tests
Return
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Employment Laws
Return