CHAPTER 11

Human Resource
Management:
Finding and
Keeping the Best
Employees

McGraw-Hill/Irwin

Copyright 2015 by the McGraw-Hill Companies, Inc. All rights reserved.

LEARNING OBJECTIVES
1. Explain the importance of human resource
management, and describe current issues in
managing human resources.
2. Illustrate the effects of legislation on human resource
management.
3. Summarize the five steps in human resource
planning.
4. Describe methods that companies use to recruit new
employees, and explain some of the issues that
make recruitment challenging.
11-2

LEARNING OBJECTIVES
5. Outline the six steps in selecting employees.
6. Illustrate employee training and development
methods.
7. Trace the six steps in appraising employee
performance.
8. Summarize the objectives of employee
compensation programs, and evaluate pay systems
and fringe benefits.
11-3

LEARNING OBJECTIVES

9. Demonstrate how managers use scheduling plans to

adapt to workers needs.
10. Describe how employees can move through a
company: promotion, reassignment, termination, and
retirement.

11-4

HUMAN RESOURCE
MANAGEMENT

LO 11-1

Human Resource Management (HRM) -- The

process of determining human resource needs and

then recruiting, selecting, developing, motivating,
evaluating, compensating and scheduling employees
to achieve organizational goals.

HRMs role has grown because of:

1. Increased recognition of employees as a
resource.
2. Changes in law that rewrote old workplace
practices.
11-5

HUMAN RESOURCE MANAGEMENT

LO 11-1

11-6

DEVELOPING the FIRMS

ULTIMATE RESOURCE

LO 11-1

Service and high-tech manufacturing requires

employees with highly technical job skills.
Such workers are scarce,
making recruiting and
retention more important
and more difficult.
The human resource job is
now the job of all managers
in an organization.
11-7

CHALLENGES in FINDING
HIGH-LEVEL WORKERS

LO 11-1

A shortage of trained workers in key areas

Worker shortage in skilled trades
An increasing number of baby boomers who
delay retirement
A declining economy with fewer full-time jobs
Expanding global markets with low-wage workers
Increasing benefit demands and benefit costs
A decreased sense of employee loyalty
11-8

CIVIL RIGHTS ACT of 1964

LO 11-2

Title VII prohibits discrimination in hiring, firing,

compensation, apprenticeships, training, terms,
conditions or privileges of employment based on:
- Race
- Religion
- Creed
- Sex
- Age
- National Origin
11-9

1972 EQUAL EMPLOYMENT

OPPORTUNITY ACT (EEOA)

LO 11-2

Strengthened the Equal Employment Opportunity

Commission (EEOC).
Gave EEOC the right to issue workplace
guidelines for acceptable employer conduct.
EEOC could mandate specific recordkeeping
procedures.
EEOC was vested with the power of enforcement.
11-10

CONTROVERSIAL PROCEDURES
of the EEOC

LO 11-2

Affirmative Action -- Policy designed to right past

wrongs by increasing opportunities for minorities and

women.

Reverse Discrimination -- Discriminating against

members of a dominant or majority group (e.g. whites

or males) usually as a result of policies designed to
correct previous discrimination against minority or
disadvantaged groups.

This policy has been at the center of many

debates and lawsuits.
11-11

CIVIL RIGHTS ACT of 1991

and OFCCP

LO 11-2

Civil Rights Act of 1991

- Amended Title VII and gave victims of discrimination
the right to a jury trial and possible damages.

Office of Federal Contract Compliance Programs

(OFCCP)
- Ensures that employers doing business with the
federal government comply with the nondiscrimination
and affirmative action laws.

11-12

LAWS PROTECTING
EMPLOYEES with DISABILITIES

LO 11-2

Americans with Disabilities Act of 1990 (ADA)

- Requires employers to give applicants with physical or
mental disabilities the same consideration for employment as
people without disabilities.
- Passage in 2008 of Americans with
Disabilities Amendments Act
expanded protection.
- 2011 saw regulations that widen the
range of disabilities covered by the
ADA and shift the burden of proof of
disability from employees to
employers.
11-13

AGE DISCRIMINATION in
EMPLOYMENT ACT (ADEA)

LO 11-2

Age Discrimination in Employment Act (ADEA)

- Protects workers 40 and
over from employment
and workplace
discrimination in hiring,
firing, promotion, layoff,
compensation, benefits,
job assignments and
training.
11-14

MINDING the LAW in HRM

LO 11-2

Employers must know the law

and act accordingly.
Legislation affects all areas of
HRM.
Court cases highlight that
sometimes its proper to go
beyond providing equal rights.
Changes in law and legislation
occur regularly.
11-15

TEST PREP
Whats human resource management?
What did Title VII of the Civil Rights Act of 1964
achieve?
Whats the EEOC and what was the intention of
affirmative action?
What does accommodations mean in the
Americans with Disabilities Act of 1990?
11-16

HUMAN RESOURCE PLANNING

PROCESS

LO 11-3

1) Preparing a human resource

inventory of employees.
2) Preparing a job analysis.
3) Assessing future human
resource demand.
4) Assessing future labor
supply.
5) Establishing a strategic plan.
11-17

WHATS a JOB ANALYSIS?

LO 11-3

Job Analysis A study of what employees do who

hold various job titles.

Job Description A summary of the objectives of

the job, the type of work, the responsibilities and
duties, working conditions and relationship to other
jobs.

Job Specifications -- A summary of the minimum

qualifications needed to do a particular job.

11-18

RECRUITING EMPLOYEES

LO 11-4

Recruitment -- The set of activities for obtaining the

right number of qualified people at the right time.

Human resource managers use both internal and

external sources to recruit employees.

Small businesses often make use of web

sources like CareerBuilder and Monster to
recruit employees.
11-19

EMPLOYEE SOURCES

LO 11-4

11-20

SELECTION

LO 11-5

Selection -- The process of

gathering information and

deciding who should be hired,
under legal guidelines, to
serve the best interest of the
individual and the
organization.

11-21

STEPS in the
SELECTION PROCESS

LO 11-5

1. Obtaining complete application forms

2. Conducting initial and follow-up interviews
3. Giving employment tests
4. Conducting background investigations
5. Obtaining results from physical exams
6. Establishing trial (probationary) work periods
11-22

HIRING CONTINGENT WORKERS

LO 11-5

Contingent Workers -- Include part-time and

temporary workers, seasonal workers, independent

contractors, interns and co-op students.

There are about 5.7

million contingent
workers in the U.S.
Majority of contingent
workers are under 25.
11-23

WHY HIRE
CONTINGENT WORKERS?

LO 11-5

Companies hire contingent workers:

- When full-time workers are on leave.
- During periods of peak demand.
- In uncertain economic times.
- To save on employee benefits.
- To screen candidates for future employment.

11-24

STUDENTS and the

CONTINGENT WORKFORCE

LO 11-5

With temporary staffing agencies, companies

have easier access to screened workers.
Worker information is entered into their
databases.
When students come back
to town, they can call the
agency and ask them to
put their names into the
system for work.
11-25

TEST PREP
What are the five steps in human resource
planning?
What factors make it difficult to recruit qualified
employees?
What are the six steps in the selection process?
Who is considered a contingent worker, and why
do company hire such workers?
11-26

TRAINING and DEVELOPING

EMPLOYEES

LO 11-6

Training and Development -All attempts to improve

productivity by increasing an
employees ability to perform.

Training focuses on short-term

skills.
Development focuses on longterm abilities.
11-27

THREE STEPS of TRAINING

and DEVELOPMENT

LO 11-6

1. Assessing organization needs and employee

skills to develop appropriate training needs.
2. Designing training activities to meet identified
needs.
3. Evaluating the trainings effectiveness.

11-28

MOST COMMONLY USED TRAINING

and DEVELOPMENT ACTIVITIES

LO 11-6

Orientation
On-the-Job Training
Apprenticeships
Off-the-Job Training
Online Training
Vestibule Training
Job Simulation

11-29

DEVELOPING EFFECTIVE
MANAGERS

LO 11-6

Management Development -- The process of

training and educating employees to become good

managers and monitoring the progress of their skills
over time.

Management training includes:

- On-the-job coaching
- Understudy positions
- Job rotation
- Off-the-job courses and training
11-30

USING NETWORKS and

MENTORING

LO 11-6

Networking -- Establishing and maintaining contacts

with key managers in and out of the organization and
using those contacts to develop relationships.

Mentors -- Managers who supervise, coach and

guide selected lower-level employees by acting as

corporate sponsors.

Networking and mentoring go beyond the work

environment.
11-31

APPRAISING PERFORMANCE
on the JOB

LO 11-7

Performance Appraisal -- An evaluation that

measures employee performance against established

standards in order to make decisions about
promotions, compensation, training or termination.

A 360-degree review
gives managers
opinions from people at
different levels to get a
more accurate idea of
the workers ability.
11-32

SIX STEPS of PERFORMANCE

APPRAISALS

LO 11-7

1. Establishing performance standards that are

understandable, measurable and reasonable.
2. Clearly communicating those standards.
3. Evaluating performance against the standards.
4. Discussing the results with employees.
5. Taking corrective action.
6. Using the results to make decisions.
11-33

DOs and DONTs of

PERFORMANCE APPRAISALS

LO 11-7

11-34

TEST PREP

Name and describe four training techniques.

Whats the primary purpose of a performance
appraisal?
What are the six steps in a performance
appraisal?

11-35

COMPENSATION PROGRAMS

LO 11-8

A managed and competitive compensation

program helps:
- Attract the kinds of employees the business needs.
- Build employee incentive to work efficiently and
productively.
- Keep valued employees from going to competitors or
starting their own firm.
- Maintain a competitive market position by keeping costs
low due to high productivity from a satisfied workforce.
- Provide employee financial security through wages and
fringe benefits.

11-36

TYPES of PAY SYSTEMS

LO 11-8

11-37

TYPES of PAY SYSTEMS

LO 11-8

11-38

TYPES of PAY SYSTEMS

LO 11-8

11-39

COMPENSATING TEAMS

LO 11-8

Team-based pay programs are more challenging

than individual pay systems.
The two most common methods for teams involve:
- Skill-Based: Pay is increased as skill increases. (
Eastman Chemical uses this system.)

- Gain-Sharing: Pay is increased as performance

increases. (Nucor Steel uses this system.)

11-40

FRINGE BENEFITS on the JOB

LO 11-8

Fringe Benefits -- Sick leave, vacation pay, pension

and health plans that provide additional compensation

to employees beyond base wages.

In 1929, fringe benefits accounted for less than

2% of payroll cost. Today its about 30%.
Healthcare has been the most significant increase
in fringe benefit cost.
11-41

The RANGE of
FRINGE BENEFITS

LO 11-8

Fringe benefits include incentives like:

- Company cars
- Country club memberships
- Recreation facilities
- Special home mortgage rates
- Paid and unpaid sabbaticals
- Day-care and elder care services
- Dental and eye care
- Legal counseling
- Short or compressed work weeks

11-42

CAFETERIA-STYLE and
SOFT BENEFITS

LO 11-8

Cafeteria-Style Fringe Benefits -- Allow

employees to choose the benefits they want (up to a

certain dollar amount).

Soft Benefits include:

- Onsite haircuts and shoe repair
- Concierge services
- Free meals at work
- Doggie daycare
- Onsite farmers markets

11-43

CULTURAL CHALLENGES
without CONFLICT
Managers need to understand the business
needs of each country they operate in.
- Compensation: Conversion to foreign currencies and
special allowances often are needed.
- Health and Pension Standards: Benefits are different
country-by-country.
- Paid Time Off: Vacation time, sick and personal leave
vary.
- Taxation: Tax policies vary.
- Communication: Employees can feel disconnected in
other countries.

11-44

FLEXIBLE SCHEDULING PLANS

LO 11-9

Flextime Plan -- Gives employees some freedom to

choose which hours to work as long as they work the
required number of hours or complete their tasks.

Compressed Work Week -- Employees work the

full number of work hours, but in fewer than the
standard number of days.

Job Sharing -- Lets two or more part-time

employees share on a full-time job.

11-45

USING FLEXTIME PLANS

LO 11-9

Most flextime plans require Core Time -- When all

employees are expected to be at their job stations.

Flextime is difficult to incorporate into shift work

and managers have to work longer hours.
Communication among employees can also be
difficult under flextime and managers have to be
alert to any system abuses.
11-46

A FLEXTIME CHART

LO 11-9

11-47

COMPRESSED WORK WEEKS

LO 11-9

Employees enjoy long

weekends after working long
days.
Productivity is a concern.
Nurses and firefighters often
work compressed work
weeks.
11-48

HOME-BASED WORK

LO 11-9

About 13 million Americans work from home at

least several days a month.
12% of U.S. businesses use some home-based
work.

Bank of America has

My Work that permits
employees to work
remotely about 60%
of the time.
11-49

HOME-BASED WORK

LO 11-9

11-50

JOB SHARING BENEFITS

LO 11-9

Provides employment opportunities for many

people who cannot work full time.
Workers tend to be enthusiastic and productive.
Absenteeism and tardiness are reduced.
Employers can schedule part-time workers in
peak demand periods.
11-51

MOVING EMPLOYEES

LO 11-10

Employees are promoted or reassigned.

Employees are terminated due to
performance or economic situations.
Employees retire.

11-52

TERMINATING EMPLOYEES

LO 11-10

As the economic crisis grew, more and more

employers have had to lay off employees.
Even when the economy is booming, employers
are hesitant to hire full-time workers because of
the cost of termination.
Firing employees is more
difficult for employers because
of laws preventing termination
for certain acts.
11-53

TEST PREP
Name and describe five alternative compensation
techniques.
What advantages do compensation plans such
as profit sharing offer an organization?
What are the benefits and challenges of flextime?
Telecommuting? Job sharing?

11-54