Copyright © Houghton Mifflin Company. All rights reserved.14–1 Human Resource Management (HRM)...

Copyright © Houghton Mifflin Company. All rights reserved. 14–1

Human Resource Management (HRM)The set of organizational activities directed at attracting,

developing, and maintaining an effective work force.

Attract, Train, and Retain

• Strategic Importance of HRM– HRM is increasingly important as firms realize the

value of their human capital in improving productivity.

– The process of hiring and training employees is both time consuming and expensive. You want to hire the right individual for each position.

– HR planning is now part of the strategic planning process.


The Legal Environment of HRM

Human Resource Management practices are governed by a country’s laws and regulations.

Laws and Regulations:• reduce employment discrimination• reduce unfair practices• limit management discretion in human resource decisions

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The Legal Environment of HRM

Equal Employment Opportunity

Compensationand Benefits

Labor Relations

Health and Safety

Title VII of Civil Rights Act of 1964 Fair Labor Standards

Act of 1938 (FLSA)

National Labor Relations Act of 1935 (Wagner Act)

Occupational Safety and Health Act of 1970 (OSHA)

Pregnancy Discrimination Act Equal Pay Act

of 1963Labor Management Relations Act of 1947 (Taft-Hartley Act)Age Discrimination in

Employment Act Employee Retirement Income Security Act of 1974 (ERISA)Americans with

Disabilities Act

Family and Medical Leave Act of 1993 (FMLA)

Civil Rights Act of 1991

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Equal Employment Opportunity• Title VII of the Civil Rights Act of 1964

– Forbids discrimination in the employment relationship.

• Civil Rights Act of 1991– Amended the original Civil Rights Act, making it easier to bring

discrimination lawsuits while also limiting punitive damages that can be awarded in those lawsuits.

• Pregnancy Discrimination Act– Outlaws discrimination on the basis of pregnancy

• Age Discrimination in Employment Act of 1967– Outlaws discrimination against persons older than 40.

• Americans with Disabilities Act of 1990 (ADA)– Forbids discrimination on the basis of disabilities and requires

employers to provide reasonable accommodations for disabled employees


Affirmative Action– Intentionally seeking and hiring qualified or

qualifiable employees from racial, sexual, and ethnic groups that are underrepresented in the organization.

– Several executive orders require federal contractors to develop affirmative action plans and take affirmative action in hiring veterans and the disabled.


Compensation and Benefits• Fair Labor Standards Act of 1938 (FLSA)

– Sets a minimum wage and requires overtime pay for work in excess of 40 hours per week for non-exempt employees.

• Equal Pay Act of 1963– Requires men and women to be paid the same amount for doing the same

jobs; exceptions are permitted for seniority and merit pay.

• Employee Retirement Income Security Act of 1974 (ERISA) – Sets standards for pension plan management and provides federal

insurance if pension plans go bankrupt.

• Family and Medical Leave Act of 1993 (FMLA)– Requires employers to provide up to

12 weeks of unpaid leave for family and medical emergencies.

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Labor Relations• National Labor Relations Act of 1935 (Wagner Act)

– Set up procedures for employees to vote whether to have a union; if the vote is for a union, management is required to bargain collectively with the union.

• Labor Management Relations Act of 1947 (Taft-Hartley Act)– Amended NLRA to limit the power of unions and increase

management’s rights during organizing campaigns.

– Allows the U.S. president to prevent or end a strike that endangers national security.

Wagner Act expanded unions power, then Taft-Hartley restricted unions power.


Health and Safety

• Occupational Safety and Health Act of 1970 (OSHA) requires that employers:

– Provide a place of employment that is free from hazards that may cause death or serious physical harm.

– Obey the safety and health standards established by Occupational Safety and Health Administration (OSHA).

Major Responsibilities of HRM

• Plan for Staffing Needs• Recruiting (Attract Qualified People)

• Selection (Hire the Best Employee)

• Training & Development

• Performance Appraisal

• Compensation & Benefits


Attract, Train, Retain


• Employment-at-Will

– A traditional view of the workplace in which an employer can fire an employee for any or no reason.

• Just Cause—The New Argument

– An organization should be able to fire only people who are poor performers or who violate rules.

– Courts have limited an employer’s ability to terminate employees by requiring just cause for firing or dismissal as part of an organization-wide cutback.


Planning for Staffing Needs• Job Analysis

– A systematic analysis of jobs within an organization.

• Job Description– A listing of the job’s duties; its working conditions; and the tools,

materials, and equipment used to perform the job.Data Conversion Operators use a computer terminal to prepare mail for automated sorting equipment. They read type or handwritten addresses from a letter image on the terminal screen, and then select and type essential information so an address bar code can be applied to the letter.

• Job Specification– A listing of the skills, abilities, and other credentials the

incumbent jobholder will need to do a job.Typing or data entry experience is required. Applicants must demonstrate the ability to type the required number of words and/or numbers per minute in a performance test.

Once understand the organization’s jobs, then plan for future HR needs.


RecruitingRecruiting

– The process of attracting qualified persons to apply for jobs that are open.

• Internal Recruiting– Considering present employees as candidates for

openings.

• Advantage: build morale and retain high-quality employees.

• Disadvantage: internal recruiting can create a “ripple effect” of having to successively fill vacated positions.

• External Recruiting

– Attracting persons from outside the organization

Realistic Job Preview (RJP) is considered a successful method to ensure person-job fit.


SelectingSelection Devices:• Application Blanks - Used to gather information about work

history, educational background, and other job-related demographic data. Must not ask for information unrelated to the job.

• Tests - Ability, skill, aptitude, or knowledge tests are usually the best predictors of job success. Must be validated, administered, and scored consistently.

• Interviews - Interviews can be poor predictors of job success due to interviewer biases. Interview validity can be improved by training interviewers and using structured interviews.

• Assessment Centers – Popular method for selecting managers and current employees for promotion. Two to three days of managerial exercises.

• Other Techniques - Physical exams, drug tests, and credit checks to screen prospective employees.


Selecting

• Validation: – Determining the extent to which a selection device

is really predictive of future job performance.


Training and Development

• Assessing Training Needs– Determining what needs exist is the first step

in developing a training plan.

LecturesRole play and case studies

On-the-job and vestibule training

Common Training Methods

Web-based and electronic training


Performance AppraisalA formal assessment of how well employees do their jobs.

Should be done regularly to:

• Validates the selection process and the effects of training.

• Aids in making decisions about pay raises, promotions, and training.

• Provides feedback to employees to improve their performance and plan future careers.

Errors of leniency and strictness

Halo error

Recency error

Rater Errors in Performance Appraisal


Performance Appraisal (cont’d)

Objective measures of performance

• Actual output (units produced), scrap rate, dollar volume of sales, and number of claims processed.

• Can become contaminated by outside factors resulting in “opportunity bias” where some have a better chance to perform than others.

• Special performance tests are a method in which each employee is assessed under standardized conditions.

• Performance tests measure ability and not motivation.

Judgmental methodsRanking—compares employees directly with each other.

Rating—compares each employee with a fixed standard.

Graphic rating scales

Behaviorally-anchored rating scale (BARS)

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• Performance Feedback– Is best given in a private meeting between the

employee and immediate supervisor.

– Discussion should focus on the facts:• The assessed level of performance

• How and why the assessment was made.

• How the employee’s performance can be improved.

360 degree” FeedbackManagers are evaluated by everyone around them:

Boss Subordinates Peers

Provides a richer array of performance information on which to base an appraisal.


Compensation

• Determining Compensation– Compensation

• The financial remuneration given by the organization to its employees in exchange for their work.

– Wages– Salary– Incentives

What determines the level of compensation?


• Determining Compensation – Wage-level decision

• The wage-level decision is a management policy decision to pay above, at, or below the going rate for labor in an industry or geographic area.

• Factors that affect the wage-level decision:– the size and current success of the firm.

– the level of unemployment in the labor force.

– Area wage surveys• Can provide information about the maximum, minimum,

and average wages for a particular job in a labor market.

Factors such as seniority, initial qualifications, individual merit, and labor market conditions influence wage decisions

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Benefits• Determining Benefits

– Benefits (Indirect compensation)• Things of value other than compensation that an

organization provides to its workers.• The average company spends an amount equal to more

than one-third of its cash payroll on employee benefits.• A good benefit plan encourages employees to stay with

the company and attracts new employees.• Benefits do not necessarily stimulate high performance.

Shop carefully for best-cost providers

Avoid redundant coverage

Provide only benefits that employees want

Managing Benefits Effectively


Maintaining Human Resources (cont’d)

Shop carefully for best-cost providers

Avoid redundant coverage

Provide only benefits that employees want

Managing Benefits Effectively

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Managing Labor Relations• Labor Relations

– The process of dealing with employees when they are represented by a union.

– Organizations prefer employees remain nonunion because unions limit management’s freedom.

• Why Unions Have Declined– Increased standards of living made union

membership less important.– Unionized manufacturing industries have declined.– Globalization of business has caused many

unionized jobs to be lost overseas.


Managing Labor Relations

Provide a complaint and appeal system

Avoidfavoritism

Provide fair treatment with clear standards

Avoiding Unionization


Managing Labor Relations

• Collective Bargaining– The process of agreeing on a satisfactory labor

contract between management and labor.• The contract contains agreements about wage, hours, and

working conditions and how management will treat employees.

• Grievance Procedure– The step-wise means by which a labor contract is

enforced.• Grievances are filed on behalf of an employee by the union

when it believes employees have not been treated fairly under the contract.


Contingent and Temporary Workers• Trends in Contingent and Temporary Workers

– Consistent increases in contingent workers—10% of the U.S. workforce is either contingent or temporary.

• Challenges in Managing Contingent Workers– Integrating contingent workers into the organization in a

coordinated fashion.

– Understanding their advantages and disadvantages.

– Calculating labor-cost savings of contingent workers.

– Deciding how similarly contingent employees will be treated relative to permanent employees.

Copyright © Houghton Mifflin Company. All rights reserved.14–1 Human Resource Management (HRM)...

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