BUS137 Chapter 7

Learning Objectives
L01: HRM & C ompetitive advantage
L02: R ecruitment - internal and external
L03: Selection methods
L04: Tr aining and development
L05: Appraisal methods
L06: R eward systems
L07: U nions and labor laws

Strategic Human Resources Management
People create value
Talent is rare
A group of well-chosen, motivated people is difficult to imitate
People can be organized for success

The puzzle of HR
Attracting talent
Maintaining a well-trained, highly motivated and loyal workforce
Managing diversity
Devising effective compensation systems
Managing layoffs
Containing health care and pension costs

HR Planning Process

Job Analysis
Tools for determining what is done on a given job and what should be done on that job
Job description describes job itself
essential tasks, duties, and responsibilities involved in performing job
Job specification prescribes
skills, knowledge, abilities, and other characteristics needed to perform job

Staffing the Organization
Recruitment
development of a pool of applicants for jobs in an organization
Selection
choosing from among qualified applicants to hire into an organization
Outplacement
process of helping people who have been dismissed from the company to regain employment elsewhere

Advantages & Disadvantages of Internal Recruitment
Knowledge of company and employees
Employee motivation
Outsiders may demoralize employees
Limited applicant pool
Inhibits company changes – cultures, goals, etc.

External Recruitment
Brings in new blood
Can inspire motivation
Sources
Internet job boards, company Web sites, employee referrals, newspaper advertisements and college campus recruiting

Selection Instruments
Applications and resumes
Interviews
Reference checks
Background checks
Personality tests
Drug testing
Cognitive ability tests
Performance tests
Integrity tests

Interviews
Structured interviews
Interviewer asks all applicants the same questions and compares responses to standardized set of answers
Types
Situational (hypothetical)
Behavioral (SAR)
Unstructured interviews
interviewer asks different interviewees different questions

Hiring Checks
Reference
Contact references or former employers and educational institutions
Background
SSN verification, past employment/ education verification, criminal records and credit checks
Internet searches (e.g. Google, MySpace, Facebook)

Termination Methods
Downsizing
laying off large numbers of managerial and other employees
Termination
dismissal of employees for poor performance or other reasons
Employment-at-will
legal concept that an employee may be terminated for any reason
Termination interview
discussion between a manager and an employee about the employee’s dismissal.

Termination Interview
Do’s
-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
-Be sure the employee hears about his or her termination from a manager, not a colleague
Don’ts
-Leave room for confusion when firing
-Allow time for debate during a termination session
-Make personal comments when firing someone
-Rush a fired employees offsite unless security is an issue

Training and Development
Training
Teaching lower-level employees how to perform their present jobs.
Development
teaching managers and professional employees broad skills needed for their present and future jobs.

Types of Training
Orientation
familiarizes new employees with their jobs, work units, and organization in general
Team training
teaches employees skills they need to work together and helps them interact
Diversity training
identifying and reducing hidden biases against people with differences and developing skills needed to manage a diversified workforce
Management training
improving managers’ people skills

Performance Appraisal
Assessment of employee’s job performance
Administrative
provides managers with information to make salary, promotion, and dismissal decisions
helps employees understand and accept basis of those decisions
Developmental
identify and plan training, experience, or other improvement that employees require

Types of Performance Appraisals
Trait appraisal
involves judgments about employee performance traits such as initiative, leadership and attitude
Behavioral appraisal
focuses on observable aspects of performance
Results appraisal
focuses on quantitative data such as sales volume, units produced or profits

Guidelines for Performance Appraisals
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 performance appraisal process carefully
Use more than one rater
Take legal considerations into account

Who should do the appraisal?
Managers and supervisors
Peers and team members
Subordinates
Internal and external customers
Self appraisals

Designing Reward Systems
Effective reward systems take into account:
Organization
Position
Individual

Pay Plan Factors
Internal
organization’s compensation policy, worth of each job, employee’s relative worth, and employer’s ability to pay
External
conditions of labor market, area wage rates, cost of living, use of collective bargaining (union negotiations) and legal requirements

Employee Incentives
Individual incentive plan
Compares worker’s performance against objective standard, with pay determined by employee’s performance.
Group incentive plan
pay is based on group performance.

Group Incentive Plans
Gainsharing plans
reward employees for increasing productivity or saving money in areas under their direct control.
Profit-sharing plans
implemented in division or organization although some incentives may be tailored to unit performance
Merit pay systems
pay raises and bonuses are based on the merit rating received from their boss

CEO Pay Controversy
CEOs earned 500 times the average worker’s pay
Median salary of $2.5 million for CEOs of companies in the Standard and Poor’s stock index
Stock options are the fastest-growing part of executive compensation

What do You think?
Are CEOs paid too much? Why? Why not?
Should CEOs be given stock options as part of their compensation package? Why? Why not?

Employee Benefits
Benefits required by law
Worker’s Compensation
Social Security
Unemployment insurance
Optional benefits
- Pension plans
Medical insurance
Hospital insurance

Legal Requirements of Pay Systems
Equal Pay Act of 1963
prohibits unequal pay for men and women who perform equal work.
Pregnancy Discrimination Act of 1978
Pregnancy is a disability and qualifies a woman to receive the same benefits that she would with any other disability
Employment Income Security Act of 1974
protects private pension programs from mismanagement.

What is OSHA?
Occupational Safety and Health Act of 1970
Requires employers to pursue workplace safety
Employers must maintain records of injuries and deaths caused by workplace accidents and submit to on-site inspection

Labor Relations
The system of relations between workers and management
Labor unions established to ensure that employees are treated fairly with respect to wages, working condition, and other issues
National Labor Relations Act – declared labor organizations legal, established five unfair employer labor practices, and creating the National Labor Relations Board (NLRB)

Other Labor Relations Laws
Labor-Management Relations Act protected employers
Labor-Management Reporting and Disclosure Act established a Bill of Rights for union members, control over dues increases, and imposed reporting requirements for unions.

Four factors play a significant role
Economic factors
Job dissatisfaction
Belief that the union has power to obtain desired benefits can generate a pro-union vote
The image of the union

Collective Bargaining Agreements
Security clause
Wage component
Individual rights
Grievance procedure

Review Slides

Values for HR Leaders
Strategic
Ethical
Legal
Financial

YOU should be able to
L01: Discuss how companies use human resources management to gain competitive advantage
L02: Give reasons why companies recruit both internally and externally for new hires
L03: Identify various methods for selecting new employees

YOU should be able to
L04: Evaluate the importance of spending on training and development
L05: Explain alternatives for who appraises an employee’s performance
L06: Describe the fundamental aspects of a reward system.
L07: Summarize how unions and labor laws influence human resources management

Practice and apply your knowledge by going online at www.mhhe.com/batemanM 7-

Test Your Knowledge
Which of these methods has been found to be the way most job positions get filled?
A) Want ads
B) Employee referrals
C) Private employment agencies
D) Unions
E) None of the above.

Test Your Knowledge
Hammond University requires all applicants to their Masters of Business Administration Program to take the G.M.A.T. exam. This exam measures the test taker's aptitude for management by measuring things like verbal comprehension, mathematical calculations, and other necessary management skills. This type of test is classified as a(n):
A) personality test.
B) performance test.
C) integrity test.
D) cognitive ability test.
E) none of the above.

Test Your Knowledge
Companies invest in training to enhance individual performance and organizational productivity. Which of the following is NOT a typical training exercise?
A) Orientation training
B) Team training
C) Personality training
D) Diversity training
E) All of the above

Test Your Knowledge
Explain the alternatives for who should appraise an employee’s performance.

Test Your Knowledge
Describe the fundamental aspects of a reward system

Test Your Knowledge
Summarize how unions and labor laws influence human resources management
What are the major labor laws that influence human resources management?
How do unions influence human resources management?

BUS137 Chapter 7

by Deborah Oronzio

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