Learning Objectives:
Explain human resource planning by firms.
Explain how a firm can ensure equal opportunity and the benefits of doing so.
Differentiate among the types of compensation that firms offer to employees.
Describe the skills of employees that firms develop.
Explain how the performance of employees can be evaluated.
An Appendix is provided on Labor Unions
Human Resource Planning: Planning to satisfy a firm’s needs for employees
Consists of three tasks:
Forecasting staffing needs: A company will have more time to satisfy staffing needs if they can anticipate those needs in advance. Retirements, expansion plans and temporary production needs are common reasons to require increased staff levels. For example, if a company forecasts the temporary need for more employees due to the upcoming holiday season, the firm can either offer overtime to existing workers or use temporary workers for seasonal work.
Job Analysis: The analysis used to determine the tasks and the necessary credentials for a particular position. This analysis, for example, should include input from the position’s supervisor as well as from other employees whose tasks are related. This analysis allows for the creation of:Job Specification: States the credentials necessary to qualify for a job position.Job Description: States the tasks and responsibilities of a job position.For example, people use the job specification to determine whether they qualify for the position, and the job description to determine what the position involves.
Recruiting: Some firms use a human resource manager: Helps each specific department recruit candidates for its open position.
Recruitment
Internal: An effort to fill open positions with persons already employed by the firm. This can be beneficial because existing employees have already been proven – their personalities are known and their potential can be assessed.Promotions: The assignment of an employee to a higher-level job with more responsibilities and compensation. Many firms, for example have a “promote from within” policy whereby management level positions are only filled by existing employees.
External: An effort to fill positions with applicants from outside the firm. Some firms feel that they can recruit more qualified individuals by using external recruiting.
Screening: When recruiting externally for employees, the company does not know as much about the candidates as when internal candidates are considered – therefore candidates must be go through a screening process
Screening process is comprised of steps, as illustrated on this slide.
The first step is to receive applications. For example, companies normally request and receive resumes at this stage.
The second step is to assess each application to screen out unqualified applicants. For example, this is often referred to as a “paper screen” whereby the list of potential applicants is reduced by eliminating those that do not match well with the job specification. The third step is to screen based on the interview process. For example, some companies may have several levels of interviews with multiple people in the organization. This helps to ensure that the potential employees have the skills and traits desired by the company.The fourth step is to screen based on contact with the applicant’s references. This has mixed benefits to the firm, for example, because in a recent survey by the Society for Human Resource management more than 50% of respondents stated that they received inadequate information.
The fifth step is to screen based on tests. For example, it is common for some positions that applicants must take a typing test to determine speed and accuracy.
The last step is to make the hiring decision. For example, if each of the above steps was carried out, then the company should have narrowed down the number of qualified applicants, which helps make the final hiring decision easier and more appropriate.
There are Federal Laws related to human resources:
Equal Pay Act 1963: This law specifies that men and women performing similar work must receive equal pay.
Civil Rights Act 1964: Prohibits discrimination based on race, gender, or national origin.
Age Discrimination in Employment Act 1967: Prohibits employers from discriminating against people who are 40 years old or older.
Americans with Disabilities Act (ADA) 1990: Prohibits discrimination against people who are disabled.
Civil Rights Act 1991: Enables women, minorities, and disabled people who believe that they have been subject to discrimination to sue firms. This act protects against discrimination in the firing process or the employee evaluation process. It also protects against sexual harassment in the workplace.
Diversity
There are three main benefits of a diverse workplace:
Studies have shown that employees who work in a diverse workplace tend to be more innovative.
Employees in a diverse workplace are more likely to understand different points of view and be capable of interaction with a diverse set of customers.
A larger proportion of eligible employees with be from minority groups in the future in the labor pool.
Compensation Package: The total monetary compensation and benefits offered to employees.
Salary: The dollars paid for a job over a specific period (a wage). For example, $8.00/ hour is a salary level.
Stock Options: Allows employees to purchase shares of their employer’s stock at a specific price. For example, employees at a firm may have been given the option to purchase 100 shares of stock at a price of $20 per share. This means that they can purchase the stock for the price, regardless of the stock’s market price. Microsoft attributes much of its success to its use of stock options, because of its strong performance since 1992, its managers who were hired in 1992 or before are now millionaires because their shares are worth more than $1 million.
Commissions: Compensation for meeting specific sales objectives. For example, this is usually listed as a percentage of the employee’s total sales volume.
Bonuses: An extra onetime payment at the end of a period in which performance was measured. At Disney, for example, 70 percent of bonuses paid to executives are based on specific financial performance measures, such as earnings.
Profit Sharing: A portion of the firm’s profits is paid to employees. For example, firms such as Continental Airlines and General Motors offer profit sharing to employees in an effort to motivate employees to perform in a manner that improves profitability.
Benefits: Additional privileges beyond compensation payments, such as paid vacation time, health, life or dental insurance, and pension programs. Many firms, for example, provide substantial employee benefits to their employees, and also offer preventive health-care programs to help reduce the high health care costs.
Perquisites: Additional privileges beyond compensation payments and employee benefits. These are typically offered to high-level employees, for example, and include “perks” such as free parking, a company car, club membership, telephone credit cards and expense accounts.
Employee Skills
Technical: employees must be trained to perform the tasks they engage in daily. For example, Ace Hardware offers courses to train its employees in the use of the products that it sells. Many firms find that due to advances in computer technologies, they must offer technical training to their workers.
Decision-Making: Companies should provide guidelines for employees to consider when making decisions and generating ideas. For example, Xerox trains all of its employees to follow a six-step process when generating ideas and making decisions.
Customer service: Customer services skills training needs to be provided to employees who frequently deal with customers. For example, Marriott International provides training on servicing customers, with refresher sessions after the first and second months.
Safety: Companies often train employees on safety within the working environment, such as how to operate machinery and equipment. For example, United Parcel Service (UPS) implements training programs for its employees on handling hazardous materials.
Human Relations: Supervisors may receive training on how to manage other employees. For example, Denny’s offers employee training on diversity to prevent racial discrimination, and to create an environment in which people work together more effectively, thereby increasing the firm’s performance.
Evaluating employee performance
For most employees, their overall performance is normally based on multiple criteria. Therefore, an evaluation can best be conducted by segmenting the evaluation into the criteria that are relevant for each particular job position. For example, some employees may have excellent technical skills, yet not be dependable.
The exhibit on this slide illustrates hot the measures vary by type of job. Other types of characteristics, for example, that are not shown on this slide, for some positions are organization, communication and decision-making skills.
Employee Evaluation Forms
This slide shows an example of an employee evaluation form. When supervisors measure the performance of employees, they normally classify the emplye in one of several categories, such as the following:
Outstanding
Above average
Average
Below average
Poor
Sometimes these categories can be more specific for certain types of jobs. For example, assembly-line workers may be rated by the total components produced and production quality.
Firms can follow certain steps to demonstrate fairness and recognition of employee’s rights, while following legal guidelines:
Supervisors should communicate job responsibilities to employees when they are hired. They should also communicate any changes in those responsibilities over time, and should be done in writing. The letters, for example, not only provide legal protection, but also force the supervisors to pinpoint the specific tasks for employees in a particular job position.
Supervisors should inform of deficiencies when they become aware of them. Many companies do this, for example, in the form a standard periodic review. Some supervisors prefer to inform employees immediately, rather than wait for the review period. Employees should be given the chance to provide feedback.
Supervisors should be consistent when conducting performance evaluations. For example, employees who have a similar deficiency should be treated equally in the evaluation process.
The pictures on this slide show some of the types of action that can be taken based on evaluations, namely:
Recognition: Employees who receive very favorable evaluations may deserve some type of recognition or even a promotion for their hard work. For example, employees that regularly exceed sales targets may be promoted to the position of sales manager.
Punishment: Employees who receive unfavorable evaluations also need attention. The reasons for the bad performance need to be explored. For example, the bad evaluation may be temporarily due to a family illness, or perhaps, a non-temporary bad attitude. Employees need to be made aware of any deficiencies.
It is not uncommon for employees to sue the firm after being terminated (fired). Some argue that the fired employee did not receive due process, while others argue that the firing was because of discrimination based on gender, race, religion or national origin.
For example, complaints filed based on claims of discrimination are first filed with the Equal Employment Opportunity Commission (EEOC), which is responsible for enforcing the discrimination laws. About 20 percent of the complaints filed with the EEOC are judged to have reasonable cause for the fired employee to take action, while 80 percent of the complaints are considered to have no cause (reasonable basis).
Labor Unions: An association established to represent the views, needs, and concerns of labor.
Two types of union classifications:
Craft Unions: Unions organized according to a specific craft (or trade), such as plumbing.
Industrial Unions: Unions organized for a specific industry, such as education.
Local unions: Unions composed of members in a specified local area, for example, a particular state.For example, the California Teachers Association (CTA)
National unions: Unions composed of members throughout the country.For example, the National Education Association (NEA)
International unions: Unions that have members in several countries.
For example, Education International (EI).
Norris-LaGuardia Act: Restricted the use of injunctions against unions and allowed unions to publicize a labor dispute. It also prohibited employees from signing a yellow-dog contract, which was a contract requiring employees to refrain from joining a union as a condition of employment.
Wagner Act: Prohibited firms from interfering with worker’s efforts to organize or join unions.
Taft-Hartley Act: An amendment to the Wagner Act that prohibited unions from pressuring employees to join. The right-to-work section of this act allows states to prohibit union shops (several states have this)
Landrum-Griffin Act: Required labor unions to specify in their bylaws the membership eligibility requirements, dues, and collective bargaining procedures.
Labor Negotiations
The most critical issues to be discussed include:
Salaries: A general concern of unions is to improve or at least maintain their members’ standard of living.For example, airline pilot captains of unionized airlines, such as American earn more than $100,000 per year, while pilots of non-unionized airlines commonly earn less than $50,000 per year.
Job Security: A key issue from the perspective of the worker. Unions can not guarantee lifetime employment, but they have been able to obtain supplemental unemployment benefits.
Management Rights: Management expects to have carious rights as to how it managers its workers. For example, the union-management contract may state a specified number of work hours.
Grievances: A grievance is a complaint made by an employee or the union. Contracts typically specify procedures for resolving a grievance.
Labor Conflicts
Picketing: Walking around near the employer’s building with signs complaining of poor working conditions.
Boycott: Refusing to purchase products and services offered.
Strike: A discontinuation of employee services.
For example, two recent well-publicized strikes were by employees at UPS and General Motors. The goal of the UPS strike was to achieve better wages. The objective of the general Motors strike was to ensure that some of GM’s plants would not be closed.
Management may respond in a couple of ways
Injunction: A court order to prevent a union from a particular activity, such as picketing
Lockout: Prevents employees from working until an agreement between management and labor is reached.
For example, when 33,000 machinists went on strike at Boeing in 1995, they forced Boeing to provide a larger salary increase as an inventive to end the strike. However, a strike at Bridgestone/Firestone was not as successful, as the firm hired replacement workers.
