Chapter 1Introduction to Human Resource Management.docx

Chapter 1
Introduction to Human
Resource Management
Learning Objectives
After reading this chapter, you should be able to do the
following:
• Explain what human resource management (HRM) is and
how it relates to the manage-
ment process.
• Identify major events in the history of HRM and explain
how they have shaped the current
field of HRM.
• Describe the strategic importance of HRM activities
performed in the organizational
setting.
• Identify your own HRM responsibilities and challenges as
an organizational participant and
decision maker.
• Define the major responsibilities of a human resources
(HR) department.
• Describe the role of the legal environment in HR
operations and activities.

• Define each of the major HRM functions and processes of
strategic HRM planning, job
analysis and design, recruitment, selection, training and
development, compensation and
benefits, and performance appraisal.
• Identify major recent trends in HRM.
1
Frances Roberts/age fotostock/SuperStock
Pre-Test Chapter 1
Pre-Test
1. HR personal credibility is one of the critical competencies
required in order for HR profes-
sionals to be able to carry out their duties successfully.
a) True
b) False
2. Human resource management has been defined as:
a) managing people’s skills and talents to effectively align them
with organizational
goals.
b) all decisions made by human resource departments that
improve morale for
employees.

c) decisions made by human resource departments that balance
the needs of the
management team and employee bargaining units.
d) decisions made by management and by employees that help
reach the organization’s
goals.
3. The market value per employee of publicly traded companies
in the United States can
indicate the effectiveness of HR practices on organizational
performance.
a) True
b) False
4. Corporate governance refers to the relationship between
managers and unions in terms
of shared corporate rights and responsibilities.
a) True
b) False
5. Which of the following is one of the HR department’s major
everyday tasks?
a) Sales and operations planning
b) Supply chain management
c) Inventory accounting
d) Planning and alignment

6. Any of the following can be a reason for employees to join
unions EXCEPT:
a) an employee’s personal need to make a difference in the work
environment.
b) employee dissatisfaction and discomfort with the existing
work environment.
c) unions’ prospective advantages.
d) a greater chance of joining an organization’s board of
directors.
7. Which of the following is one of the HRM practices?
a) Union activities
c) Benefits administration
d) Operations management
8. Taking work that used to be done within an organization and
contracting it to a third
party is called:
a) globalization.
Introduction Chapter 1
b) outsourcing.

c) free trade.
d) economic shifting.
Answers
1. a) True. The correct answer can be found in Section 1.1.
2. a) managing people’s skills and talents to effectively align
them with organizational
goals. The correct answer can be found in Section 1.2.
3. a) True. The correct answer can be found in Section 1.3.
4. b) False. The correct answer can be found in Section 1.4.
5. d) Planning and alignment. The correct answer can be found
in Section 1.5.
6. d) a greater chance of joining an organization’s board of
directors. The correct answer
can be found in Section 1.6.
7. c) Benefits administration. The correct answer can be found
in Section 1.7.
8. b) outsourcing. The correct answer can be found in Section
1.8.
Introduction
Consider the various organizations you have been involved in—
as an employee, as a customer,
as a volunteer, and as a member. From grocery stores and banks
to sports teams and political
parties, all organizations share a common theme: they have
goals, and they need to accom-
plish these goals through people. Of course, they also need

financial resources, a viable busi-
ness plan, the right technology, and a market. However, an
organization’s success depends
not only on the availability of these resources but also on the
people who will organize, lead,
control, and use the resources to achieve the organization’s
goals. Critical to an organization’s
success is the effective management of its people. That’s why
Bill Gates of Microsoft and Herb
Kelleher of Southwest Airlines, along with many other well-
known leaders of highly successful
organizations, have often asserted that people are their most
important assets.
O P E N I N G C A S E S T U DY
OCBC Bank
Read the following article:
http://www.hrmasia.com/case-studies/putting-the-person-in-
personnel/144268/
Browse OCBC's website at:
http://www.ocbc.com/group/Group-Home.html
OCBC Bank has been recently ranked as the strongest bank in
the world for two consecutive years.
One of OCBC’s notable strengths is its emphasis on proactive
talent management and development.
For example, OCBC has an extensive three-year training
program for its new employees, ongo-
ing career development plans, and a structured approach to job
rotations across functions to give
employees diversified exposure. Managers are evaluated and
rewarded as much for their effective-
ness in managing talent as for their functional roles. In this

chapter and throughout this textbook,
you will learn about many of these practices and how you can
apply them.
(continued)
http://www.hrmasia.com/case-studies/putting-the-person-in-
personnel/144268/
http://www.ocbc.com/group/Group-Home.html
What Is HRM? Chapter 1
1.1 What Is HRM?
Human resource management (HRM) is the managing of human
skills and talents to make
sure they are used effectively and in alignment with an
organization’s goals. Neither the size
nor type of a company affects this definition. Whether big or
small, for-profit or nonprofit,
all organizations perform HR functions that relate to the
recruitment, selection, training, and
management of their workforces. In addition, every organization
is concerned with offering
competitive salaries and benefits to attract, motivate, and retain
talented employees. Even
nonprofit organizations that rely on volunteers are often
concerned with attracting, moti-
vating, and retaining the best volunteers by providing
nonfinancial incentives and designing
meaningful roles for them.
It is important to note that HRM activities exist throughout any
organization, whether or not
there is a recognized HRM department. For instance, you will
find managers of various func-

tions such as finance, production, and marketing doing such HR
activities as hiring, training,
and scheduling employees and appraising their performance.
And
HRM activities extend further. HRM also involves handling the
legal issues related to hiring, training, compensating,
rewarding,
disciplining, promoting, demoting, and even firing people.
HRM can provide a competitive advantage to organizations
through the efficient and effective use of the tools, data, and
processes provided by HRM specialists. Yet HRM should also
focus on pursuing one strategic priority: helping the organiza-
tion function as an exceptional employer that provides
rewarding
work to qualified and exceptional employees. HRM should not
be seen as merely performing routine administrative activities.
While these activities are important for organizational and legal
purposes, human resources should, first and foremost, be looked
on as an asset that plays a strategic role in giving the
organization
a competitive advantage in the marketplace.
The University of Michigan and the Society for Human
Resource
Management identify a critical set of competencies that enable
HR professionals to carry out their duties successfully:
Maurizio Gambarini/picture-alliance/dpa/AP Images
▲▲ Bill Gates, founder and former CEO
of Microsoft, believes the success of
an organization depends not on the
availability of resources but on its
employees’ ability to organize, lead, and

control the use of these resources to
achieve organizational goals.
Discussion Questions
1. Describe OCBC’s distinctive approach to talent management
and development.
2. Compare OCBC’s approach to talent management and
development to other organizations you
are familiar with (e.g., current or past employers, a family
business).
3. To what extent do you agree that OCBC’s approach to talent
management and development is a
primary contributing factor in its success? What can be other
contributing factors?
4. To what extent does OCBC’s approach to talent management
and development fit other types
of organizations or industries? What can be some limitations if
it is applied elsewhere without
modification?
5. Conduct some additional Internet research on OCBC. How
has OCBC performed recently, and
what has it done more of, less of, or differently in the area of
human resource management?
What Is HRM? Chapter 1
1. Strategic contribution means that HR has to be able to be a
key contributor to
organizational success.

2. HR professionals must attain business mastery—that is, a
deep understanding of their
organization’s business and its technological, economic, and
financial aspects.
3. HR professionals must also attain HR mastery—the ability to
execute their practices effec-
tively and to ensure that these practices meet employees’ needs
and are also aligned with
organizational goals.
4. HR professionals must embrace and leverage HR technology
to be able to transform HR’s
performance of its roles and functions.
5. And it is very important for HR professionals to acquire a
fifth competency: HR personal
credibility, which occurs through building and developing both
internal and external rela-
tionships (Brockbank & Ulrich, 2003).
Firms usually deal with four types of capital assets: physical
(e.g., buildings, land, and equip-
ment), financial (e.g., cash and financial securities), intangible
(e.g., patents and information
systems), and human assets (e.g., people’s talents, knowledge,
skills, abilities, experience,
personalities, attitudes, and motives). Each of these assets has a
different role in an organiza-
tion. However, human assets are the only ones capable of
managing all the other assets to
accomplish organizational goals.
For example, retail chains such as Target
and Wal-Mart possess substantial physi-
cal, financial, and intangible assets.

However, these assets are meaningless
until they are coordinated, integrated, and
offered to the customer in terms of the
right products at the right prices. Decision
makers at the top of the organization per-
form these key strategic coordination and
integration functions. However, even this
strategic work by those at the top can
be meaningless if it is not implemented
effectively by frontline employees, who
are often the only employees a customer
will ever meet or be directly affected by.
For example, you may never meet or inter-
act with the CEO of your grocery store, yet your experience
(and willingness to return) is
directly influenced by whether employees promptly stock the
shelves with your favorite items;
whether the janitor properly cleans the aisles and bathrooms;
whether the customer service
representative knows the answers to your questions and offers
them in a friendly manner;
and whether the cashier rings up your selections accurately,
efficiently, and courteously. Thus,
all those organizational human assets, not just those at the top,
perform the roles necessary
to transform other types of assets into effective means to
achieve organizational goals and
maintain a competitive advantage.
The efficient use of the organization’s human assets affects its
market value. For example,
an enormous gap is revealed by comparing the market value of
publicly traded companies
to the value of their physical, financial, and even their
intangible assets. This gap can only
be accounted for through the value added by the companies’

human assets (Echols, 2007).
AP Photo/The Canadian Press/Dave Chidley
▲▲ Retail chains such as Target have substantial physical and
finan-
cial assets that are meaningless unless they are managed,
coordi-
nated, and offered to the customer by employees.
The History of Human Resource Management Chapter 1
Firms in the United States seem to be aware of this truth. U.S.
firms spend almost double the
amount that European firms spend on salaries and benefits, and
in the United States there is
slightly more than a 150% return on this investment in human
assets (Burton & Pollack, 2006).
1.2 The History of Human Resource Management
It has only been since the late 1970s and early 1980s that the
term “human resources man-
agement” (HRM) has come to identify what was previously
known in organizations as “per-
sonnel administration” (PA; Liu, Combs, Ketchen, & Ireland,
2007). The function we now
know as HRM has evolved over the last one hundred years in
response to changes in tech-
nology, business environments, legislation, and society. To
appreciate the concept of HRM, a
familiarity with the path that has been traveled and the
individuals who have influenced our
understanding of the concept is necessary.

Precursors to HRM
Prior to 1900, most employment was within small businesses
and professional guilds where
owners or craft masters were primarily responsible for dealing
with the job performance of
individual employees. In larger organizations such as
manufacturing plants or railroad compa-
nies, issues of employee welfare or how employee welfare
might relate to efficiency and pro-
ductivity were seldom a concern. During this period there was
no unemployment or disability
insurance for workers, so that if a worker lost a job
through discharge or injury there was no safety net
to prevent a fall into destitution. Thus, any discus-
sion of human resource management was limited
to a job foreman who closely monitored the efforts
of individual workers and often resorted to the
threat of discharge as inducement for employees to
worker harder. In response, workers did attempt to
gain some degree of collective protection against
their employers through groups such as the Knights
of Labor and the Railroad Brotherhoods. However,
such groups seldom were given any legal status,
and in labor disputes state and local governments
most often sided with the employer and brought
resources to bear against the employees.
From 1900 to about 1920, employment numbers
shifted away from small businesses and professional
guilds toward quickly growing businesses in manu-
facturing, transportation, and mining. As businesses
and industries grew in the United States, so did
worker demands for collective protection against the
power of employers. Somewhat grudgingly, state

and federal government came to recognize the legal
status of employee unions such as the American
Federation of Labor and the United Mine Workers
of America. The drive for worker rights culminated
H -D Falkenstein/imagebroker.net/SuperStock
▲▲ Before the existence of human resources depart-
ments, employees depended on professional guilds
for direction when dealing with individual employees.
Pictured here is Carpenters’ Hall in Philadelphia, home
to the Carpenters’ Company, the oldest guild in the
United States.
The History of Human Resource Management Chapter 1
in the National Labor Relations Act of 1935, which gave unions
wide-ranging latitude to orga-
nize and bargain with management. In response, businesses in
various industries established
industrial relations departments, which attempted to manage
human resources by formalizing
a process that would acknowledge workers’ rights in compliance
with legal requirements.
Generally, however, employees were still considered as
interchangeable parts of any business.
The period from 1920 through World War II saw emergence of
the principles of scientific man-
agement advanced by individuals such as industrial
psychologists Frank and Lillian Gilbreth,
who gained notice for their study of time and motion efficiency
in manufacturing plants.
Perhaps the most notable use of the principles of scientific

management at the time occurred
at the Ford Motor Company. Traditionally, when constructing
automobiles, craftsmen worked
at their own pace and exercised their own judgment. Henry Ford
sought to speed up auto-
mobile production, and he was influenced by the writings of a
mechanical engineer, Fredrick
Taylor, who believed that left to their own devices workers
would try to determine just how
slowly they could work without getting fired. Using Taylor’s
management principles, Ford
broke down what had once been the domain of skilled craftsmen
into simple and repetitive
steps that anyone could be trained to do. Further, he established
an assembly line that allowed
workers to stand in one place and complete their individual,
repetitive tasks while the pace
of the assembly line was set by the principles of scientific
management. Attempts to manage
human resources were, at best, characterized by personnel
administration departments in
which the focus was on the creation and implementation of
policies intended to maximize the
operational efficiency of human labor. While Ford was noted for
paying a generous wage for
the time, the policies he used to implement scientific
management gave little consideration to
employees as important resources. For instance, workers had to
ask permission to leave the
assembly line to go to the restroom, guards checked the
restrooms for malingerers, and job
foremen could fire workers for smiling while on the assembly
line in the belief that they were
not taking their jobs seriously.
From the end of WWII until the early 1960s, PA functions

slowly began to look beyond the
principles of scientific management and achieving greater
financial efficiency from a firm’s
employees. A Harvard University professor of industrial
management, Elton Mayo, and his
colleague, Fritz Roethlisberger, delved deeply into the complex
and sometimes confusing
data generated from 1924–1932 in a study at Western Electric.
Frequently referred to as the
Hawthorn Effect, their analysis suggested that there is a
connection between the social needs
of employees in the workplace and their job performance. From
their work emerged the
principles of what became known as the Human Relations
Movement. Influenced by these
principles, Peter Drucker in 1954 first coined the term human
resources in calling on managers
to consider the moral and social needs of humans in the design
of work. Shortly thereafter,
in 1958, sociologist E. Wright Bakke identified human
resources as an ignored function of
general management equally as important to business success as
accounting and finance.
Interestingly, the concept of humans as resources critical to
success was not immediately
embraced by business and industry.
Personnel administration departments in the 1960s were
confronted with a substantial
increase in labor legislation emerging from the social disruption
associated with the civil rights
and antiwar movements. This legislation was designed to ensure
nondiscriminatory employ-
ment practices and increased worker safety. Compliance with
the plethora of new legislation
forced PA departments to develop more sophisticated personnel-

related policies and proce-
dures (Salvatore, Weitzman, & Halem, 2005). Because of the
potential loss that might result
The Strategic Value of HRM Chapter 1
from legislative noncompliance, PA departments could claim to
make a demonstrable contri-
bution to a firm’s bottom line. Overwhelmed by issues of legal
compliance, PA departments
had little time to notice research by R. E. Miles suggesting that
when managing their subor-
dinates managers preferred using principles of human relations
whereby the worker is made
to feel useful and important through constant communication,
but when being managed by
their superiors managers preferred that their superiors use
principles of human resources in
which great value is placed on their knowledge and experience
(Marciano, 1995). With this
research, the stage was set for the appearance of HRM.
From Personnel Administration to Strategic HRM
During the decade between 1970 and the early 1980s, HRM
gained wider acceptance in
management circles. Textbooks written by authors with
scholarly backgrounds all came to link
HRM with activities traditionally associated with PA. However,
it remained for thought leaders
in the 1980s to fully develop the concept of HRM. The most
influential was likely a book by
Beer, Spector, Lawrence, Mills, and Walton in 1984 entitled
Managing Human Assets in which

the authors defined HRM as all management decisions affecting
the relationship between
the organization and employees. The authors further identified
four areas of HRM policy: 1)
choices regarding mechanisms to influence employee behavior,
2) choices regarding human
resource flows, 3) choices regarding reward systems, 4) choices
regarding work systems.
In 1997, David Ulrich wrote the seminal work most likely
responsible for the latest evolution
of HRM: Strategic Human Resource Management. Abbreviated
as SHRM, strategic human
resource management can be defined as leveraging the linkages
between human resource
practices and organizational objectives to achieve a competitive
edge. Based on that defini-
tion, it follows that HRM serves a critical, strategic function,
and thus HR should be involved
in the design and implementation of organizational plans and
strategies. In HR Champions,
Ulrich argued that because the operational aspects of HRM are
easily outsourced, if the HRM
function could not define the value it creates and could not
implement metrics necessary
to measure its performance, it would become irrelevant to a
firm’s success. Today, SHRM’s
transformational aspects (i.e., strategic player, administrative
expert, employee champion, and
change agent) are argued to be central components in any plan
for organizational effective-
ness. As such, HRM is now perceived as having moved beyond
“putting out fires” to maintain-
ing a strategic focus on issues such human capital, culture, and
internal customers, all having
the potential to provide a firm with a competitive edge.

As mentioned earlier, day-to-day personnel administration is
one of the HR department’s roles
or functions in an organization. However, for the past two
decades, personnel administration
has received less study than the relationship between applied,
effective HRM practices and
organizational performance. HRM practices are effective when
they impact such employee
factors as skills, motivation, morale, absenteeism, retention,
productivity, and performance
quality. These factors can be measured and related to such
organizational goals and success
indicators as profitability, efficiency, and effectiveness. The
link between HR and organiza-
tional performance is at the core of SHRM.
1.3 The Strategic Value of HRM
Every organization has its own strategic plan; it includes the
organization’s long- and short-
term goals, and it also includes the procedures for deciding how
to allocate organizational
resources to achieve these goals. Strategic HRM provides the
link between strategic planning
and HRM by incorporating HRM strategies and policies to
achieve organizational goals while
meeting employees’ and stakeholders’ needs. In addition, these
practices can increase the
market value of an organization by as much as 50% when they
are consistently followed
(McFarlin, 2006). HR practices will be discussed in detail in the

following chapters.
Although on the surface this sounds impressive, not everyone is
convinced of the importance
of HRM to organizational success. Thomas Stewart (1996) in
Fortune magazine startled HR
professionals by labeling HRM as the last great organizational
bureaucracy and asking the
question, “Why not abolish it?” His reasoning? Most of what
HRM does can be outsourced
at a significant cost savings. Philip Vernon of Mercer Human
Resource Consulting (2004)
observed that nearly 60% of Chief Financial Officers (CFO)
viewed HRM as a cost center rather
than the much desired strategic partner. He concluded that HRM
is still primarily an admin-
istrative function devoting less than 15% of its time and
resources to strategic value-based
interventions (Vernon, 2004). Richard Vosburgh (2007), senior
vice-president of HR for the
Mirage Resorts, cited data suggesting that only slightly more
than 50% of HRM departments
report directly to the chief executive officer (CEO), and
Hammonds (2005) argued that if the
HR department reports to the chief financial officer rather than
the CEO (which is frequently
the case), there is little to suggest that the function is
considered a strategic business partner.
You can read Hammonds’ thought-provoking arguments in the
next web link.
Web Links
Why We Hate HR
http://www.fastcompany.com/53319/why-we-hate-hr

1. Is there more to HR than its predecessor, PA? Discuss the
arguments for and against this notion.
2. Based on your experience, to what extent do you
agree/disagree with Hammonds’s arguments?
Why?
3. In your opinion, who is responsible for the fact that HR has
not reached its full potential in
general? In your organization (if applicable)?
4. Based on what you have learned so far, how can HR act as a
strategic business partner in
general? In your organization?
5. After reading Hammonds’s article, do you think your
employer should increase, decrease or
outsource HR roles and functions? Why?
A 2004 study by the Society for Human Resource Management
found that the most fre-
quently cited barrier to career advancement for HR
professionals was the HRM function not
being held in high esteem at the executive level of organizations
(SHRM Global Forum, 2004).
Keith Hammonds (2005) did little to raise the esteem of most
HR professionals when he pub-
lished in Fast Track magazine an article entitled “Why We Hate
HR” in which he charged that
most human resource professionals are not interested in
business, and in business that is a
problem. He went on to argue that HR professionals pursue
efficiency at the expense of value.
If, in the value chain, adding value to a product delights and
satisfies the consumer such that

he or she is willing to pay a premium for the end product, what
HR activities contribute to
customer delight such as to justify a premium charge? Andrew
Lambert (2009), director of the
Corporate Business Forum, enlarged upon this issue by
observing that a primary reason HRM
fails as a strategic business partner is an inability to employ HR
metrics that have relevance to
http://www.fastcompany.com/53319/why-we-hate-hr
business success. So, where might the HRM professional focus
in advancing the proposition
of being a strategic business partner?
HRM’s Contribution to Motivation, Morale, Retention,
Productivity,
and Performance Quality
Managing employee productivity is a critical factor in both for-
profit and nonprofit organiza-
tions’ success. Higher productivity levels enable firms to offer
higher salaries and still be com-
petitive. Effective HRM practices have been shown to reduce
turnover, increase productivity,
and directly contribute to corporate financial performance
(Huselid, 1995). Thus, HRM is able
to contribute to overall organizational competitiveness through
improving employee retention
and productivity.
Effective HRM practices can also enhance employee motivation
and morale, which can in

turn positively affect organizational outcomes. For example,
effective job analysis and design
can balance the demands of a job with the resources provided to
accomplish its tasks, and
this balance has been shown to contribute to work engagement
(Schaufeli & Bakker, 2004).
The relationship between work engagement, job satisfaction,
and business unit outcomes is
supported by numerous studies (Harter, Schmidt, & Hayes,
2002). There are many other ways
in which HRM can contribute to employee motivation and
morale, such as providing a family-
friendly environment, sponsoring social events and activities,
and offering opportunities for
learning and career development (Collins & Allen, 2006;
Czinege, 2009).
HRM’s Contribution to Profitability, Efficiency, and
Effectiveness
Organizational effectiveness is the degree to which an
organization is able to meet its
goals and objectives. Organizational efficiency, on the other
hand, is the degree to which
an organization is able to maximize the productivity of given
resources, produce a given
amount of output with minimal resources, or accomplish both
tasks. HRM can contribute
to an organization’s efficiency and effectiveness by leveraging
human assets through their
selection, allocation, deployment, development, management,
and retention; in turn, these
contributions can improve an organization’s financial
performance (Kroll, 2006). Moreover,
employee motivation, morale, retention, productivity, and
performance all have a great influ-

ence on an organization’s efficiency and effectiveness. Because
HRM practices have positive
effects on such factors, applying these practices will also have a
significant influence on an
organization’s profitability.
Organizational effectiveness can be measured in many ways,
such as return on investment
(ROI), economic value added (EVA), and balanced scorecards.
Some of these approaches will
be introduced in subsequent chapters. At this point, however,
you should know that for each
of its activities, HR should be capable of presenting financial
justification.
Strategic HRM Perspectives
Strategic human resource management includes three schools of
thought: best practice, best
fit, and resource-based view (RBV; Paauwe, 2009).
Best Practice
As the name implies, best practice refers to the practice that
results in the best possible orga-
nizational performance. Numerous best practices in HR have
been demonstrated to relate to
organizational performance as it is measured by the market
value per employee of publicly
traded companies in the United States. (Huselid, 1995).
However, because there are numerous
studies about best practices, it is hard to tell which practices are

truly best (Becker & Gerhart,
1996). Based on Pfeffer’s (1994) work, seven practices are
claimed to be the most effective
for gaining competitive advantage through the workforce and
generating additional profits
by considering people as a top priority:
• offering employment security
• selective hiring
• extensive training
• sharing information
• self-managed teams
• company performance-based pay
• overcoming status differences
Best Fit
Best fit can also be referred to as the contingency approach to
HRM. The claim behind the
concept of best fit is that HRM practices are able to enhance
performance if a close fit exists
between the HRM practices and the firm’s strategy (Kochan &
Barocci, 1985). For example,
imagine that an organization seeks to develop innovative and
complex products that would
be best designed by cross-functional teams. An aligned HR
practice would then be to design
compensation and reward systems that recognize and promote
creativity, teamwork, and
collaboration, rather than individual productivity and
competition among employees. Many

theories have been developed concerning this type of vertical
integration. For example, con-
figuration models offer a two-step approach. The first step is
the study and analysis of the
organization’s strategy, and the second step is the establishment
of corresponding HR policies
and activities that best fit the results of the analysis. The
downside of this approach is that it
assumes the organization’s strategy always exists, which is not
always the case for firms that
are in their developmental stages (Delery & Doty, 1996).
Resource-Based View (RBV)
A resource-based view follows an inside-out approach by giving
special attention to the
strategic internal resources available to a company. In addition,
this view focuses on how
the application of these valuable resources contributes to
competitive advantage. Tangible
and intangible resources by themselves do not confer any
benefit to the firm unless they are
effectively used, at which point they are able to provide the
firm with competencies. In order
for the internal resources of a company to be of great
significance, they have to be valuable,
rare, and not capable of being imitated or substituted.
Accordingly, the effective use of such
strategic and unique resources will enable the company to
acquire a sustainable competitive
advantage (Prahalad & Hamel, 1990).
According to the RBV school of thought, the best approach to
strategic HRM is therefore to
create and maintain human assets that are also valuable, rare,
inimitable, and nonsubstitut-
able. These human assets can then serve as a sustainable source

of competitive advantage.
For example, an organization that buys into RBV would develop
proprietary selection tools
and training programs for its employees, require their
employees to maintain secrecy about
pay and benefits, and take extra measures to avoid knowledge
sharing in their industry so that
their competitors cannot imitate their practices.
What Do HR Managers Do? Chapter 1
Of course, each of those three schools of thought has its merits
that should be considered in
conjunction with other approaches. For example, the
contingency best fit approach is more
compatible with industries where change is fast and
unpredictable. These industries require
continual reconsideration and reconfiguration of what
constitutes the mix of best practices
utilized by the organization. Moreover, RBV may have limited
use in industries where entry
and exit costs are low for competitors—for example, where
technology is readily accessible,
limited up-front capital investments are needed, or skilled labor
is in abundant supply. Many
home-based businesses such as childcare, lawn care,
bookkeeping, and housecleaning fall in
that category.
1.4 What Do HR Managers Do?
HR and line management have one common goal, which is to
bring capable human assets into
the organization who can perform the duties and responsibilities
that will keep the organiza-

tion functional and competitive in the market. HR management
and line management must
work together at all times to ensure that all their common
deliverables are successfully met.
However, HR management has many unique functions and tasks.
These are the main roles of
the HR manager:
• providing guidance and advice
• providing service
• creating and implementing policies
• advocating for employees
Provide Guidance and Advice
HRM directly contributes to defining and shaping the ethical
culture within an organization;
hence, HRM governs the behavior of executives, managers, and
employees. This role is of
crucial significance since organizations achieve their long-term
objectives and goals through
setting clear ethical standards. Owing to their extensive
knowledge of the internal employ-
ment affairs of the organization, HR managers provide crucial
guidance and advice to execu-
tives, managers, and supervisors in critical areas such as
policies, labor agreements, past
practices, ethics, corporate control, and employment
requirements. HR managers also consult
with other managers and executives based on their extensive
knowledge of external tenden-
cies and such market movements as economic and employment
details, as well as updates in

legal and regulatory issues. For instance, HR managers often
provide good support and advice
pertaining to vague and obscure ethical areas where it is hard
for employees and other man-
agers to determine whether an issue can safely be deemed right
or wrong.
Organizations with high levels of integrity are favorably
recognized and respected in the mar-
ket by their customers, employees, and other organizations—
recognition and respect which,
in turn, translate into higher profits. More attention has been
drawn lately to the importance
of creating strong ethical cultures within an organization and
raising its levels of integrity,
especially after numerous financial scandals surfaced in the past
few years in many organiza-
tions around the world (Cherenson, 2006).
HR managers have the vital role of policing, monitoring, and
establishing control within the
organization to ensure that top executives and managers do not
abuse their authority and
that all employees adhere to company policies and norms. This
function of HR managers
What Do HR Managers Do? Chapter 1
is commonly known as corporate governance. The term
describes the relationship between managers and share-
holders in terms of shared corporate rights and responsi-
bilities. Another very important task of every HR manager
is to provide guidance and advice in matters of employee
compensation and appraisals based on past evaluations and

performance details.
Provide Service
The service role of HR managers is to successfully plan and
execute all the activities related to employee selection,
scheduled testing, training and development, and listening
and responding to employees’ concerns and complaints.
This fundamental area of HR management involves a myriad
of skills and technical expertise. HR managers must establish
and build influential HR systems and programs that effec-
tively support and serve these purposes.
Other executives, managers, and supervisors must take the
initiative of positively supporting the HR manager in accom-
plishing this service role. They should believe in the critical
function of HR in increasing the
ultimate productivity and efficiency of the organization, and
they should act on this belief
by collaborating with HR and following the policies and
procedures pertinent for HRM in
their organizations. In addition, they should neither create
hurdles that negatively impact the
organization nor circumvent the HR department by doing things
their way. To help an orga-
nization’s managers achieve these goals, the HR manager must
have the skill to take a step
back and observe problematic scenarios from the managers’
points of view. An even more
challenging skill that HR managers develop over time and
through experience is to find tactful
ways to communicate their opinions and advice to managers.
Create and Implement Policies
HR managers must foresee potential problems, identify

recurring problems, and use past
experience to create, update, modify, and enforce company
policies and norms. All policy
drafts and phases are proposed to executive managers for
revisions and approvals before the
drafts and phases can be issued or deemed active. To ensure
absolute compliance and confor-
mance, HR management must enforce established policies,
norms, procedures, and practices,
and then follow this enforcement with extensive monitoring and
control of line managers and
employees. HR managers also serve to elucidate enforced
policies to managers and employ-
ees, ensuring adequate interpretation and application of all
rules.
Advocate for Employees
HR managers are the employees’ representatives within
organizations in more or less the
same manner that attorneys represent citizens in the courthouse.
HR managers are there-
fore often referred to as the “employee advocates.” They listen
to, consider, and evaluate
employees—assisting them with their needs, concerns and
issues. HR managers also bring
employees’ cases to their direct managers or to other decision
makers within the organiza-
tion, pleading employees’ needs. In other words, HR managers
are the voice of employees to
© Brankica Tekic/iStock/Thinkstock
▲▲ HR managers provide crucial guidance and
advice to executives and managers about poli-
cies concerning labor agreements, ethics, cor-

porate control, and employee requirements.
What Are the Responsibilities of the HR Department? Chapter 1
executives and line managers. This advocating role serves to
highlight and convey employee
interests and, furthermore, align them with the interests of the
organization as a whole.
Effective employee relations are the backbone of a successful
organization: they preserve its
most valuable asset—the human asset—and hence promote the
organization’s survival and
competitiveness in the market (Mathis & Jackson, 2007).
However, the role of employee advocate is not without
dissenters. Edwin Lawler III, director
of the University of Southern California’s Center for Effective
Organizations, observed that
HRM professionals should abandon (at least temporarily) the
employee advocate role because
keeping a focus on being an employee advocate makes it
difficult to be seen as a strategic
business partner (Laabs, 1998). Reilly and Williams (2006)
stated that as long as HR is part
of the management team it cannot serve as a champion or
advocate for employees. That is,
although HRM professionals must be experts on what attracts
people to the organization,
what keeps them there, and what motivates them to be
productive, being an employee advo-
cate or champion should not be part of the role. Why? Because
when all is said and done, in
order to be a strategic business partner, HRM must perform a
business function.

Although questions may be raised about the assertion that HR
must steer clear from employee
advocacy in order to be a strategic business partner, this view
does have some merit and war-
rants serious consideration. Perhaps this is the point that Lawler
(2005) made in suggesting
that as a business partner HRM should be providing service by
designing and implementing
HR systems that resolve business problems and exert influence
across the organization. If HR
can align its employee advocacy role with effective solutions to
business problems, then this
role can further enhance its contribution as a strategic business
partner.
Vosburgh (2007) may have given greater definition to this
charge by noting that at the inter-
section between day-to-day HR operations and employees,
employee advocacy likely is dem-
onstrated through specialized knowledge and skill in employee
relations, labor relations,
employee health and safety, diversity, and EEO compliance. For
example, promoting well-
ness and equal employment opportunities through effectively
designed, implemented, and
rigorously evaluated HR interventions and programs can have a
demonstrable impact on the
organization’s strategic outcomes while serving the needs of its
employees as well. Similarly,
when HR utilizes valid and reliable selection tools to optimize
the fit between selected job
candidates and the roles they are hired to fill, it can help align
the organization’s strategic
goals with those of its employees.

1.5 What Are the Responsibilities of the HR
Department?
As the name indicates, the human resource department is
responsible for the management of
the organization’s employee-related matters. The HR
department attracts, hires, and retains
the right employees, and it makes sure they perform according
to expectations. The HR
department also establishes organizational goals and plans as
they relate to human assets.
The HR department’s major everyday tasks are
• planning and alignment
• staffing
• preparing compensation offers
The following sections on these tasks feature detailed
discussions of each of the HR depart-
ment’s roles, pointing out the positives and negatives as well as
strategies to help increase a
given department’s effectiveness (Handy, 1999; Hyde, 2004).
Planning and Alignment
One of the HR department’s most important roles is planning
for the human side of the orga-
nization’s operations. The department has to accurately align
the number of employees the

organization needs to be capable of performing its activities and
operations efficiently. Having
more than the required number of staff members will harm the
company by drawing scarce
financial resources away from other important functions and
uses. On the other hand, hav-
ing an insufficient number of employees means that existing
staff members will be stretched
beyond their limits, lose motivation due to the extended hours
of work, and eventually experi-
ence burnout, which can be detrimental for productivity and
well-being (Schaufeli & Bakker,
2004). It can also lead to counterproductive work behaviors and
voluntary turnover.
With no clear direction, employees will not be able to perform
effectively. Two of the roles
of the HR department are therefore to participate in planning for
future organizational objec-
tives and to act as a liaison to make sure that staff members
understand these objectives.
These roles enable employees to embrace a purpose-oriented
approach while performing
their duties. Employees and staff members who do not have a
clear understanding of the
organizational objectives cannot contribute effectively to
organizational success.
Moreover, since performance is a function of time, it is in the
best interest of the HR depart-
ment to actively work towards promoting and sustaining a better
use of time among all other
departments of the organization. In other words, time can be
regarded as an asset that must
be utilized efficiently to maximize the productivity of the
organization and, ultimately, thereby

achieve set targets and goals (Harold, 2003). The HR
department can achieve these results by
the active planning and proper scheduling of activities and by
ensuring that information flows
swiftly though proper channels, which provides better support
and coordination between
departments in HR-related matters.
There are many ways the HR department
can align the organization’s strategic
objectives and needs with the number,
quality, goals, and time allocation of its
human resources. For example, this align-
ment can be accomplished through pro-
active onboarding, training, education,
and development. In onboarding, new
employees receive various forms of orien-
tation to enhance their understanding of
the organization's culture and familiarize
them with what the new job entails so
that they can perform their duties effec-
tively. Training emphasizes current job
requirements, and it is evaluated against
these requirements. In contrast, educa-
tion focuses not on current job require-
ments but on requirements or responsibilities for positions that
an employee may hold in the
future. Education is evaluated against these future requirements.
Finally, development involves
Sneksy/iStock/Thinkstock
▲▲ Onboarding helps new employees get acquainted with the
orga-
nization’s functions. Training and development are crucial to be
able

to adapt to the ever-changing work environment.
attention to current and future job requirements that are
difficult to evaluate and assess
(Garavan, Costine, & Heraty, 1995; Harrison, 2005). Just
because an employee has a great
resume or did well in an interview does not mean he or she will
be able to perform organi-
zational activities effectively. In an ever-changing environment,
training and development are
very important to an organization’s ability to adapt to change.
Adapting to change is crucial in
order to compete in the market. As illustrated by the opening
case, training and development
can also be used to inspire employees, improve their attitudes,
and energize them when they
must perform under stress. It is the responsibility of the HR
department to set the timing and
place of training, decide who will deliver it, and decide who
will participate in it.
Accountability is another very important factor that the HR
department can use in its align-
ment activities. Accountability ensures that employees
efficiently fulfill their set goals and
objectives in the allocated time frame, rather than routinely
reporting to work and performing
some daily activities with no real sense of connection to the
work they do. Designing effective
performance management systems can help in these alignment
activities—maintaining clear
communication and holding employees accountable for specific,

measurable outcomes.
Staffing
One of the critical tasks of the HR department is staffing the
organization. Staffing includes
recruiting and selecting the right employees and then placing
them in jobs that fit their per-
sonalities, capabilities, and future potential. The HR department
has to be selective while
recruiting, and it must make sure that only the most qualified,
skilled employees are chosen—
employees who are a good fit for the company’s positions and
are able to contribute to the
company’s goals. The department must then evaluate
prospective employees’ abilities and
competencies against the company’s needs. When the HR
department is able to execute this
task properly, the organization will be better able to achieve its
goals and objectives.
There is more than one way to facilitate the process of effective
staffing. Conducting psycho-
logical and physical assessments of abilities, skills, and
personality traits is one option. These
assessments help the company choose employees with the
necessary qualifications. Another
option is interviewing applicants. The purpose of the interview
is to ask applicants questions
that reveal their decision-making skills and their reactions to
specific situations. These and
numerous other techniques for the effective recruitment and
selection of employees are dis-
cussed in detail in Chapters 4 and 5.
Preparing Compensation Offers

In order for employees to be motivated, their efforts need to be
adequately rewarded. Offering
attractive compensation packages is one way organizations
increase employee motivation.
When employees know that they will be rewarded for their
actions, this knowledge pushes
them to go beyond their comfort zones. Compensation packages
can come in the form of
pay, benefits, and such incentives as days off, bonuses, equities,
awards, raises, flexible work-
ing hours, or promotions and opportunities for career
development. Effective compensation
packages can increase retention rates by boosting employee
satisfaction. This boost can also
have a positive impact on employee loyalty and thus increase
the firm’s stability and security
(Handy, 1999).
Compensation packages may cause unexpected problems. For
example, an organization might
try to reward employees and managers by offering them
financial incentives while it is suffering
financial losses. Organizations have to pay out their contractual
obligations to their employees.
The Legal Environment Chapter 1
In a well-publicized instance, Robert L. Nardelli, former chief
executive of Home Depot, was
asked to resign due to his failure to improve profitability and
stock prices. Yet Home Depot still
had to pay him $210 million in compensation that he was
contractually and legally entitled to.

This is one way that compensation packages sometimes hurt
organizations (Barbaro, 2007).
1.6 The Legal Environment
The HRM legal environment includes numerous laws and
regulations that protect against
discrimination based on race, sex, color, religion, or national
origin. Other laws relate to plant
closures, mergers, and acquisitions. Laws and regulations have
a great influence on person-
nel decisions. Throughout this textbook, you will learn about
the many laws that govern HR
processes.
The number of HR-related federal lawsuits has been increasing
in recent years and is expected
to continue to increase. The number of Equal Employment
Opportunity (EEO) laws and regula-
tions is also expected to increase. Defending against legislative
violations can require substan-
tial organizational time, energy, and money.
Unions and Labor Relations
The term labor relations refers to the relationship between the
organization’s management
and a labor union representing a set of employees in a
bargaining unit. Employee relations
refers to the way in which HR managers work with employees
in a nonunion environment.
There are three primary reasons why employees join unions.
The first reason can be employee
dissatisfaction and discomfort with the existing work
environment—including working condi-
tions, compensation systems, and management and supervision
methods. Another motiva-

tion may be an employee’s personal need to make a difference
in the work environment or
the industry as a whole. Finally, employees also join unions
because they recognize unions’
prospective advantages. HR managers must work hard to listen
to and interpret employee
complaints; HR managers must also create and develop
strategies to rectify complaints in
order to create cooperative, rather than antagonistic, relations
with unions.
Labor relations are the relationship between
management and unionized workers regarding
employment conditions, as discussed above.
The National Labor Relations Act (NLRA)
addresses issues such as employee representa-
tion rights, interfering with union affairs, and
discrimination in employment. Again, HR man-
agers must work toward employee satisfaction
and claim resolution to preserve the integrity of
the organization (Kochan, 1980).
Health and Safety Regulations
Industry-related accidents adversely impact the
US economy; with more and more job-related
injuries, occupational illnesses, and fatalities
reported every year, it is evident that orga-
nizations must impose and strictly practice a
Jim West/age fotostock/SuperStock
▲▲ Labor unions represent a group of employees in bargain-
ing between the employees and their organization’s man-
agement. Here, UAW President Bob King (left) shakes hands
with Ford CEO Alan Mulally (right) before open contract

negotiations.
The HRM Process Chapter 1
stringent code for health and safety. HR managers have the role
of creating programs to
proactively mitigate job-related accidents.
Some of the techniques that HR uses to avoid future health and
safety issues include matching
employee personalities with their job descriptions and
environment during the hiring process,
conducting on-the-job safety awareness and training programs
(Budd, 1996), rewarding safe
behavior with incentives (Mace, 1988), and distributing
guidelines and handbooks that detail
safety and regulatory policies.
1.7 The HRM Process
The HRM process consists of eight practices or activities whose
purposes are to attract, retain,
and motivate qualified employees. Using such practices results
in greater profitability, low rates
of employee turnover, high-quality products, reduced
production costs, and alignment of HR
with an organization’s strategic goals (Schuler & MacMillan,
1984). Below is a brief summary
of each of these eight practices, which will be discussed in
greater detail in Chapters 2 through
10. Figure 1.1 also summarizes the HRM process and serves as
an outline for the book.
f01.01_OMM618.ai

Strategic HR
planning
Perfomance
appraisal/
management
Job analysis
and job design
Bene�ts and
bene�ts
administration
Selection and
job �t
Training and
development
Attraction and
recruitment of
talent
Compensation
Figure 1.1: The strategic HRM process
Strategic HR planning

To maintain business competitiveness, managers forecast future
labor supply and demand. An
organization has to make sure that it has access to the
knowledge, skills, and abilities it needs
at the times these human capacities are needed. These needs can
then be fulfilled through
various means such as employment, contracting out,
partnerships, and other means. One of
the activities of HR strategic planning is that it takes into
account the risk that having an insuf-
ficient or unqualified workforce poses to the organization’s
competitive advantage.
Another strategic HR activity is retaining a well-qualified
workforce. Strategic planning con-
siders meeting resource demands, examining and evaluating
resource deployment, estimat-
ing capacity, and also recognizing and handling human talent to
satisfy capacity needs. HR
planning is typically tied to the recruiting function and includes
such topics as projected turn-
over, succession planning, career planning. Strategic HR
planning will be discussed in detail in
Chapter 2.
Job Analysis and Job Design
The term job analysis refers to providing detailed job
descriptions and specifications. It also
includes the collection of job information and the systematic
analysis of that information.
The type of information gathered in a job analysis includes job
context, content, and require-
ments. Job analysis can be used for recruitment and selection
procedures, performance evalu-
ation, training, compensation, and many other purposes. Job

analysis is critical for hiring the
right workforce for specific jobs (Cascio & Aguinis, 2005).
The term job design refers to identifying the elements of a job
and arranging its tasks and
responsibilities for the purpose of creating a productive work
unit. Moreover, job design
involves studying what a job entails as well as how it affects
employees. Job design can help
alleviate many of the problems companies face, such as
employee performance, job satisfac-
tion, grievances, absenteeism, and physical and mental health
(Grant, Fried, & Juillerat (2011).
Job design and job analysis will be addressed in detail in
Chapter 4, but due to the extensive
labor laws governing job analysis, job design, and other HR
functions, Chapter 3 covers the
legal environment first, before delving into these HR functions.
Attracting and Recruiting Talent
The recruitment of talent entails three main processes:
attracting, screening, and selecting
qualified potential employees for further consideration. All
three processes can be done either
in-house or outsourced to recruitment agencies. The first step in
the recruiting process is
advertising job offers. Advertising is followed by screening, for
which recruiters use resumes,
application forms, initial interviews, tests, and other screening
tools to identify qualified can-
didates. Then a candidate is selected for further consideration
based on how well he or she
did during the screening process. Attraction and recruitment of
talent will be discussed in
detail in Chapter 5.

Selection and Job Fit
Selection is the method through which organizations choose
their most valuable asset—people
—to fill jobs within the organization with the right, qualified
individuals. Selection is one of
the most crucial processes for an organization: it is only
through qualified employees that
corporate goals and objectives are fulfilled, success is attained,
and the organization gains a
competitive edge in the market.
Employees can be managed much more easily in the long term,
and many problems can be
avoided, if enough time, effort, and planning are initially
invested in recruitment and selec-
tion. Difficulties will be eventually faced with the selected
employees if the selection process
is not successfully executed based on adequate planning, job
analysis, and job design. These
difficulties may not be possible to rectify, even with extensive
training. Clearly, the selection
process affects the well-being of the organization and,
ultimately, its future.
However, the process of employee selection is successful only
if the employees’ knowledge,
skills, and abilities (or KSAs for short) are carefully matched
with the characteristics of the
jobs they are assigned to fill. Employees who are successful in

their current positions are the
best candidates to help identify the most significant KSA
requirements for their jobs. A good
fit between the nature of the job and the employee’s personality,
interpersonal skills, and
academic and technical knowledge is critical toward sustaining
the organization’s prosperity.
Selection and job fit will be discussed in more detail in Chapter
6.
Performance Appraisal/Management
Performance management is a continuous process of measuring
and developing performance
through linking each employee’s performance to the
organization’s overall mission and goals
(Aguinis, 2005). Performance appraisal is the practice of rating
and evaluating the accom-
plishments of employees, relative to set goals and objectives,
and rewarding the employees
accordingly. Rating the individual employee is equivalent to
evaluating the greater objectives
of the organization as a whole. Accordingly, performance
appraisal is of crucial importance to
any organization since it impacts the strategic plan of the entire
organization.
Performance appraisals can be conducted through a variety of
approaches and methodolo-
gies. These methods include
• employees evaluating themselves
• supervisors evaluating their employees
• employees evaluating their supervisors

• team members evaluating one another
• external specialized organizations or consultants being
contracted for the purpose of
rating employees
In most cases, performance appraisals are conducted using a
combination of these approaches
in order to formulate the most informative and accurate
assessments.
The performance-appraisal process takes place in a series of six
consecutive phases or steps:
1. Identify, highlight, and clearly define the performance levels
that employees are expected
to attain based both on their jobs and responsibilities and on the
organizational strategic
plan as a whole.
2. Communicate the defined performance metrics to employees
while sustaining, encour-
aging, and promoting superior performance levels within the
organization, in order to
achieve the set objectives in the allocated time frame.
3. Measure the actual performance of
each employee, and then evaluate it
based on the individually set targets
and goals. This measurement and
evaluation determine the extent to

which each of the set objectives has
been accomplished.
4. Ensure that employee performance is
aligned with the set goals and organi-
zational objectives by communicating
employee performance back to the
employee at regular intervals.
5. Provide any assistance needed to get
employees back on track and ensure
that all organizational targets are met
after employees have been informed
where they stand relative to their set
goals and objectives.
6. Reward employees based on the extent of their
accomplishment of their set goals and
objectives.
Performance appraisal/management will be discussed in detail
in Chapter 7.
Training and Development
As mentioned earlier, training and development involve four
different activities: onboard-
ing, training, education, and development. The purpose of these
activities is to enhance the
performance of individual employees and to enhance group
performance in an organiza-
tional setting. Training and development are given many names
in various organizations and
industries, including learning and development, human resource
development, and employee
development. Training and development will be discussed in

Compensation
Employee compensation is critical for the satisfaction,
motivation, and preservation of the
workforce. Organizations spend a great deal of time, money,
and effort every year on plan-
ning, creating, implementing, and successfully executing
employee compensation strategies.
Accordingly, it is vitally important for HR managers and other
organizational decision makers
to carefully examine the organization’s targets and objectives.
A number of significant decisions have to be made to create
compensation and reward sys-
tems based on what the organization is attempting to
accomplish. For instance, a compensa-
tion plan has to satisfy and fully comply with all legal rules and
regulations, which may vary
between different work locations. A compensation plan must
also be cost effective for the
organization; otherwise it will become a burden. Most
importantly, a compensation plan must
yield a considerable performance advantage for the organization
through attracting, motivat-
ing, and retaining high performers, and it must align the
performance of those employees
with the goals and objectives of the organization. In other
words, a compensation plan has
© Aleksandar Stojanov/iStock/Thinkstock
▲▲ Performance evaluation of employees is vital because it
impacts
an organization’s strategic plan.

to identify, distinguish, and reward employees whose efforts
and talents have successfully
accomplished the goals, objectives, and performance
expectations of their roles in ways that
directly contribute to organizational goals, objectives, and
overall competitiveness. The com-
pensation plan should motivate these employees to remain
within the organization.
An organization can use many types of compensation systems to
reward people for fulfilling
their set targets. Compensation systems include base pay,
variable pay, and incentive systems.
Base pay, as the name implies, is the basic compensation that an
employee receives from an
organization in exchange for his or her basic services—usually
in the form of a wage or salary
or a combination of the two, depending on the nature of the job.
Waged employees receive
compensation based on the number of hours worked over a
predetermined period of time,
as well as additional overtime pay for every extra hour worked.
On the other hand, salaried
employees receive a fixed compensation over certain periods of
time regardless of the number
of hours invested in work.
Variable pay is compensation that varies directly with
measurable aspects of employee per-
formance. The most commonly used variable pay system in
organizations is the sales com-

mission, in which a sales person’s compensation is entirely or
mostly based on the number of
units sold or the value of sales they generated within a
previously specified period of time.
Variable pay can also be used in conjunction with base pay.
An incentive compensation system is compensation connected
to individual, team, and orga-
nizational performance. The most common variable-pay systems
are performance bonuses,
stock options, and high-level executive compensation for top
executive managers. Incentive
systems are designed to reward employees beyond their normal
expectations for their excel-
lence in performing above and beyond the immediate goals and
objectives of their roles. The
concept behind incentive systems is the fact that some
employees perform much better than
others, and such employees must be recognized and rewarded
for their performance with
extra compensation. Many companies tie employee
compensation to performance in order
to motivate employees to exceed performance expectations,
ultimately contributing to the
organization’s success. Compensation will be discussed in
Benefits and Benefits Administration
Benefits are an essential part of the total compensation package.
They are considered a
supplement to salaries and wages. Benefits cost companies a
great deal, but they also give
employers an advantage. Benefits programs have a positive
effect on employee attraction,
motivation, and work satisfaction. Furthermore, they help

companies meet employee health
and security requirements, retain a quality workforce, and
sustain competitive advantage
(Cascio & Boudreau, 2011).
In general, nearly a quarter of the benefits package offered to
full-time employees is required
by law. The rest is offered voluntarily by employers. The
legally required benefits include
employer contribution to Social Security taxes, unemployment
insurance, workers’ compen-
sation insurance, and state disability insurance. The
contributions of both employers and
employees to Social Security taxes are used in the payment of
retirement, disability, and sur-
vivors’ benefits.
It may come as a surprise that health, dental, vision, life,
supplemental disability insurance,
and paid time off for vacations and illness are all voluntary
benefits that are not required by
law, even for full-time employees. However, organizations often
offer these benefits. Many
organizations offer numerous additional benefits such as
exercise facilities, childcare, elder
care, employee-assistance programs, and tuition reimbursement.
Some organizations even
offer unique benefits such as car detailing, oil changes, laundry,
dry cleaning, and a variety
of concierge services. Benefits can cost an organization up to
75% of an employee’s salary,

making them the second-largest expense item for many
organizations after payroll (Cascio &
Boudreau, 2011).
Companies should have a sound benefit program in order to gain
a human-based competitive
advantage. Two important factors must be considered for this to
happen. First, the benefit
program has to be established according to certain objectives.
These objectives should be
aligned with the organizational policies and values. Second, the
program should be afford-
able, a consideration that requires effective management.
Benefits will be discussed in detail
in Chapter 10.
A M O M E N T I N T H E L I F E O F A N H R M A N A
G E R
Every Manager is an HR Manager
John is a production facility manager. When he graduated years
ago with a degree in industrial
engineering, he landed a job as a production engineer at a
midsize production facility. The job has
been great—great pay, great benefits, great co-workers—and
life was good. Due to his knowledge,
diligence, and hard work, he has recently been offered a
promotion. The opportunity was extremely
exciting to him—more pay, better hours, and he got to manage
the facility!
John’s first few weeks in management were calm and
uneventful—he had more scheduling and
logistical responsibilities, which he had been trained for when
he was the technical lead for several

projects in the past. He also had less involvement in day-to-day
production problems, which he did
not really miss at all. Then came a call from the HR department
at the head office.
The HR manager, Maria, wanted to know when John would be
sending his “quarterly workforce
status and projections report,” and whether he needed help in
preparing it since it was his first such
report. It turned out that every one of the organization’s 200
facility managers across the nation
needed to turn in their reports, and the deadline was in two
weeks!
John was baffled! He knew the facility inside out. He knew the
answer to any technical question
about any product, machine, or piece of equipment, and he
could give you the answer on the spot.
He had no problem presenting a quarterly production status and
projections report off the top of
his head. He knew the status and progress of every project and
order the facility handled, down to
the minute, thanks to his dedication and to the facility’s state-
of-the-art information system. But he
didn’t know what he needed for a quarterly workforce status and
projections report. Maybe looking
at past reports could help, he thought—so he started digging
into the former manager’s files.
John breathed a sigh of relief when he found every quarterly
workforce status and projections
report for the last five years in a designated folder on the
facility’s database system. However, his
relief was short-lived. He started browsing through the table of
contents:

• performance appraisal results
• employee morale assessments and recommendations
• health and safety checklists
(continued)
• notes from interviews with job candidates and
recommendations for acceptance or rejection
• labor market analyses
• workforce forecasts including turnover projections
• training and development needs assessments
• pay-raise and promotion recommendations
• succession action plans
And there were even referrals to an employee-assistance
program for alcohol and drug abuse!
“Drugs?! On my facility?” John said. “How can that be, and
how should I know if one of my work-
ers is on drugs?” he asked. “It could take months to find the
data I need for this report, assuming
that it exists anywhere in the company database.”
However, taking comfort in the fact that Maria had offered to
help him with the report, he figured
that she’d probably have answers to his many questions. After
all, she was the HR manager. Surely,

she’d know who was due for a raise or a promotion, what the
job market trends were, what the rate
of turnover should be, and who would be sent for training next
quarter. So John called Maria back.
Here’s how the conversation went.
John: “Hi, Maria. This is John from the Lake Manawa facility. I
think I’ll take you up on your offer to
help me with my first quarterly workforce status and projections
report.”
Maria: “Sure, John. No problem. What do you need?”
John: “I need the performance appraisal results from my
facility. Where can I find those on the
database?”
Maria: “We don’t have any from your facility for the last
quarter, John. Apparently the last manager
did not conduct these performance appraisals, or at least did not
enter them in the system. You will
need to fill out the appraisal forms for your employees as soon
as possible. Please meet with each of
your employees to give them feedback on their performance,
and set goals with them for the next
quarter.”
John: “But I know those guys really well, Maria. I’ve worked
with them for years. I interact with
them on a daily basis. They know what they’re doing. We’re
extremely busy here; we don’t need
to waste time on unnecessary meetings. I can see why the last
manager did not see the need for
formal appraisals. He was always available and made it a point
to communicate with us on a regular
basis. Why can’t we just keep doing that?”

Maria: “John, formal performance appraisal is extremely
important. You can’t assume that your
employees always know what you want them to do. How will
they know the facility’s goals and
priorities if you don’t communicate those to them? How will
they know how their roles fit within
the overall structure, and how they can contribute to the success
of the organization? You can’t
keep them motivated if you’re just making them do the day-to-
day work while keeping them in the
dark about the big picture. Besides, you do have a couple of low
performers in your facility that the
previous manager has placed on probation, and your facility is
in a minority-dense community. We
can’t let anyone go unless we have the performance appraisals
to back it up, or we may get sued for
discrimination.”
John: “OK. I guess I’ll have to read the electronic bulletin
board announcements more carefully. I
always glossed over the admin section. I’ll get on this, get those
forms filled out, and have those
appraisal meetings. I still have some questions about several
other issues, though.”
Maria: “Sure, John. Fire away.”
John: “I was able to locate the results of the employee morale
survey on the database, but it was
all anonymous. Can you please give me the names of all the
employees whose morale scores were

lower than 60%?”
Maria: “No way! That’s a confidential survey.”
John: “But how am I supposed to improve morale if I don’t
know who has problems to start with?”
Maria: “You need to look for trends in the data you have, and
run some analyses using the HRM
software.”
John: “But doesn’t the company have some plans to improve
morale?”
Maria: “Nothing across the board. That’s delegated to the
facility managers because every facility is
different. You need to design your own plans and propose a
budget for them—which, by the way,
are due by the end of the month.”
John: “Oh, great. One more thing to do.”
Maria: “Don’t worry, John. You’ll get a lot of input in your
performance appraisal sessions with your
workers on how to improve morale. Just listen carefully. This is
where all the great ideas are gener-
ated anyway.”
John: “Yeah, right. I’ll see what I can do. What about the labor
market analysis, workforce forecasts,
and turnover projections? Do you have the data for that
somewhere?”
Maria: “No, John. This is about your local labor market. I can
give you some great websites that will
help you with your environmental scanning, though.”

John: “Environmental what? Have the neighbors complained
about the exhaust pipes again? We
tested them many times, and they’re perfectly safe and up to
standard. Besides, we don’t even own
a scanner in this facility. Do I need to put in a purchase order
for one?”
Maria: “There’s nothing to physically scan, John, and this has
nothing to do with the physical envi-
ronment. This is about analyzing the trends that can affect the
supply and demand of labor in your
job market—technological trends, social trends, economic
trends, legal trends—things like that.”
John: “I see. But how do I make projections based on that kind
of data? There are a lot of changes
and uncertainties all the time. For example, there’s no way
anyone can accurately project something
like turnover. People leave organizations for all kinds of
reasons. How am I supposed to guess who’ll
leave and when they’ll leave?
Maria: “Welcome to the world of HR, John. I deal with those
issues every day.”
John: “But you’re the HR manager, Maria. You chose this
career. I’m not in HR: I’m a production
facility manager. This is completely out of my league.”
Maria: “Every manager is an HR manager, John. The HR
department is here to support you and
ensure that the company’s human assets are selected, deployed,
and managed efficiently, effec-
tively, and fairly. But you are ultimately their direct manager.
You’re the one dealing with them

every day. And you’re in the best position to monitor and
develop their performance and their
motivation.”
John: “OK, Maria. Thanks for your help. I’ll get started on this
and may call you back with more
questions over the next few days.”
Maria: “No problem, John. And while we’re at it, I’m sending
you the resumes of the shortlisted
applicants for the production foreman position. Please let me
know who you want to interview
(continued)
Opportunities, Challenges, and Recent Trends in HRM Chapter
1
1.8 Opportunities, Challenges, and Recent Trends
in HRM
The current business environment presents organizations with
numerous challenges. For
example, we are operating in a global economy in which many
cultures, languages, cur-
rencies, legal systems, and political conditions must interact.
Adding to the complexity and
uncertainty is the dizzying rate of change across those various
dimensions and the need for
organizations to adapt quickly and effectively to numerous
concurrent changes in order to
survive. These changes may be technological, competitive,
economic, or legal. Moreover, ethi-
cal managers in socially responsible organizations are faced

with additional dilemmas as they
attempt to adapt to change and still remain competitive in a cut-
throat economy—all while
maintaining their values and standards. This section presents an
overview of some of these
challenges and offers ways in which strategic human resource
management can help leverage
and what times you’re available. Also make sure you use the
updated rating form and interview
questions.”
John: “I had no idea we have an opening. Nobody left from my
facility!”
Maria: “We don’t only hire to replace those who leave, John,
and if we wait until someone leaves,
it’s going to be too late. The company’s goal this year is 8%
growth, and last quarter’s projections
from your facility showed that you expect a 3% increase in
sales. Someone has to make all that
stuff, you know.”
John: “So how many people do I need to hire?”
Maria: “Two foremen, each with his or her full team. Your
facility has enough slack capacity to
accommodate that production increase, I’m assuming.”
John: “Finally a question I can answer. Yes, Maria, we have the
capacity. I’ll get back to you on
which resumes I like most.”
Maria: “Oh, no, John. This isn’t about who you like and who
you don’t. You can’t do this subjec-
tively. You can get us in legal trouble if you choose applicants

based on your feelings about them.
There are clear guidelines and an objective process in place to
help you select candidates based on
essential job functions. You even have to use the approved list
of questions in the interview, or some
of your questions may be discriminatory. I’d better sign you up
for the HR law training. It’s required
before you can interview any applicants.”
John: “HR law training? Don’t we have lawyers at the head
office for that?”
Maria: “Of course we do, but in the eyes of the law, you’re a
representative of the company, John. If
you say or do something that’s discriminatory or harassing to
others, even if it’s unintentional, it can
easily expose the organization to litigation and compromise our
reputation. Remember, John: every
manager is an HR manager.”
1. To what extent do you agree that every manager is an HR
manager?
2. Which people-related responsibilities should be performed by
the HR department? Why?
3. Which people-related responsibilities should be performed by
line managers? Why?
4. Where can John obtain the data he needs to complete the
quarterly workforce status and projec-
tions report? Optional: collaborate with classmates to create a
comprehensive list of resources for
the data John needs, along with the rationale for each resource.

1
human assets to turn these challenges into opportunities to build
sustainable competitive
advantages.
Globalization and Outsourcing
Globalization is a process driven by international trade and
investments in foreign markets.
It enables organizations to offer customers products and
services from all over the world at
any time. Both large and small firms are affected by
globalization. The General Agreement
on Tariffs and Trade (GATT) was the first joint agreement for
regulating international trade
among nations. It has been followed by other agreements and
organizations, such as the
North American Free Trade Agreement (NAFTA), Asia-Pacific
Economic Cooperation (APEC),
and the World Trade Organization (WTO).
Globalization has made business processes more efficient and
effective and paved the way
for outsourcing, an increasing trend with which HR
professionals are dealing. Outsourcing is
contracting work that used to be done within an organization to
a third party. When imple-
mented effectively, outsourcing can help the organization cut
labor costs by contracting more
highly skilled expertise to do jobs that were formerly done in
house. As a result, the organiza-
tion can focus on its core activities and use its resources more

efficiently.
HR professionals are responsible for making decisions about
outsourcing work. However,
being cost effective should not be the sole purpose for
outsourcing. Among other consider-
ations, it is essential to ensure that outsourcing will not unduly
strain organizational resources,
result in work of substandard quality, or compromise
intellectual property, corporate social
responsibility, or customer service.
Globalization has brought many challenges for HRM. For
example, HR managers have to deal
with such issues as differences in cultures, employment, and
business laws and practices.
Assessing international workers’ knowledge, measuring their
skills, and training them are also
considered tough tasks. Furthermore, it is a challenge to
relocate managers for the purpose
of international employment relations. Global HRM includes
providing training programs and
tools to enlighten managers about cultural differences in
business and teach them how to
close these cross-cultural gaps.
The Economy
Globalization has paved the way for foreign investments. For
example, Asia has become a
major foreign direct investment (FDI) destination. Investing in
Asian regions is considered
challenging due to problems with law enforcement and
implementation. Moreover, the dif-
ferences in social and political practices between Asia and the
West will necessitate a change

in management techniques to help prevent negative local
reactions to foreign investments.
China and the Pacific Rim countries of East Asia are playing an
important and changing role in
the global economy. Manufacturing is a major focus of foreign
investment across the region.
However, the service sector in Asia is growing, especially in
China, while the agricultural sec-
tor is decreasing. China is also experiencing significant growth
in its productivity as well as its
economy (Rowley & Warner, 2007). China is now the second
largest economy after the United
States. Japan is third.
In the United States, jobs are shifting toward service and
telecommunications; service
industries now represent approximately 80% of all U.S. jobs.
This shift is expected to con-
tinue. Furthermore, there will be an increase in the number of
healthcare jobs as the “Baby
1
Boom” generation ages and as the recent Patient Protection and
Affordable Care Act is fully
implemented.
These economic shifts across geographic borders and industries
have significant implications
for HRM. Managers and HR practitioners now need to be savvy
global leaders who can man-
age through physical distance and despite language and cultural

barriers (Youssef & Luthans,
in press). They also need to adapt to their organizations’ needs
for a different skill set, and to
select, develop, and reward their employees accordingly.
Sociocultural Factors: Demographics, Diversity, and Changing
Employee Expectations
The United States is experiencing a remarkable change in the
nature of its workforce. The
multiracial and multicultural composition of its population has
required HRM to adjust to
a more diverse labor force. The increasing percentage of women
and of racial and ethnic
minorities in the workforce, and the aging
workforce in several developed countries,
has contributed to the transformation of
the labor market.
An aspect of globalization is greater mobil-
ity within and across national boundaries.
Always a melting pot of cultures, in recent
years the United States has experienced
increases both in the number of immi-
grants and in the percentages of racial
and ethnic minorities entering the work-
force. The resulting increase in cultural
diversity has created a need for employers
to become more familiar with other cul-
tures’ beliefs and practices.
In addition, there is a concern that the
United States is not well prepared to equip
young employees for future jobs. Due to

the aging workforce, employers are now facing the challenge of
replacing many experienced
and talented employees. With all these concerns in mind, U.S.
employers have to be certain
that they pursue inclusive and nondiscriminatory policies and
activities.
Image Source RF/Cadalpe/Getty Images
▲▲ Responding to the rising number of women in the
workforce,
many companies have addressed work-family issues through
benefits such as flexible work hours, childcare services, and
paid
family leave.
E Y E O N T H E G O A L
The Human Equation
There is an increasing emphasis in business practice on human
contributions to an organization’s
success. Such an emphasis is not only a valuable and
worthwhile pursuit in its own right, but it also
offers a strategic opportunity for significant returns on
investment in terms of organizational profit-
(continued)
1
ability, efficiency, and effectiveness. Emphasizing the human
side yields enhanced employee motiva-

tion, morale, retention, productivity, and performance quality.
In other words, there is an increasing
recognition of human resources as assets and as a form of
capital, rather than just an expense.
However, quantifying the return on investment in human capital
is a challenge that HR professionals
struggle with as they find themselves increasingly expected to
link human aspects to financial out-
comes, especially with today’s tight economy and limited
budgets. Strategic investments in human
assets can yield quantifiable returns on such practices as
effective selection, training, and perfor-
mance management. When HR professionals understand the
methods for quantifying such returns,
they are in a better position to effectively influence financial
and human resource allocations in their
organizations.
Unfortunately, many HR managers view their profession as
more of an art than a science. They go
about their jobs making subjective decisions based on hunches,
personal opinions, or politics—
ignoring the vast scientific body of knowledge that can lead
them to effective HRM. Business con-
sultants have also adopted unscientific approaches that may be
very appealing to their clients (and a
great source of revenue for their consultancies), but which have
led to the widespread adoption of
many unfounded management fads. In their seminal book Hard
Facts, Dangerous Half-Truths and
Total Nonsense (2006), Professors Jeffrey Pfeffer and Robert
Sutton of Stanford uncover many of the
lies that managers believe and act on, to the detriment of their
organizations. Pfeffer and Sutton call
for “evidence-based management”—practices that are based on
rigorous scientific research and can

deliver real results.
Furthermore, many managers strongly believe that people are
impossible to measure, quantify, pre-
dict, and explain. The problem with this notion is that no matter
how important you believe people
are, they will be viewed as an expense to be avoided or
minimized if you cannot quantify the return
on investment in them. Resources and attention are then
allocated to more tangible assets, with
quantifiable return on investment, and investment in people
disappears. Moreover, when people are
viewed merely as an expense, they are the first to go. This
situation is especially true in tough eco-
nomic conditions, as is evidenced by the recent massive layoffs
and high unemployment rates.
Fortunately, science has proven this type of thinking wrong,
time and time again. Pfeffer and Sutton
(2000) refer to this faulty thinking as “the knowing-doing gap.”
Pfeffer’s earlier book, The Human
Equation (1998), built an extremely convincing case for the
quantifiable return on investment in
human assets. He showed that about half of organizations
believe that people are their most impor-
tant asset. Within this half, about one-half act on their belief.
They implement some measures,
systems, or policies that show they truly value their people.
Then about half of that quarter of orga-
nizations stick to their beliefs and actions—even under business
pressures to abandon their beliefs
in order to cut costs or reallocate their investments elsewhere.
Interestingly, over the years, this
one-eighth of organizations has shown superior results on every
imaginable measure of profitability,
efficiency, and effectiveness when compared to the other seven-

eighths.
Examples of effective, evidence-based HR practices include
training to improve employees’ knowl-
edge, skills and abilities; performance-based incentives and
internal promotion polities to motivate
them to perform at their potential; and employment security and
participation opportunities to
empower them to leverage their abilities and motivation to
benefit the organization. These “high
performance work practices” (HPWPs), especially when
integrated into coherent “high performance
work systems” (HPWSs) rather than adopted as isolated
individual practices, have been shown to
have a significant influence on organizational performance by
improving job satisfaction, organiza-
tional commitment, and productivity, and reducing turnover and
absenteeism (Aryee, Walumbwa,
Seidu, & Otaye, 2012; Combs, Liu, Hall, & Ketchen, 2006;
Huselid, 1995; Posthuma, Campion,
Masimova, & Campion, in press). The lesson is simple: people
do matter, and their value is quantifi-
able. You just have to find the right measures.
1
Web Links
The Society for Human Resource Management (SHRM)
www.shrm.com
The Society for Human Resource Management is one of the
most recognized HR professional orga-

nizations and thought leaders on HR practice, education, and
research worldwide. It currently has
over 250,000 members in 140 countries. Its primary goal is to
provide a community and foster
partnerships among human resource professionals, media,
governments, nongovernmental orga-
nizations, businesses, and academic institutions so that they
share expertise and create innovative
solutions for managing people. Through their website, you can
learn more about SHRM, review its
publications, become more familiar with the field of HRM in
general, and keep up with the changes
and developments on various HR-related fronts.
The Human Capital Lab
www.humancapitallab.org
The Human Capital Lab is an organization founded by Bellevue
University, Nebraska, with the goal
of developing innovative approaches to leveraging human
capital investments through better mea-
surement and management of human assets. The lab brings
together business and academic leaders
to quantify the return on investment in such HR initiatives as
learning and development. The knowl-
edge the lab generates is shared with HR professionals through
industry studies, newsletters, and
quarterly colloquia, which you can access free of charge by
joining the lab on its website.
The Human Capital Institute
www.hci.org
Similar to the Human Capital Lab but on a larger and more
global scale, the Human Capital Institute
(HCI) is a think tank for advancing the science of strategic

talent management. Through its website,
you can access world-class research, global thought leadership,
unique educational opportunities,
and a social network of more than 190,000 HR professionals.
S P O T L I G H T O N E V I D E N C E - B A S E D H R M
HRM Practices and Performance
The use of scientific quantitative and qualitative research
methods can help HRM practitioners and
scholars determine the most effective HRM theories and
applications within and across various con-
texts. This evidence-based approach to HRM is necessary in
order to avoid common fads that can
waste time, energy, and financial resources, and compromise the
reputations, credibility, and effec-
tiveness of the organizations and the managers that choose to
practice them.
The scholarly articles listed below report compelling evidence
for the relationship between high-
quality HRM practices and tangible performance indicators. As
you read these articles, you may real-
ize that scientific evidence can be difficult to understand. Do
not let the complexity of some of this
material intimidate you. This is one of the reasons many
managers choose to limit their reading to
the popular literature such as most magazine articles and best-
sellers. Unfortunately, many of these
easy-to-read references are often plagued with unsubstantiated
claims and fads. Instead, focus on
the big picture and lessons to be learned from each article. Over
time, you will get used to reading
and applying high-quality, evidence-based literature.

(continued)
http://www.shrm.com
http://www.humancapitallab.org
http://www.hci.org
Summary and Resources Chapter 1
Summary and Resources
Human resource management (HRM) is the managing of human
skills and talents to make
sure they are used effectively and in alignment with an
organization’s goals. Since most busi-
ness functions are performed by people, it follows that human
resources are a key asset that
should be strategically managed and that can be an important
basis of competitive advan-
tage. HRM functions such as planning, job analysis and design,
recruitment, selection, training
and development, compensation and benefits, and performance
appraisal help organizations
achieve their goals through people. Each of these functions is
discussed in more detail in
subsequent chapters.
Post-Test
1. HR personal credibility is one of the critical competencies
required in order for HR profes-
sionals to be able to carry out their duties successfully.
a) True
b) False

2. Human resource management has been defined as:
a) managing people’s skills and talents to effectively align them
with organizational
goals.
b) all decisions made by human resource departments that
improve morale for
employees.
c) decisions made by human resource departments that balance
the needs of the man-
agement team and employee bargaining units.
d) decisions by management and by employees that help reach
the organization’s goals.
If you are interested in evidence-based HRM resources that are
easier for managers to read, the
Gallup Organization publishes excellent books based on its
extensive research all over the world. Its
website also provides links to numerous research reports and
videos on HRM-related topics. Credible
practitioner-oriented journals are also available. The articles in
these journals are written in nontechni-
cal language, but are based on rigorous scientific research.
Examples include Harvard Business Review,
MIT Sloan Management Review, California Management
Review, Business Horizons, Organizational
Dynamics, and HR Magazine. Your university library most
likely gives you access to these journals.
References
Becker, B., & Huselid, M. (2003). Measuring HR? HR
Magazine, 48(12), 56–61.

Haynes, P., & Fryer, G. (2000). Human resources, service
quality and performance: A case study.
International Journal of Contemporary Hospitality Management,
12, 240–248.
Huselid, M.A. (1995). The impact of human resource
management practices on turnover, productiv-
ity, and corporate financial performance. Academy of
Management Journal, 38, 635–672.
Li, J., Yang, J., & Wu, H. (2008). Improving service quality and
organisation performance through
human resource practices. A case study. Total Quality
Management & Business Excellence, 19,
969–985.
Pfeffer, J., & Sutton R.I. (2006). Evidenced-based management.
Harvard Business Review, 84(1),
63–74.
Summary and Resources Chapter 1
3. The market value per employee of publicly traded companies
in the United States can
indicate the effectiveness of HR practices on organizational
performance.
a) True
b) False
4. Corporate governance refers to the relationship between
managers and unions in terms
of shared corporate rights and responsibilities.

a) True
b) False
5. Which of the following is one of HR department’s major
everyday tasks?
a) Sales and operations planning
c) Inventory accounting
d) Planning and alignment
6. All the following can be a reason for employees to join
unions EXCEPT:
a) an employee’s personal need to make a difference in the work
environment.
b) employee dissatisfaction and discomfort with existing work
environment.
c) unions’ prospective advantages.
d) a greater chance of joining an organization’s board of
directors.
7. Which of the following is one of the HRM practices?
a) Union activities

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