Chapter 1—the challenge of human resources management

CHAPTER 1—THE CHALLENGE OF HUMAN RESOURCES
MANAGEMENT

TRUE/FALSE

1. In general, many companies are realizing diminished demand for "touch labor" and an increasing
demand for "knowledge workers."

ANS: T PTS: 1 REF: p. 13 OBJ: 1-4 TYPE: K

2. Knowledge workers are employees whose responsibilities focus on problem solving.

ANS: F PTS: 1 REF: p. 13 OBJ: 1-4 TYPE: U

3. A Human Resource Information System (HRIS) provides current and accurate data for control and
decision-making by managers.


4. To proactively manage change, organizations should wait to see how external forces impact an
organization's performance, then develop a plan to address those changes.


5. The strategies companies are pursuing today increasingly involve one or more elements of
globalization.


6. A firm's ability to compete through people depends upon its ability to manage human capital.

ANS: T PTS: 1 REF: p. 4 OBJ: 1-1 TYPE: U

7. Human capital is owned by the organization and is part of the company's core competencies.

ANS: F PTS: 1 REF: p. 5 OBJ: 1-3 TYPE: K

8. Companies are increasingly rotating non-HR managers into HR positions and vice versa to give
exposure to different areas of the organization.

ANS: T PTS: 1 REF: p. 8 OBJ: 1-8 TYPE: A

9. Proactive change is change that occurs when external forces have started affecting performance.


10. Human capital is intangible, but can still be managed the way organizations manage jobs, products,
and technologies.


11. Development of human capital is the responsibility of the HR group.


12. Total-quality management is a set of principles and practices whose core ideas include doing things
right the first time and striving for continuous improvement.


13. To be successful, organizations should constantly seek to align their processes with customer needs.


14. 'Six Sigma' refers to the six criteria for Malcolm Baldrige National Quality Award.


15. Six Sigma is a set of principles and practices whose core ideas include doing things right the first time
and striving for continuous improvement.


16. In absolute terms, the United States remains the world’s most productive nation, even when it comes to
manufacturing.


17. Reengineering is a statistical method of translating customer needs into separate tasks and defining the
best way to perform each task.


18. Over the past twenty-five years, the employment relationship between companies and
employees has shifted from transaction based to relationship based.


19. Labor costs are one of the largest expenditures of any organization.


20. Furloughing is a situation in which a firm asks an employee to take time off, but the employee is still
provided with full pay and benefits.


21. Methods of reducing labor costs include downsizing, outsourcing, and employee leasing.


22. Downsizing is often used by organizations for the planned elimination of jobs.


23. Downsizing was used extensively by firms during the Great Recession of 2008, causing the U.S.
unemployment rate to jump up to about 10 percent.


24. Technology, transportation, communications, and utilities industries tend to spend
the least on training.


25. Some organizations have instituted "No Layoff" policies to help preserve institutional memory and
worker productivity.


26. Outsourcing refers to employing workers in their homes rather than within the traditional office
environment.


27. Offshoring greatly improves key competencies of a firm.


28. Corporate social responsibility requires the organization to act in the best interests of the people AND
communities affected by its activities.


29. Older workers have significantly higher training costs than younger workers.


30. Educational level is positively related to annual earnings.


31. As many as half of all high school seniors are unable to handle basic math involving fractions,
decimals, and simple algebra.


32. Women now account for slightly more than half of the American workforce.


33. By 2050, the percentage of Hispanics in the United States is expected to nearly triple, while
the percentage of people of Asian descent is expected to significantly decrease.


34. Older workers are often willing to work flexible hours.


35. Employees today are less likely to define success in terms of financial gain.


36. Family-friendly practices include offering flexible hours, telecommuting, and job sharing.


37. One of the responsibilities of HR managers is to provide advice and counsel to line managers.


38. An HR manager is typically expected to function as an in-house consultant to supervisors, managers,
and executives.


39. Because HR managers function in an advisory role, they are responsible for issuing policy revisions
and implementing them.

ANS: F PTS: 1 REF: p. 31 OBJ: 1-8 TYPE: A

40. One of the roles of HR managers is to act as employee advocates despite their positions as managers.


41. HR managers establish credibility by supporting the policies and values of the firm.

ANS: F PTS: 1 REF: p. 32 OBJ: 1-8 TYPE: A

42. Employee leasing shifts administrative costs from the company to a professional employer
organization.


MULTIPLE CHOICE

1. Which of the following is NOT a competitive challenge within the Human Resources Management
framework?
a.b changes in the marketplaceglobalizationtechnologyemployee rights
.c.
ANS: D PTS: 1 REF: p. 6 OBJ: 1-1 TYPE: K
d.a
.b.
The World Trade Organization (WTO) utilizes ____ to establish rules and guidelines for
c.d
global commerce.
.a.
NAFTA (North American Free Trade Agreement)GATT (General Agreement on Tariffs
b.c
and Trade)FTAA (Free Trade Area of the Americas)APEC (Asia Pacific Economic
.d.
Cooperation)
a.b
.c. ANS: B PTS: 1 REF: p. 9 OBJ: 1-2 TYPE: K
d.a
.b. Knowledge workers require skills in all of the following areas except:
c.d computer programming.planning.decision-making.problem solving.

.a.
ANS: A PTS: 1 REF: p. 13 OBJ: 1-4 TYPE: U
b.c
.d.
Which of the following is the largest employment agency in the United States?
a.b
Snelling Personnel ServicesKelly ServicesManpower Inc.Labor Ready
.c.
d.a ANS: C PTS: 1 REF: p. 13 OBJ: 1-4 TYPE: K
.b.
c.d An HRIS extends information technology beyond storing and retrieving information to:
.a. overseeing production planning.providing current and accurate data for purposes of
b.c control and decision making.providing managers easy access to personnel records.serving
.d. as an intranet communication system.
a.b
.c. ANS: B PTS: 1 REF: p. 13 OBJ: 1-4 TYPE: U
d.a
.b. Which of the following is not a primary impact that technology has had on HRM?
c.d It has altered the methods of collecting employment information.It has speeded up the
.a. processing of employment data.It has diminished the role of supervisors in managing
b.c employees.It has improved the processes of internal and external communications.
.d. ANS: C PTS: 1 REF: p. 13 OBJ: 1-4 TYPE: K
a.b
.c. The operational impact of information technology on HRM includes all of the following
d.a except:
.b. administering benefits programs.improving productivity internal to the HR
c.d function.providing a direct connection to recruitment sources such as
.a. Monster.com.automating routine tasks.
b.c
a.b
.c. The first step in choosing an HRIS is for the HR personnel to:
d.a evaluate the most time-consuming tasks.examine the user-friendliness of the
.b. software.calculate the cost savings in using an HRIS.calculate the time required to train
c.d the HR staff.
.a. ANS: A PTS: 1 REF: p. 14 OBJ: 1-4 TYPE: K
b.c
.d. A needs assessment for IT investments should include all of the following except:
a.b Initial costs and annual maintenance.Who will have access to private records.Ability to
.c. upgrade.User friendly capability.
d.a
.b. ANS: B PTS: 1 REF: p. 15 OBJ: 1-4 TYPE: K
c.d
.a. ____ is closely related to corporate social responsibility.
b.c downsizingfurloughingsustainabilityoffshoring
a.b
.c. Organizational changes are said to be ____ when external forces have already affected an
d.a organization's performance.
.b. proactiveintentionalreactivenegative
c.d
.a. ANS: C PTS: 1 REF: p. 8 OBJ: 1-1 TYPE: K
b.c
.d. What change is initiated by management to take advantage of targeted opportunities?
a.b proactiveintentionalreactivenegative
.c.
ANS: A PTS: 1 REF: p. 8 OBJ: 1-1 TYPE: K
d.a

.b.
c.d Today, approximately ____ of private sector workers have pension plans?
.a. 5 percent15 percent25 percent40 percent
b.c
ANS: B PTS: 1 REF: p. 16 OBJ: 1-5 TYPE: K
.d.
a.b
____ is the process of moving jobs closer to one’s home country.
.c.
Nearshoring OutsourcingOffshoringThe Boomerang Effect.
d.a
.b. ANS: A PTS: 1 REF: p. 20 OBJ: 1-5 TYPE: K
c.d
.a. Millennials are also known as:
b.c Baby BoomersGeneration XGeneration YScreenagers
.d.
a.b ANS: C PTS: 1 REF: p. 24 OBJ: 1-6 TYPE: K
.c.
d.a The value, skills, and capabilities that have a tremendous impact on an organization's
.b. performance but does not show up on its balance sheet are known as:
c.d intellectual capital.human capital.core competencies.employee capital.
.a. ANS: B PTS: 1 REF: p. 4 OBJ: 1-1 TYPE: K
b.c
.d. Women who are employed full-time today earn make about ____ of what men employed
a.b full-time make.
.c. 50%2/3’s80%100%
d.a
.b. ANS: C PTS: 1 REF: p. 25 OBJ: 1-6 TYPE: K
c.d
.a. To build human capital in organizations, managers should rely upon staffing programs that
b.c focus on:
.d. identifying cheap sources of qualified labor.identifying and hiring the best and brightest
a.b talent available.identifying college graduates with the requisite skills.identifying
.c. individuals with highly specialized skills.
d.a ANS: B PTS: 1 REF: p. 5 OBJ: 1-1 TYPE: A
.b.
c.d _____ is a process used to translate customer needs into a set of optimal tasks that are
.a. performed in concert with one another.
b.c Six SigmaTotal Quality ManagementReengineering Change Management
.d.
a.b ANS: A PTS: 1 REF: p. 8 OBJ: 1-1 TYPE: K
.c.
d.a Managers have to find ways to empower employees and encourage their participation and
.b. involvement to more fully utilize human capital because:
c.d They are figured as part of training costs.Firms are moving away from team-based
.a. structures.Employee skills often go unused.Knowledge exchange is the best method of
b.c human capital development.
.d. ANS: C PTS: 1 REF: p. 5 OBJ: 1-1 TYPE: U
a.b
.c. A survey conducted by the Human Resource Planning Society revealed that ____ percent
d.a of the responding companies believe that their HR group plays an important role in
.b. developing human capital.
c.d less than 30nearly 50between 30 and 40nearly 65
.a.
b.c ANS: D PTS: 1 REF: p. 5 OBJ: 1-1 TYPE: U
.d.
a.b About ___ of what Americans produce every year dollar-wise is sold abroad.

.c. 50 percent 30 percent10 percent 2 percent
d.a
ANS: C PTS: 1 REF: p. 9 OBJ: 1-2 TYPE: K
.b.
c.d
TQM:
.a.
Focuses on understanding customer needs, doing things right the first time, and striving
b.c
for continuous improvement.Uses statistical methods to translate customer needs into
.d.
separate tasks and defining the best way to perform them.Fundamentally redesigns
a.b
business processes to achieve improvements in cost, quality, service, and speed.Changes
.c.
the purpose and function of the HR group.
d.a
.b. ANS: A PTS: 1 REF: p. 7 OBJ: 1-1 TYPE: K
c.d
.a. The trend towards opening up foreign markets to international trade and investment is
b.c knows as:
.d. globalizationoffshoringoutsourcinginternational economic diversity
a.b
.c. ANS: A PTS: 1 REF: p. 8 OBJ: 1-2 TYPE: K
d.a
.b. Six Sigma is a systematic approach to quality that:
c.d Focuses on understanding customer needs, doing things right the first time, and striving
.a. for continuous improvement.Uses statistical methods to translate customer needs into
b.c separate tasks and defining the best way to perform them.Fundamentally redesigns
.d. business processes to achieve improvements in cost, quality, service, and speed.Focuses on
a.b improving the HR function through six principles.
.c. ANS: B PTS: 1 REF: p. 8 OBJ: 1-1 TYPE: K
d.a
.b. ______ paved the way for the formation of many major trade agreements and institutions.
c.d GATTThe WTONAFTAThe EU
.a.
b.c ANS: A PTS: 1 REF: p. 9 OBJ: 1-2 TYPE: U
.d.
a.b Reengineering:
.c. Focuses on understanding customer needs, doing things right the first time, and striving
d.a for continuous improvement.Uses statistical methods to translate customer needs into
.b. separate tasks and defining the best way to perform them.Fundamentally redesigns
c.d business processes to achieve improvements in cost, quality, service, and speed.Changes
.a. the purpose and function of the HR group.
b.c ANS: C PTS: 1 REF: p. 7 OBJ: 1-1 TYPE: K
.d.
a.b Which of the following is NOT a characteristic of organizations that have been successful
.c. in engineering change?
d.a linking the change to business strategyEngaging key employees early in the change
.b. processinvesting in the implementation of changeshowing how the change has created
c.d qualitative benefits
.a.
b.c ANS: D PTS: 1 REF: p. 8 OBJ: 1-1 TYPE: A
.d.
a.b Which of the following is one of the largest expenditures of service companies?
.c. production costs.marketing costs.labor costs.distribution costs.
d.a ANS: C PTS: 1 REF: p. 16 OBJ: 1-5 TYPE: K
.b.
c.d Which of the following is not an approach used by organizations to try to lower labor
.a. costs?
b.c

.d. productivity enhancementsoutsourcingemployee leasingemployee development
a.b
ANS: D PTS: 1 REF: pp. 19-20 OBJ: 1-5 TYPE: U
.c.
d.a
Which strategy is the planned elimination of jobs?
.b.
downsizing.outsourcingTQMreengineering
c.d
.a. ANS: A PTS: 1 REF: p. 7 OBJ: 1-1 TYPE: K
b.c
.d. Approximately ____ of the U.S. economy today is affected by international competition,
a.b including small companies.
.c. 25-40 percent50-65 percent70-85 percent90-100 percent
d.
(1) ANS: C PTS: 1 REF: p. 9 OBJ: 1-2 TYPE: K
(2)
(3) A Watson Wyatt study showed that companies with excellent recruiting and retention
(4) policies provide a ____ return to shareholders compared to those that do not.
(1) exact rate of1.4% lower rate of 1.4% higher rate of14% higher rate of
(2) ANS: C PTS: 1 REF: p. 17 OBJ: 1-5 TYPE: K
1.
2. Layoffs can incur all of the following hidden costs except:
3. pension and benefit payoffsincreased training expensesloss of institutional memory and
human capitala paranoid, political workforce

Which one of the following is not an HR cost that is typically incurred as a result of
downsizing?
severance payvacation and sick-day payoutspotential lawsuitsdevelopmental expenses
ANS: D PTS: 1 REF: p. 17 OBJ: 1-5 TYPE: A

A fiercely loyal workforce, a recruiting edge, and workers who aren't afraid to innovate are
all benefits of:
downsizingoutsourcingcompanies that establish "no layoff" policiesproductivity
enhancements

Hiring someone outside the company to perform tasks that could be done internally is
known as:
outplacement.contracting.outsourcing.employee leasing.

The practice of moving jobs overseas is known as:
outplacement.offshoring.outsourcing.employee leasing.

A method of containing costs that allows firms to maintain working relationships while
shifting administrative costs to another firm is known as ____.
OutsourcingEmployee LeasingGainsourcingProfessional employer organization

Employee productivity be summarized as a function of all of the following except:

AbilityMotivationEnvironmentCompensation
ANS: D PTS: 1 REF: p. 20 OBJ: 1-5 TYPE: U

It is anticipated that in the future, the American workforce will exhibit:
about the same demographic mix as it does today.an increase in ethnic diversity.a decrease
in ethnic diversity.a decrease in the number of older workers.
ANS: B PTS: 1 REF: p. 22 OBJ: 1-6 TYPE: A

Baby Boomers comprise approximately ____ of the population.
16 percent26 percent36 percent46 percent

Managers are concerned that the expertise of employees will be rapidly drained from their
companies because:
recruitment of minorities is increasinglarge portions of some workforces are nearing
retirementolder workers' skills and performance declineolder workers have higher
absentee and accident rates

Labor force demographics are expected to change in which of the following ways?
Minorities will make up a smaller share of the U.S. labor force than they did in the
past.Women will make up a smaller share of the U.S. labor force than they did in the
past.Shrinking pool of entry-level workers.Increased use of temporary workers.
ANS: C PTS: 1 REF: p. 29 OBJ: 1-7 TYPE: U

Older workers:
have lower performance than younger workershave higher performance than younger
workersare more willing to work more flexible hourslearn new behaviors more quickly
because of their experience

Over the last few decades, the educational attainment of the U.S. labor force has:
risen dramatically.fallen dramatically.remained at about the same level.had little influence
on HRM.

The average payoff in annual earnings from education has:
declined.remained the sameincreasedresulted in a higher literacy rate

Approximately ___ of mother with school-age children are employed.
11 percent31 percent51 percent71 percent

The use and disclosure of personal medical information is protected by:
the Privacy Act of 1974the Health Insurance Portability and Accountability Act of 1996the
Electronic Communications Privacy Act of 1986Title VII of the Civil Rights Act of 1964
ANS: B PTS: 1 REF: p. 27 OBJ: 1-7 TYPE: U

Which of the following does not represent a cultural change emerging in organizations?
an increased concern for privacychanging attitudes toward workbalancing work and
family demandsaccommodating unemployed workers

Employee rights include all of the following except:
company funded pension plan.equal employment opportunity.union representation.equal
pay for equal work.

In an attitude survey of 3000 workers, 86 percent of workers said that ____ were their top
priorities.
work-life balance and being successful at workwork fulfillment and work-life
balancework fulfillment and being successful at workbeing successful at work and high
pay

Family friendly work options include all of the following except:
day care.spousal benefitsparental leave.job sharing.

About _____ of Fortune 500 companies provide same-sex partner health insurance
benefits.
34 percent 57 percent72 percent81 percent

Which of the following is False?
A majority of employees have no children under 18Family friendly policies have no
positive outcomes for firmsFlextime options are on the rise for employeesFamily friendly
policies may include day care, part-time work, and job sharing
ANS: B PTS: 1 REF: p. 28 OBJ: 1-7 TYPE: A

A firm’s top ____ manager is in a good position to be the “chief ethics officer” of an
organization.
HRFinanceProductionMarketing

Which of the following is NOT an issue related to employee rights?
equal pay for equal workwhistle-blowingconcerns for privacyjob sharing

As an employee advocate, HR managers:
formulate and issue policy revisionslisten to employees and represent their needs to
management.provide individual orientation and training to every employee.assist
employees with labor negotiations.

____ is a competency of the HR manager that entails knowing the business of their

organization thoroughly. One must understand its economic and financial capabilities as
well as develop external relations skills focused on their customers.
Change MasteryHR MasteryBusiness MasteryPersonal Credibility
ANS: C PTS: 1 REF: p. 31 OBJ: 1-8 TYPE: U

Which of the following is NOT a general responsibility of the HR manager?
Employee supervisionStrategic advice and counselPolicy formulation and
implementationEmployee advocacy
ANS: A PTS: 1 REF: p. 31 OBJ: 1-8 TYPE: U

____ is a competency of the HR manager earned by developing personal relationships
with internal customers, by demonstrating the values of the firm, by standing up for one's
own beliefs, and by being fair-minded in dealing with others.
Change MasteryHR MasteryBusiness MasteryPersonal Credibility
ANS: D PTS: 1 REF: pp. 31-32 OBJ: 1-8 TYPE: U

Globalization is really of interest to_________ companies.
serviceconsumer productlargeall

Free trade agreements stir fierce debate, especially when it comes to____________.
equal employment opportunities for womenjobsproprietary technologyinformation
exchange
ANS: B PTS: 1 REF: p. 10 OBJ: 1-2 TYPE:A

Globalization has led to a new focus on________________.
corporate social responsibilitymediarecruitingemployee performance evaluation

The most obvious impact of technology on HRM has been_____________.
in the area of HR researchoperationalapplying the latest government regulationsin
outsourcing jobs

Understanding the organization’s customers and economic and financial capabilities is a
part of which of the following competencies required of HR managers?
personal credibilityHR masterybusiness masterychange mastery

Human capital is _____ and _____ be managed the way organizations manage jobs,
products, and technologies.
tangible; cannottangible; canintangible; cannottangible; can
ANS: C PTS: 1 REF: p. 5 OBJ: 1-1 TYPE:U

L. L. Bean softened the impact of downsizing on its employees through_____.
early retirement and “sweetened” voluntary separation programsoutplacementhefty
benefitsaggressive career counseling

In absolute terms, which country in the world is most productive?
JapanUnited StatesGermanySweden

Today about _____ % of women in the U.S. 16 years of age and older participate in the
work force.
40803060

ESSAY

What are the seven competitive challenges facing human resources management
departments?

ANS:
Students should expand upon the following:

1. Responding strategically to changes in the marketplace;
2. Competing, recruiting and staffing globally;
3. Setting and achieving corporate social responsibility and sustainability goals;
4. Advancing HRM with technology;
5. Containing costs while retaining top talent and maximizing productivity;
6. Responding to the demographic and diversity challenges of the workforce;
7. Adapting to educational and cultural shifts affecting the workforce.

PTS: 1 REF: pp. 6-26 OBJ: 1-1 | 1-2 | 1-3 | 1-4 | 1-5 | 1-6 | 1-7

Discuss the concept of downsizing and some of the hidden costs associated with it.

ANS:
Downsizing is defined as the planned elimination of jobs. Employers have used
downsizing extensively during the Great Recession. It has now become a tool continually
used by companies to adjust to changes in technology, globalization, and the firm’s
business direction. Some of the hidden costs associated with downsizing include:
1. severance and rehiring costs;
2. accrued vacation and sick day payouts;
3. pension and benefit payouts;
4. potential lawsuits from aggrieved workers;
5. a loss of institutional memory and trust in management;
6. a lack of staff when the economy rebounds;
7. survivors who are risk averse, paranoid, and focused on company politics.

PTS: 1 REF: p. 17 OBJ: 1-5

Explain the major activities for which the HR manager is typically responsible.

ANS:
1. Strategic advice and counsel. The HR manager serves as in-house counsel to managers,
supervisors and executives. They may help in the areas of legal compliance and ethical
decision-making, as well as serving on compensation committees.
2. Service. HR managers perform such services as recruiting, selecting, testing, and

planning and conducting training programs.
3. Policy formation and implementation. HR managers propose, draft, and at times
interpret company policy. They also monitor employees to ensure that they are following
established policies, procedures and protocols.
4. Employee advocacy. HR managers listen to employee concerns and represent their
needs. The HR manager must ensure that the interests of the employee align with the
interests of the organization.

PTS: 1 REF: p. 31 OBJ: 1-8

What implications do the anticipated changes in age and demographics of the workforce
have for the management of human resources?

ANS:
Demographically, the labor force is expected to age (with the aging of the baby boomers),
creating a larger number of older workers and a shrinking pool of young workers. HRM
implications for aging workers include increases in
the competition for entry level workers;the costs of compensation, health care, and retirement
benefits;career plateauing and related motivational concerns; andtraining techniques that
help senior workers "unlearn" old behaviors while acquiring new ones.
Diversity in the workplace will continue, with a higher proportion of women and minorities in the
workforce. HRM efforts that will be required to accommodate the needs of these workers
include
flexible schedules, parental leave, and day-care options for dual-career families;
andtraining for supervisors in the management of a diverse workforce.
Educational levels are expected to rise, but functional and technological illiteracy will
continue to be a problem for employers. HR managers will need to plan training programs
to assist employees in attaining basic and developmental skills and overcoming these
deficiencies.

Managing diversity involves managing employees as individuals while maintaining
awareness of characteristics common to all employees.

PTS: 1 REF: pp. 21-26 OBJ: 1-5 | 1-6 | 1-7

What are some of the key competencies needed by Human Resource Managers to become
full business partners?

ANS:
As top executives expect HR managers to assume a broader role in overall organizational
strategy, many of these managers will have to acquire a complementary set of
competencies. These competencies are business mastery, HR mastery, change mastery, and
personal credibility.
Business mastery. HR professionals need to know the business of their organization
thoroughly. This required HR professionals to develop skills at customer focused external
relations and an understanding of their organization’s economic and financial capabilities.
These skills will enable them to join a team of “business managers” to develop the firm’s
strategic direction.HR mastery. HR professionals are a firm’s behavioral science experts. It
is important that they are current with developments and changes in their professional
field.Personal credibility. This competency is earned by developing personal relationships
with internal customers, by demonstrating the values of the firm, by standing up for one's
own beliefs, and by being fair-minded in dealing with others.

PTS: 1 REF: p. 31 OBJ: 1-8

Describe the role of the line manager.

ANS:
Managing people ultimately depends on the effective supervisor and line manager. This
text tries to help all managers manage effectively. Close cooperation between HRM and
line management is always needed. More people become line managers than HR
specialists. Each group needs to understand and be able to work together with the other.
They each play significant roles in contributing to organizational effectiveness.

PTS: 1 REF: p. 30 OBJ: 1-7

Chapter 1—the challenge of human resources management

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