Managing human resources

1. CHAPTER 9
Managing Human Resources
in Organizations

2. Learning Objectives
1. Describe the environmental context of human resource
management, including its strategic importance and its
relationship with legal and social factors.
2. Discuss how organizations attract human resources,
including human resource planning, recruiting, and selection.
3. Describe how organizations develop human resources,
including training and development, performance appraisal,
and performance feedback.
4. Discuss how organizations maintain human resources,
including the determination of compensation and benefits
and career planning.
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3. Learning Objectives (cont’d)
5. Discuss labor relations, including how employees form
unions and the mechanics of collective bargaining.
6. Describe the key issues associated with managing
knowledge and contingent and temporary workers.
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4. The Environmental Context of
HRM
 Human Resource Management (HRM)
 The set of organizational activities directed at
attracting, developing, and maintaining an effective
work force.
 The Strategic Importance of HRM
 HRM is increasingly important as firms realize the
value of their human capital in improving productivity.
 HRM is critical to bottom-line performance of the firm.
 HR planning is now part of the strategic planning
process.
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5. The Legal Environment of HRM
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Equal Employment
Opportunity
Compensation
and Benefits
Labor
Relations
Health
and Safety
TitleVII of Civil
Rights Act of 1964
Fair Labor Standards Act of
1938 (FLSA) National Labor Relations
Act of 1935 (Wagner Act)
Occupational Safety
and Health Act
of 1970 (OSHA)
Pregnancy Discrimination
Act
Equal Pay Act
of 1963
Labor Management
Relations Act of 1947
(Taft-HartleyAct)Age Discrimination
in Employment Act
Employee Retirement
Income SecurityAct
of 1974 (ERISA)
Americans with Disabilities
Act
Family and Medical Leave
Act of 1993 (FMLA)Civil Rights Act
of 1991
Vietnam EraVeterans
Readjustment Assistance
Act
ExecutiveOrders

6. The Legal Environment of HRM
 Equal Employment Opportunity
 TitleVII of the Civil Rights Act of 1964
 Forbids discrimination in the employment relationship.
 Employers are not required to seek out and hire
minorities but they must treat fairly all who apply.
 Adverse impact
 When minority group members pass a selection standard
at a rate less than 80% of the rate of the majority group.
 Equal Employment Opportunity Commission
 Federal agency charged with enforcingTitleVII as well as
several other employment-related laws.
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7. The Legal Environment of HRM
(cont’d)
 Equal Employment Opportunity (cont’d)
 Affirmative Action
 Intentionally seeking and hiring qualified or qualifiable
employees from racial, sexual, and ethnic groups that are
underrepresented in the organization.
 Several executive orders require federal contractors to
develop affirmative action plans and take affirmative
action in hiring veterans and the disabled.
 Pregnancy Discrimination Act
 Specifically outlaws discrimination on the basis of
pregnancy.
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8. The Legal Environment of HRM
(cont’d) Equal Employment Opportunity (cont’d)
 Age Discrimination in EmploymentAct of 1967
 Outlaws discrimination against persons older
than 40 years of age.
 Americans with Disabilities Act of 1990 (ADA)
 Forbids discrimination on the basis of disabilities
and requires employers to provide reasonable
accommodations for disabled employees.
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9. The Legal Environment of HRM
(cont’d)
 Equal Employment Opportunity (cont’d)
 Civil Rights Act of 1991
 Amended the original Civil Rights Act, making it
easier to bring discrimination lawsuits while also
limiting punitive damages that can be awarded in
those lawsuits.
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10. The Legal Environment of HRM
(cont’d)
 Compensation and Benefits
 Fair Labor Standards Act of 1938 (FLSA)
 Sets a minimum wage and requires overtime pay for
work in excess of 40 hours per week for non-exempt
employees.
 Salaried professional, executive, and administrative
employees are exempt from the Act’s minimum wage
and overtime provisions.
 Equal Pay Act of 1963
 Requires men and women to be paid the same amount
for doing the same jobs; exceptions are permitted for
seniority and merit pay.
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11. The Legal Environment of HRM
(cont’d) Compensation and Benefits (cont’d)
 Employee Retirement Income Security
Act of 1974 (ERISA)
 Sets standards for pension plan
management and provides federal
insurance if pension plans go bankrupt.
 Family and Medical LeaveAct of 1993
(FMLA)
 Requires employers to provide up to
12 weeks of unpaid leave for family
and medical emergencies.
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11

12. The Legal Environment of HRM
(cont’d)
 Labor Relations
 National Labor Relations Act of 1935 (Wagner Act)
 Set up procedures for employees to vote whether to
have a union; if the vote is for a union, management is
required to bargain collectively with the union.
 National Labor Relations Board (NLRB)—the federal
agency empowered to enforce provisions of the NLRA.
 Labor Management Relations Act of 1947
(Taft-Hartley Act)
 Amended NLRA to limit the power of unions and
increase management’s rights during organizing
campaigns.
 Allows the U.S. president to prevent or end a strike that
endangers national security.
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13. The Legal Environment of HRM
(cont’d)
 Health and Safety
 Occupational Safety and Health Act of 1970
(OSHA) requires that employers:
 Provide a place of employment that is free from
hazards that may cause death or serious physical
harm.
 Obey the safety and health standards established by
Occupational Safety and Health Administration
(OSHA).
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14. The Legal Environment of HRM
(cont’d)
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Alcohol
and drug
dependencies
AIDS in
the workplace
Sexual
harassment
Emerging Legal Issues

15. Attracting Human Resources
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Job Analysis
A systematic analysis of jobs within
an organization.
Job Description
A listing of the job’s duties; its working
conditions; and the tools, materials, and
equipment use to perform the job.
Job Specification
A listing of the knowledge, skills, abilities,
and other credentials the incumbent
jobholder will need to do a job.

16. Attracting Human Resources
(cont’d) Forecasting HR Demand and Supply
 Replacement chart
 A list of managerial positions in the
organization, the occupants, how long they
will stay in the position, and who will replace
them.
 Employee information system
(skills inventory)
 A database of employees’ education,
skills, work experience, and career
expectations, usually computerized.
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17. Recruiting Human Resources
 Recruiting
 The process of attracting qualified persons
to apply for jobs that are open.
 Internal Recruiting
 Promotion from within: considering
current employees as candidates for
openings.
 Advantage: can build morale and reduce
turnover of high-quality employees.
 Disadvantage: can create a “ripple effect” of
having to successively fill vacated positions.
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18. Recruiting Human Resources
(cont’d)
 Realistic Job Preview (RJP)
 is considered a successful method to ensure person-job fit.
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Executive search firms
Union halls
Employee referrals
Sources of
External Recruits
Advertising
Campus interviews
Employment agencies
Walk-ins

19. Selecting Human Resources
 Validation:
 Determining the extent to which a selection device
is predictive of future job performance.
 Predictive validation
 Correlating previously collected test scores of
employees with the employees’ actual job
performance.
 Content validation
 The use of logic and job analysis to determine that
selection techniques measure the exact skills needed
for job performance.
 Used to establish the job relatedness of a selection
device.
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20. Selecting Human Resources
(cont’d)
 Application Blanks
 Are used to gather information about work
history, educational background, and other job-
related demographic data.
 Must not ask for information unrelated to the job.
 Tests
 That measure ability, skill, aptitude, or knowledge
tests are usually the best predictors of job success.
 Must be validated, administered, and scored
consistently.
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21. Selecting Human Resources
(cont’d) Interviews
 Interviews can be poor predictors of job success
due to interviewer biases.
 Interview validity can be improved by training
interviewers and using structured interviews.
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22. Selecting Human Resources
(cont’d)
 Assessment Centers
 Are a popular method for selecting that is particularly
good for selecting current managers for promotion.
 Provides content validation for major parts of the
managerial job.
 OtherTechniques
 Polygraphs have declined in popularity due to passage
of the Polygraph Protection Act.
 Employers now use physical exams, drug tests, and
credit checks to screen prospective employees.
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23. Developing Human Resources
 Training and Development
 Training
 Teaching operational or technical
employees how to do the job for which
they were hired.
 Development
 Teaching managers and professionals the
skills need for both present and future
jobs.
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24. Developing Human Resources
(cont’d) AssessingTraining Needs
 Determining what needs exist is the first step in
developing a training plan.
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Lectures
Role play and
case studies
On-the-job
and vestibule
training
CommonTraining Methods
Web-based
and electronic
training

25. Developing Human Resources
(cont’d)
 Evaluation of training
 Training and development programs should
always be evaluated.
 Approaches include measuring relevant job
performance criteria before (pretest) and after the
training (post-test) to determine the effect of
training.
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26. Developing Human Resources
(cont’d) Performance Appraisal
 A formal assessment of how well workers do their
jobs.
 Reasons for Performance Appraisal
 Validates selection process and effects of training.
 Aids in making pay raise, promotion, and training
decisions.
 Provides feedback to workers to improve their
performance and plan future careers.
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27. Developing Human Resources
(cont’d)
 Objective Measures of Performance
 Can be actual output (units produced), scrap rate,
dollar volume of sales, and claims processed.
 Can become contaminated by outside factors
resulting in “opportunity bias” where some have a
better chance to perform than others.
 Special performance tests assess each employee
under standardized conditions.
 Performance tests measure ability and not
motivation.
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28. Developing Human Resources
(cont’d)
 Judgmental Methods of Appraisal
 Ranking—compares employees to each other.
 Difficult to do with large numbers of employees.
 Difficult to make comparisons across work groups.
 Employees are ranked only on overall performance.
 Do not provide useful information for employee
feedback.
 Rating—compares employee to a fixed standard.
 Graphic rating scales
 Behaviorally-anchored rating scale (BARS)
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29. Developing Human Resources
(cont’d)
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Errors of leniency
and strictness
Halo
error
Recency
error
Rater Errors in
Performance Appraisal

30. Developing Human Resources
(cont’d)
 Performance Feedback
 Is best given in a private meeting between the
employee and immediate supervisor.
 Discussion should focus on the facts:
 The assessed level of performance
 How and why the assessment was made.
 How the employee’s performance can be improved.
 Properly training managers can help them
conduct more effective feedback interviews.
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31. Developing Human Resources
(cont’d)
 “360 degree” Feedback
 Managers are evaluated by everyone around
them:
 Boss
 Subordinates
 Peers
 Provides a richer array of performance
information on which to base
an appraisal.
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32. Maintaining Human Resources
 Determining Compensation
 Compensation
 The financial remuneration given by the organization to
its employees in exchange for their work.
 Wages
 Salary
 Incentives
 Purposes of compensation
 Provide means to maintain a reasonable standard of
living.
 Provide a tangible measure of the value of the individual
to the organization.
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33. Compensation Decisions
 Wage-Level Decision
 Is a management policy decision to pay above, at, or
below the going rate for labor in an industry or
geographic area.
 Factors affecting the wage-level decision:
 The size and current success of the firm.
 The level of unemployment in the labor force.
 Area wage surveys
 Provide information about maximum, minimum, and
average wages for a particular job in a labor market.
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34. Compensation Decisions
(cont’d)
 Wage-structure Decision
 Job evaluations
 Wage surveys data and the wage structure
 Individual Wage Decision
 Factors such as seniority, initial qualifications,
individual merit, and labor market conditions
influence wage decisions.
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35. Maintaining Human Resources
(cont’d)
 Determining Benefits
 Benefits (Indirect compensation)
 Things of value other than compensation that an
organization provides to its workers.
 The average company spends an amount equal to more
than one-third of its cash payroll on employee benefits.
 A good benefit plan encourages employees to stay with
the company and attracts new employees.
 Benefits do not necessarily stimulate high performance.
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36. Maintaining Human Resources
(cont’d)
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36
Shop carefully for best-cost providers
Avoid redundant coverage
Provide only benefits that employees want
Managing Benefits
Effectively

37. Maintaining Human Resources
(cont’d)
 Determining Benefits (cont’d)
 Types of benefits
 Pay for time not worked
 Insurance
 Employee service benefits
 Cafeteria benefit plans
 Flexible plans that provide basic coverage and allow
employees to choose the additional benefits they want
up to the cost limit set by the organization.
 Other benefits
 On-site childcare, mortgage assistance, and paid-leave
programs.
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38. KEY TERMS
 human resource management
 human capital
 TitleVII of the Civil Rights Act of
1964
 adverse impact
 Equal Employment Opportunity
Commission
 Age Discrimination in
Employment Act
 affirmative action
 Americans with DisabilitiesAct
 Civil Rights Act of 1991
 Fair Labor Standards Act
 Equal Pay Act of 1963
 Employee Retirement Income
Security Act of 1974
 Family and Medical Leave Act of
19933
 National Labor Relations (Wagner)
Act
 National Labor Relations Board
(NLRB)
 Labor-Management Relations
(Taft-Hartley) Act
 Occupational Safety and Health
Act of 1970 (OSHA)
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39. KEY TERMS (cont’d)
 employment-at-will
 job analysis
 replacement chart
 employee information system
(skills inventory)
 recruiting
 internal recruiting
 external recruiting
 realistic job preview (RJP)
 validation
 training
 development
 BehaviorallyAnchored Rating
Scale (BARS)
 360-degree feedback
 compensation
 performance appraisal
 job evaluation
 benefits
 labor relations
 collective bargaining
 grievance procedure
 knowledge workers
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