Chapter

2. Chapter 10 Human Resources Management

3. Learning Objectives • After studying Chapter 10, you will know: • how companies use human resources management to gain competitive advantage • why companies recruit both internally and externally for new hires • the various methods available for selecting new employees • why companies spend so much on training and development • how to determine who should appraise an employee’s performance • how to analyze the fundamental aspects of a reward system

4. Learning Objectives (cont.) • After studying Chapter 10, you will know: • how unions influence human resources management • how the legal system influences human resources management

5. Strategic Human Resources Management (HRM) • Human Resources Management (HRM) • formal systems for the management of people within the organization • human resources that have a strategic impact: • create value • are rare • are difficult to imitate • are organized • human capital - the knowledge, skills, and abilities of employees that have economic value • the emphasis on different HR activities depends on whether the organization is growing, declining, or standing skill

6. Strategic HRM (cont.) • The HR planning process • a three-stage activity with a strategic purpose derived from the organization’s plans • planning - determine the organization’s plans • programming - create specific HR activities • evaluating - determine whether HR programs are producing the results needed to contribute to the organization • demand forecasts - determine how many and what type of people are needed • derived from organizational plans • based on current sales and projected future sales growth

7. An Overview Of The HR Planning Process Planning Programming Evaluation Organizational strategic planning HRM environmental scanning Human resources planning Human resources activities Results • Labor markets • Technology • Legislation • Competition • Economy • Demand forecast • Internal labor supply • External labor supply • Job analysis • Employee recruitment • Employee selection • Outplacement • Training and • development • Performance appraisal • Reward systems • Labor relations • Productivity • Quality • Innovation • Satisfaction • Turnover • Absenteeism • Health

8. Strategic HRM (cont.) The HR planning process (cont.) labor supply forecasts - estimates of how many and what types of employees the organization actually will have evaluate current employees and available external workforce forecasts of a diverse workforce have become fact reconciling supply and demand labor deficit - hire new employees, promote current employees to new positions, or outsource work to contractors labor surplus may be dealt with by: laying off employees attrition - the normal turnover of employees transferring employees to other areas

9. Strategic HRM (cont.) The HR planning process (cont.) job analysis - a tool for determining what is done on a given job and what should be done on that job results of a job analysis presented in two types of documents job description - tells about the job itself job specification - describes the employee characteristics needed to perform the job provides the information that virtually every HR activity requires

10. Staffing The Organization Recruitment the development of a pool of applicants for organizational jobs internal recruiting- considers current employees for promotions and transfers advantages employers know their employees employees know their organization provides opportunity to move up within the organization drawbacks yields limited applicant pool can inhibit a company that wants to change job posting - a mechanism for advertising open positions

11. Staffing The Organization (cont.) Recruitment (cont.) external recruiting - brings “new blood” into the organization that can inspire innovation newspaper advertisements - remains the most popular recruiting source web - increasingly popular as newspaper readership declines employee referrals - some companies offer rewards for referrals campus recruiting large pool of people applicants have up-to-date training source of innovative ideas

12. Effectiveness Of Recruitment Sources Unions 1.64 Public employmentagencies 1.92 2.78 Private employment agencies Direct applications 2.86 3.05 Want ads Professional associations 3.08 Executive search firms 3.71 College recruiting 3.81 Employee referrals 3.84 Scale: 1 = not good, 3 = average, 5 = extremely good

13. Staffing The Organization (cont.) Selection choosing from among qualified applicants to hire application and résumés - provide basic information tend not to be very useful for making final selection decisions interviews - most popular selection tool questions that are not job related are prohibited unstructured (nondirective) - interviewer asks different interviewees different questions structured - interviewer asks all applicants the same questions situational interview - focuses on hypothetical situations behavioral description interview - explores what applicant’s have actually done in the past

14. Staffing The Organization (cont.) Selection (cont.) reference checks - used by virtually all organizations reference information is becoming increasingly difficult to obtain personality tests - paper and pencil inventories may be difficult to defend in court nonetheless, regaining popularity drug testing Drug-Free Workplace Act of 1988 genetic testing - identifies the likelihood of contracting a disease based on a person’s genetic makeup cognitive ability tests - measure intellectual abilities

15. Staffing The Organization (cont.) Selection (cont.) performance tests - require performing a sample of the job have been developed for almost every occupation assessment center - managerial performance test in which candidates participate in a variety of exercises and situations taps a number of critical managerial dimensions assessors generally are line managers from the organization integrity tests - assess a job candidate’s honesty polygraphs (lie detector tests) - banned for most employment purposes paper-and-pencil tests - more recent tests of integrity evidence of validity has not erased doubts about these tests

16. Staffing The Organization (cont.) Selection (cont.) reliability - the consistency of test scores over time and across alternative measurements validity - assesses the accuracy of the selection test criterion-related validity - degree to which a test actually predicts or correlates with job performance relies on scatterplots to depict the relationship between test scores and job performance content validity - degree to which selection tests measure a representative sample of the knowledge, skills, and abilities required for the job more subjective (less statistical) than criterion-related validity not less important than criterion-related validity

17. Correlation Scatterplots High High Performance Performance Low Low Low High Low High Test score Test score Coefficient of correlation = .00 Coefficient of correlation = .75

18. Staffing The Organization (cont.) Workforce reductions layoffs(downsizing) - laying off large numbers of employees as a result of restructuring in the industry victims - lose self-esteem, suffer demoralizing job searches, and are stigmatized by being out of work outplacement - process of helping people who have been dismissed to regain employment elsewhere survivors - suffer disenchantment, distrust, and lethargy a good performance appraisal process helps survivors avoid feeling that they retained their jobs due to arbitrary decision making

19. Staffing The Organization (cont.) Workforce reductions (cont.) termination - “firing” an at-will employee if the employee can quit for any reason, employer should be able to fire for any reason courts in most states have made exceptions to this doctrine public policy exceptions progressive discipline - graduated steps used to attempt to correct workplace behavior termination interview - stressful situation for all parties used to discuss the company’s position with the employee often good to have a third party present conduct the interview in a neutral location

20. Advice On Termination Don’ts Do’s • Give as much warning as possible for • mass layoffs • Sit down one on one with the • individual in a private office • Complete a termination session within • 15 minutes • Provide written explanations of severance • benefits • Provide outplacement services away from • company headquarters • Be sure the employee hears about her/his • termination from a manager, not a colleague • Express appreciation for what the employee • has contributed, if appropriate • Don’t leave room for confusion when • firing. Tell the individual in the first • sentence that s/he is terminated • Don’t allow time for debate during a • termination session • Don’t make personal comments when • firing someone; keep the conversation • professional • Don’t rush a fired employee offsite unless • security is an issue • Don’t fire people on significant dates • Don’t fire employees when they are on • vacation or have just returned

21. Staffing The Organization (cont.) Legal issues and equal employment opportunity Civil Rights Act of 1964 Title VII forbids discrimination in employment decisions based on race, sex, color, national origin, and religion created the Equal Employment Opportunity Commission (EEOC) - enforces Title VII Civil Rights Act of 1991 - provides for punitive damages Uniform Guidelines on Employee Selection Procedures - describe the development of employment practices that comply with the law adverse impact - an apparently neutral employment practice adversely affects a protected class

22. Developing The Workforce Training and development training - teaching lower-level employees how to perform their present jobs developing - teaching managers and professional employees broad skills needed for their present and future jobs Overview of the training process phase one - needs assessment identify the jobs, people, and departments which need training phase two - design the training to meet training goals phase three - decide what training methods to use phase four - evaluate the training’s effectiveness

23. Developing The Workforce (cont) Types of training orientation - training designed to introduce new employees to the company and familiarize them with policies, procedures, culture, and the like benefits may include lower turnover, increased morale, higher productivity, and lower recruiting and training costs team training - provides employees with the skills and perspectives they need to work in collaboration with others diversity training - focuses on identifying and reducing hidden biases against people with differences and developing the skills needed to effectively manage a diversified workforce

24. Selected Instructional Methods And Media 100 Classroom programs - live 80 Videotapes Internet/WWW Games/Simulations (computer-based) 60 Videoconferencing (to group) Percentageusing 40 Satellite/ Broadcast TV 20 Outdoor experiential programs Videoconferencing (individual desktops) 0 Number of employees Overall 100-499 500-999 1,000-2,499 2,500-9,999 10,000 or more

25. Performance Appraisal Performance appraisal the assessment of an employee’s job performance two basic purposes administrative - provides information for making salary, promotion, and layoff decisions developmental - diagnoses training needs and enables career planning What do you appraise? trait appraisals - subjective judgments about employee performance often leads to personal bias may not be suitable for providing useful feedback

26. Performance Appraisal (cont.) What do you appraise? (cont.) behavioral appraisals - focus on more observable aspects of performance such as specific, prescribed behaviors helps ensure understanding of what the ratings really measure results appraisals - tend to be more objective focus on production data Management By Objectives (MBO) - subordinate and supervisor agree on specific performance goals develop a plan and time frame for attaining the goals identify criteria for determining whether goals have been reached useful when managers want to empower employees may focus on short-term achievement and ignore long-term goals

27. Example Of BARS Used For Evaluating Quality Uses measures of quality and well-defined processes to achieve project goals. Defines quality from the client’s perspective. 7 Outstanding 6 Look for/identifies ways to continually improve the process. Clearly communicates quality management to others. Develops a plan that defines how the team will participate in quality. 5 Appreciates TQM as an investment. Average 4 Has measures of quality that define tolerance levels. Views quality as costly. Legislates quality. 3 Focuses her/his concerns only on outputs and deliverables, ignoring the underlying process. 2 Blames others for absence of quality. Gives lip service only to quality concerns. Poor 1

28. Guidelines For Choosing An Appraisal System Attend to legal considerations Develop a formal appeal process Use job analysis for performance standards Use more than one rater where possible Communicate performance standards Evaluate on specific behaviors Document the process carefully Appraisal System

29. Performance Appraisal (cont.) Who should do the appraisal? managers and supervisors - traditional source of appraisal information peers and team members - best at identifying leadership potential and interpersonal skills subordinates - provide feedback to supervisors internal and external customers internal customers include anyone inside the organization who depends upon an employee’s work output self-appraisals - increases worker’s involvement in appraisal 360 degree appraisal - uses multiple sources to gain comprehensive perspective of one’s performance

30. Performance Appraisal (cont.) How do you give employees feedback? performance feedback is a stressful task for all parties most difficult interviews are with employees who are performing poorly no “one best way” to perform the appraisal interview follow-up meetings may be necessary

31. Guidelines For Giving Feedback To An Average Employee Summarize performance specifically Explain the importance of employee’s work Express confidence in employee’s future Raise relevant issues Thank the employee Performance feedback

32. Designing Reward Systems Pay decisions effective reward systems attract, motivate, and retain people pay level - choice of whether to be a high-, average-, or low-paying company pay structure - choice of how to price different jobs within the organization jobs similar in worth are grouped into families pay grade established for each job family individual pay decisions - concern different pay rates for jobs of similar worth within the same family decisions based on: seniority job performance

33. Factors Affecting The Wage Mix Compensation policy of organization Conditions of the labor market Area wage rates Worth of job Cost of living Employee’s relative worth Collective bargaining Employer’s ability to pay Legal requirements Internal factors External factors Wage Mix

34. Pay Structure Maximum rate 8.00 Wage curve 7.50 7.00 Minimum rate 6.50 Wage rates 6.00 Range steps 5.50 Range overlap Range 5.00 Midpoint 4.50 150 200 250 300 350 400 450 500 Job worth (total points)

35. Designing Reward Systems (cont.) Incentive systems and variable pay individual incentive plans - most common type consists of an objective standard against which a worker’s performance is compared group incentive plans gainsharing - concentrate on saving money profit-sharing - incentives based on unit, department, plant, or company productivity each group has a production standard pay is based on the amount of production over the standard merit pay system - used in the absence of an objective standard bonuses based on supervisor’s judgment of employee’s merit

36. Designing Reward Systems (cont.) Employee benefits benefits required by law workers’ compensation - provides financial support to employees suffering from a work-related injury or illness social security - provides financial support to: retirees disabled employees funds come from taxes on employers, employees, and self-employed workers unemployment insurance - provides financial support to employees who are laid off for reasons beyond their control employer contribution based on the number of employees it has terminated

37. Designing Reward Systems (cont.) Employee benefits (cont.) benefits not required by law most common are pension plans, medical and hospital insurance, life insurance, and vacation time cafeteria benefit plan - employees choose from a menu of options to create a benefit package tailored to their needs flexible benefit plan - employees are given credits to spend on benefits that fit their unique needs

38. Designing Reward Systems (cont.) Legal issues in compensation and benefits Fair Labor Standards Act (FLSA) of 1938 - set minimum wages, maximum hours, child labor standards, and overtime pay provisions nonexempt employees - entitled to premium pay for overtime time-and-one-half exempt employees - not subject to overtime or minimum wage provisions executives, administrators, and professionals

39. Designing Reward Systems (cont.) Legal issues in compensation and benefits (cont.) Equal Pay Act (EPA) of 1963 - prohibits unequal pay for men and women who perform equal work exceptions permitted where pay differential is based on seniority, a merit system, or an incentive system comparable worth - principle of equal pay for different jobs of equal worth women who perform different jobs of equal worth as those performed by men should be paid the same wage no federal law requires comparable worth some states have implemented comparable worth changes

40. Designing Reward Systems (cont.) Health and safety Occupational Safety and Health Act (OSHA) of 1970 - requires employers to pursue workplace safety employers must maintain records of injuries and deaths caused by workplace accidents employers must submit to work-site inspections

41. Labor Relations Labor relations system of relations between workers and management Labor laws National Labor Relations Act (NLRA) - Wagner Act declared labor organizations legal established five unfair employer labor practices created the National Labor Relations Board conducts certification elections hears unfair labor practices complaints issues injunctions against offending employers greatly assisted the growth of unions

42. Labor laws (cont.) Labor-Management Relations Act - Taft-Hartley Act intended to restore the balance of power between unions and management protected employers’ free-speech rights defined unfair labor practices by unions permitted workers to decertify unions Labor-Management Reporting and Disclosure Act - Landrum-Griffin Act designed to curb abuses by union leadership and rid unions of corruption declared a bill of rights for union members Labor Relations (cont.)

43. Unionization authorization cards - collected by union locals to determine whether workers want to be represented for the purpose of collective bargaining NLRB will conduct certification elections if union has collected cards from 30 percent of the bargaining unit simple majority of those voting required to determine a winner if union wins, it is certified as the bargaining unit representative union and management obliged to negotiate in good faith to obtain a collective bargain agreement Labor Relations (cont.)

44. Determinants Of Union Voting Behavior • Beliefs in union power • Wages • Power • Working conditions • Economic needs • Wages • Hours Union vote: Yes or No • Union image • Corrupt? • Too powerful? • Unnecessary given • current legislation? • Job attitudes • Job dissatisfaction • Unfair supervision • Poor communication

45. Labor Relations (cont.) Collective bargaining negotiate agreement about wages, hours, and working conditions to compel agreement on their terms, workers may conduct an economic strike arbitration - use of a neutral third party to resolve a labor dispute used to deal with disagreements about interpretation of the contract avoids wildcat strikes in which workers walk off the job in violation of the contract

46. Labor Relations (cont.) Collective bargaining (cont.) contents of collective bargaining agreement union shop - union security clause specifying that workers must join the union after a set period of time on the job right to work - state legislation that prohibits the negotiation of union shop clauses grievance procedure - provides workers with a voice in the administration of the contract unions have a duty of fair representation