CHAPTER 9Managing Human Resources in Organizations

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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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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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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The Legal Environment of HRM

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Equal Employment Opportunity

Compensationand Benefits

Labor Relations

Health and Safety

Title VII 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-Hartley Act)Age Discriminationin Employment Act

Employee Retirement Income

Security Act of 1974 (ERISA)Americans with

Disabilities Act Family and Medical Leave Act of 1993

(FMLA)Civil Rights Act of 1991

Vietnam Era Veterans

Readjustment Assistance Act

Executive Orders

The Legal Environment of HRM Equal Employment Opportunity Title VII 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 enforcing Title VII as

well as several other employment-related laws.

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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.17–7

The Legal Environment of HRM (cont’d) Equal Employment Opportunity (cont’d) Age Discrimination in Employment Act

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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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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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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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 Leave Act of 1993 (FMLA) Requires employers to provide up

to 12 weeks of unpaid leave for family and medical emergencies.

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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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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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The Legal Environment of HRM (cont’d)

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Alcohol and drug

dependenciesAIDS in

the workplaceSexual

harassment

Emerging Legal Issues

Attracting Human Resources

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Job Analysis A systematic analysis of jobs within an organization.

Job DescriptionA 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.

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. 17–

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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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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 ofExternal Recruits

Advertising

Campus interviews

Employment agencies

Walk-ins

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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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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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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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.

Other Techniques 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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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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Developing Human Resources (cont’d) Assessing Training 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

Common Training Methods

Web-based and electronic

training

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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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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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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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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Developing Human Resources (cont’d)

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Errors of leniency and

strictnessHalo error

Recency error

Rater Errors in Performance Appraisal

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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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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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.17–32

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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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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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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Maintaining Human Resources (cont’d)

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Shop carefully for best-cost providers

Avoid redundant coverage

Provide only benefits that employees want

Managing Benefits Effectively

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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KEY TERMS

human resource management human capital Title VII of the Civil Rights Act

of 1964 adverse impact Equal Employment

Opportunity Commission Age Discrimination in

Employment Act affirmative action Americans with Disabilities Act 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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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 Behaviorally Anchored

Rating Scale (BARS) 360-degree feedback compensation performance appraisal job evaluation benefits labor relations collective bargaining grievance procedure knowledge workers

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