Chapter 8

Managing Human Resources

The Foundations of Human Resource Management (HRM)

Human Resource Management (HRM)  

Set of organizational activities directed at attracting, developing, and maintaining an effective workforce

The Strategic Importance of HRMHRM’s importance has grown dramatically in the last two decades. This new importance stems from:

– Increased legal complexities

– The recognition that human resources are a valuable means for improving productivity

– The awareness today of the costs associated with poor human resource management

Human Resource Planning HR planning involves job analysis and forecasting the demand for and supply of labor.

Job Analysis

Systematic analysis of jobs in an organization

Job Description 

Systematic evaluation of the duties, working conditions, tools, materials, and equipment related to the performance of a job

Job Specification  

Description of the skills, abilities, and other credentials required by a job

The Human Resource Planning Process

Perform Job Analysis

Forecast Demand for Labor

Forecast Internal Supply of Labor

Develop Plan to Match Demand with Supply

Forecast External Supply of Labor

Forecasting HR Demand & SupplyForecasting the supply of labor is really two tasks:

Forecasting Internal Supply

The number and type of employees who will be in the firm at some future date

Forecasting External Supply

The number and type of people who will be available for hiring from the labor market at large

Forecasting HR Demand & SupplyReplacement Charts

Listing of each managerial position, who occupies it, how long that person will likely stay in the job, and who is qualified as a replacement

Employee Information System (or Skills Inventory)

Computerized system containing information on each employee’s education, skills, work experiences, and career aspirations

Matching HR Supply & Demand After comparing future demand and internal supply,

managers can make plans to manage predicted shortfalls or overstaffing.

If a shortfall is predicted:– New employees can be hired.– Present employees can be retrained and

transferred into understaffed areas.– Individuals approaching retirement can be

convinced to stay on.– Labor-saving or productivity-enhancing systems

can be installed .

Staffing the Organization

External Staffing

The process of acquiring staff from outside the company

Internal Staffing

The process of promoting staff from within the company

Recruiting Human ResourcesRecruiting

Process of attracting qualified persons to apply for open jobs

Internal Recruiting

Practice of considering present employees as candidates for job openings

External Recruiting

Practice of attracting people outside an organization to apply for jobs

Selecting Human Resources Application Forms (Blanks) Tests Interviews Other Techniques

Validation  

Process of determining the predictive value of information

Developing Human Resources

Orientation 

Process of introducing new employees to the organization so that they can become effective contributors more quickly.

Assessing Training & Development Needs

Needs Analysis

Determines the organization’s true needs and the training programs necessary to meet them

What knowledge, skills, and abilities does the organization need to compete?

What skills must its workforce possess in order to perform the organization’s work effectively?

Training & Development Techniques & Methods

Work-Based Program  

Training technique that ties training and development activities directly to task performance

On-the-Job Training: Work‑based training, sometimes informal, conducted while an employee is in actual work situation

Vestibule Training: Worked‑based training conducted in a simulated environment away from the work site

Systematic Job Rotation & Transfer: Work‑based training in which employees are systematically moved from one job to another so that they can learn a wider array of tasks and skills

Training & Development Techniques & Methods

Instructional-Based Program  

Training designed to impart new knowledge and information

Lecture or Discussion Approach: Instructional‑based training in which knowledge and information are descriptively presented

Computer-Assisted Training: Instruction‑based training in which is knowledge and information are presented via computer

Training & Development Techniques & Methods

Training TechnologyVideo Teleconferencing

Trainers in centralized locations deliver material live by satellite hookup to remote sites

Interactive VideoMaterial is presented via video technology on a monitor from a central serving mechanism, a video disk, CD-ROM, or web site

Training & Development Techniques & Methods

Team Building & Group‑Based Training

More and more organizations are using teams as a basis for doing their jobs.

Many of the same companies are developing training programs specifically designed to facilitate intragroup cooperation among members of teams.

Evaluating Employee Performance

Performance Appraisal

Formal evaluation of an employee’s job performance in order to determine the degree to which the employee is performing effectively

The Performance Appraisal Process Conducting the Performance Appraisal

Who should conduct the performance appraisal?

What sources of information should be used? Providing Feedback

360° Feedback: Performance appraisal system in which information is provided from all sources—supervisors, employees, peers, and so forth

The Performance Appraisal ProcessMethods for Appraising Performance

Ranking MethodsSimple Ranking Method: Performance appraisal method that ranks employees from best to worst

Forced Distribution Method: Performance appraisal method that classifies employees into different performance categories based on a predetermined distribution

Rating Methods

Graphic Rating Scale: Performance rating method using a numerical scale to rate performance along a set of dimensions

Critical Incident Method: Performance rating method based on stated examples that reflect especially good or poor performance

Providing Compensation & Benefits

Compensation Set of rewards that organizations provide to individuals in return for their willingness to perform various jobs and tasks

Determining Basic CompensationBasic Compensation

The base level of wages or salary paid to an employee

Wages: Compensation in the form of money paid for time worked

Salary: Compensation in the form of money paid for discharging the responsibilities of a job

Determining Basic CompensationPay Surveys in Compensation

Method used to obtain information about compensation paid to employees by other employers

Job Evaluation

Methods for determining the relative worth of jobs in order to set compensation levels

Establishing a Pay Structure

Compensation for different jobs is based on the organization’s assessment of the relative value to the organization of each job class.

Performance-Based Compensation

Merit Pay Plan  

Performance‑based pay plan basing part of compensation on employee merit

Skill-Based or Knowledge-Based Pay  

Performance‑based pay plan rewarding employees for acquiring new skills or knowledge

Incentive Compensation Systems  

Piece-Rate Incentive Plan  

Incentive‑based pay plan that provides payment for each unit produced

Individual Incentive Plan  

Incentive‑based pay plan that rewards individual performance on a real-time basis

Sales Commission  

Individual incentive plan rewarding employees with a percentage of sales volume that they generate

Team & Group Incentive Systems

Gainsharing Program  

Group‑based incentive plan that gives rewards for productivity improvements

Profit Sharing  

Group‑based incentive plan in which employees are paid a share of company profits

Indirect Compensation & Benefits

Benefits

Compensation other than wages and salaries

Mandated Protection Plans

Unemployment Insurance: Mandated coverage protecting employees who are laid off

Social Security: Mandated federal retirement program

Worker’s Compensation Insurance: Legally required insurance covering workers who are injured or become ill on the job

Protect employees when their income is threatened or reduced by illness, disability, death, unemployment, or retirement.

Optional Protection Plans

Private Pension Plan: Prearranged company pensions provided to retired employees

Protect employees in the same manner as mandatory plans, except companies can choose whether or not to provide them.

Paid Time Off

Paid holidays, paid vacations, sick leave, & personal leave

Other Types of BenefitsWellness Program: Benefit in the form of programs designed to help employees from becoming sick

Childcare: These plans might include scheduling help, referrals to various types of services, or reimbursement accounts for childcare expenses. In many cases, they actually include company‑paid day care.

Cafeteria Benefit Plan: Benefit plan that sets limits on benefits per employee, each of whom may choose from a variety of alternative benefits

The Legal Context of Human Resource Management

Equal Employment Opportunity

Legally mandated nondiscrimination in employment on the basis of race, creed, sex, or national origin

Illegal Discrimination

Discrimination against protected classes that causes them to be unfairly differentiated from others

Protected Class

Set of individuals who by nature of one or more common characteristics are protected by law from discrimination on the basis of any of those characteristics

Equal Employment Opportunity Legislation  

Title VII of the Civil Rights Act of 1964: Federal law forbidding employment discrimination on the basis of race, color, religious beliefs, sex, or national origin

Equal Pay Act of 1963: Federal law requiring organizations to pay men and women the same pay for doing equal work

Comparable Worth: Principle that jobs which are worth the same should be compensated at the same level regardless of who performs them

Age Discrimination and Employment Act (ADEA): Federal law prohibiting discrimination against people over 40 on the basis of age

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Equal Employment Opportunity Legislation  

Pregnancy Discrimination Act of 1979: Federal law forbidding discrimination against women who are pregnant

Civil Rights Act of 1991: Amendment that extends Title VII of the Civil Rights Act of 1964 and provides for compensatory and punitive damages

Americans with Disabilities Act of 1990 (ADA): Federal law prohibiting discrimination on the basis of disability and requiring employers to make reasonable accommodation for disabled applicants and employees

Family and Medical Leave Act of 1993: Federal law requiring employers to provide unpaid leave for specified family and medical reasons

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Enforcing Equal Employment Opportunity

Equal Employment Opportunity Commission (EECO) 

Agency created by Title VII to enforce discrimination-related laws

Affirmative Action Program  

Practice of recruiting qualified employees belonging to racial, gender, or ethnic groups who are underrepresented in an organization

Reverse Discrimination  

Practice of discriminating against well-represented groups by over-hiring members of underrepresented groups

Legal Issues in Compensation

Laws Affecting Total CompensationFair Labor Standards Act: Federal law setting minimum‑wage and over‑time pay requirements

Laws Affecting Other Forms of Compensation

Employee Retirement Income Security Act of 1974 (ERISA): Federal law regulating private pension plans

Contemporary Legal Issues in HR ManagementOccupational Safety and Health Act of 1970 (OSHA)

Federal law setting and enforcing guidelines for protecting workers from unsafe conditions and potential health hazards in the workplace

Emerging Areas of Discrimination Law AIDS in the Workplace Sexual Harassment

Quid Pro Quo Harassment Hostile Work Environment

Employment-at-Will

New Challenges in the Changing Workplace

Managing Workforce Diversity

Range of workers’ attitudes, values, and behaviors that differ by gender, race, and ethnicity

New Challenges in the Changing Workplace

Managing Knowledge Workers

Employee who is of value because of the knowledge that he or she possesses

New Challenges in the Changing Workplace

Contingent Worker  

Employee hired on something other than a full-time basis to supplement an organization’s permanent work force