principles of management chapter 8 human resource management

Principles of ManagementPrinciples of Management

Chapter 8Chapter 8

Human Resource Human Resource ManagementManagement


Why study HR?Why study HR?

Human Resource Human Resource ManagementManagement


Management is the art of getting things done

through people, and things get done

better with good people.

Cool Bottled Water, Inc.Income Statement

12 Months Ending 12-31-03

Revenue $743,750

Cost of Goods SoldBeginning Inventory (12 turns/year) $20,573+ Purchases $246,875= Total Goods Available for Sale $267,448- Ending Inventory $20,573Total Cost of Goods Sold $246,875

Gross Profit $496,875

Operating ExpensesExecutive Salaries ($50k each) $250,000Payroll (20% of Sales) $148,750Rent ($5k/mo) $60,000Advertising $15,250Depreciation $3,000Utilities $3,000Professional Services $2,000Insurance $1,500Licenses $500Total Operating Expenses $484,000

Net Income Before Federal Tax $12,875Federal Income Tax (25%) $3,219

Net Profit $9,656

Cool Bottled Water, Inc.Income Statement

12 Months Ending 12-31-03

Revenue $743,750

Cost of Goods SoldBeginning Inventory (12 turns/year) $20,573+ Purchases $246,875= Total Goods Available for Sale $267,448- Ending Inventory $20,573Total Cost of Goods Sold $246,875

Gross Profit $496,875

Operating ExpensesExecutive Salaries ($50k each) $250,000Payroll (20% of Sales) $148,750Rent ($5k/mo) $60,000Advertising $15,250Depreciation $3,000Utilities $3,000Professional Services $2,000Insurance $1,500Licenses $500Total Operating Expenses $484,000

Net Income Before Federal Tax $12,875Federal Income Tax (25%) $3,219

Net Profit $9,656


Payroll is one of Payroll is one of the firm’s major the firm’s major

expenses.expenses.

Payroll is one of Payroll is one of the firm’s major the firm’s major

expenses.expenses.

PayrollPayroll$148,750


Joe Jones dba Joe Jones Company

INCOME STATEMENT For the Twelve Months Ending December 31, 2001

Revenue from Operations $500,000 Cost of Goods Sold: Beginning Inventory $100,000 Purchases $250,000 Goods Available for Sale $350,000 Ending Inventory $ 75,000 Cost of Goods Sold $275,000 Gross Profit $225,000 Operating Expenses: Rent $50,000 Payroll $75,000 Marketing $15,000 Utilities $ 4,000 Depreciation $ 1,000 Local Taxes $ 350 Licenses $ 500 Legal Fees $ 1,000 Accounting Fees $ 500 Total Operating Expenses: $147,350 Profit Before Taxes $ 77,650 Income Tax (25%) $ 19,400 Net Profit $ 58,250

Joe Jones dba Joe Jones Company

INCOME STATEMENT For the Twelve Months Ending December 31, 2001

Revenue from Operations $500,000 Cost of Goods Sold: Beginning Inventory $100,000 Purchases $250,000 Goods Available for Sale $350,000 Ending Inventory $ 75,000 Cost of Goods Sold $275,000 Gross Profit $225,000 Operating Expenses: Rent $50,000 Payroll $75,000 Marketing $15,000 Utilities $ 4,000 Depreciation $ 1,000 Local Taxes $ 350 Licenses $ 500 Legal Fees $ 1,000 Accounting Fees $ 500 Total Operating Expenses: $147,350 Profit Before Taxes $ 77,650 Income Tax (25%) $ 19,400 Net Profit $ 58,250

PayrollPayroll$75,000

Human Resource StrategyHuman Resource Strategy

Determine the correct mix of employees and skills needed to meet competitive conditions.

Develop an effective work force through good recruiting and training.

Keep costs down while improving efficiency and productivity.

Determine the correct mix of employees and skills needed to meet competitive conditions.

Develop an effective work force through good recruiting and training.

Keep costs down while improving efficiency and productivity.


Human Resource Management GoalsHuman Resource Management Goals

Developing–keep‘em up to speed?Developing–keep‘em up to speed?

•Training & Development•Performance Appraisals


Maintaining –how do we keep them?Maintaining –how do we keep them?

•Wages, Salary, Benefits•Job Enrichment


•Recruiting•Selecting


Attracting – how do we get them?Planning – what people will we need?Planning – what people will we need?

•Job Analysis•Forecasting


Human Resource PlanningHuman Resource Planning

The nature of the work activities. The nature of the work activities. Current technology. Current technology. Work productivity and product quality Work productivity and product quality

standards. standards. Results in Job Description.Results in Job Description.

The nature of the work activities. The nature of the work activities. Current technology. Current technology. Work productivity and product quality Work productivity and product quality

standards. standards. Results in Job Description.Results in Job Description.

Job AnalysisJob Analysis



What new technologies are emerging?What new technologies are emerging?What is the volume of business likely to be?What is the volume of business likely to be?What is the employee turnover rate?What is the employee turnover rate?What is the labor market like?What is the labor market like?

What new technologies are emerging?What new technologies are emerging?What is the volume of business likely to be?What is the volume of business likely to be?What is the employee turnover rate?What is the employee turnover rate?What is the labor market like?What is the labor market like?

ForecastingForecasting



What is the state of What is the state of the current labor market?the current labor market?

What is the state of What is the state of the current labor market?the current labor market?



For the very best, the For the very best, the market is always tight!market is always tight!For the very best, the For the very best, the

market is always tight!market is always tight!


The goal is the most talented, best fit.The goal is the most talented, best fit.

Stock OptionsStock OptionsBetter BenefitsBetter Benefits

Signing BonusSigning Bonus

Sell LifestyleSell Lifestyle

Ways to RecruitWays to Recruit

Recruiting BonusRecruiting Bonus


Higher PayHigher Pay

When Labor is Scarce…When Labor is Scarce…

Job SharingJob SharingWork HouseWork House

TelecommutingTelecommuting

Temp AgencyTemp Agency

RethinkRethink

Flexible SchedulesFlexible Schedules


OutsourcingOutsourcing

Internal RecruitingInternal Recruiting

Internal Recruiting Advantages

Less costly than an external search.Less costly than an external search.Higher employee commitment, Higher employee commitment,

development, and satisfaction.development, and satisfaction.Offers opportunities for internal Offers opportunities for internal

career advancements.career advancements.

Less costly than an external search.Less costly than an external search.Higher employee commitment, Higher employee commitment,

development, and satisfaction.development, and satisfaction.Offers opportunities for internal Offers opportunities for internal

career advancements.career advancements.


SelectionSelection

Selection devicesSelection devices Job Description – Job Description – Essential FunctionsEssential Functions Application/Resume – work historyApplication/Resume – work history EducationEducation ReferencesReferences

Selection devicesSelection devices Job Description – Job Description – Essential FunctionsEssential Functions Application/Resume – work historyApplication/Resume – work history EducationEducation ReferencesReferences


Which Candidates to Interview?Which Candidates to Interview?

The InterviewThe Interview

Use open-ended Use open-ended questions.questions.

Know what you Know what you want.want.

Prepare a road Prepare a road map.map.

Listen--don’t Listen--don’t talk.talk.

Allow enough Allow enough time so that the time so that the interview will interview will not be rushed.not be rushed.

Don’t ask Don’t ask questions that questions that aren’t relevant aren’t relevant

to the job.to the job.


1. What has been a particularly demanding goal for you to achieve?

2. Can you think of a situation in which an innovative course of action was needed? What did you do in this situation?

3. What are the typical customer interactions you have in your present position? Can you think of a recent example of one of these?

4. Have you ever been in a situation where you have had to take on new tasks or roles? Describe this situation and what you did?

5. In your present position, what standards have you set for doing a good job? How did you determine them?

1. What has been a particularly demanding goal for you to achieve?

2. Can you think of a situation in which an innovative course of action was needed? What did you do in this situation?

3. What are the typical customer interactions you have in your present position? Can you think of a recent example of one of these?

4. Have you ever been in a situation where you have had to take on new tasks or roles? Describe this situation and what you did?

5. In your present position, what standards have you set for doing a good job? How did you determine them?

Interview Questions:Interview Questions:

Questions to avoid:Questions to avoid:


Interview questions to avoid because they may show illegal bias.•Are you a U.S. citizen? (adversely impacts national origin) •Do you have a visual, speech, or hearing disability? •Are you planning to have a family? When? •Have you ever filed a workers’ compensation claim? •How many days of work did you miss last year due to illness? •What off-the-job activities do you participate in? •Would you have a problem working with a female partner? •Where did you grow up? •Do you have children? How old are they? •What year did you graduate from high school? (reveals age)

Interview questions to avoid because they may show illegal bias.•Are you a U.S. citizen? (adversely impacts national origin) •Do you have a visual, speech, or hearing disability? •Are you planning to have a family? When? •Have you ever filed a workers’ compensation claim? •How many days of work did you miss last year due to illness? •What off-the-job activities do you participate in? •Would you have a problem working with a female partner? •Where did you grow up? •Do you have children? How old are they? •What year did you graduate from high school? (reveals age)

Federal LegislationFederal Legislation

Point of the laws is to stop discriminatory practices.Point of the laws is to stop discriminatory practices.• EEO Legislation Attempts to:EEO Legislation Attempts to: balance the pay given to men and women.balance the pay given to men and women. provide employment opportunities without regard provide employment opportunities without regard

to race, religion, national origin, and sex.to race, religion, national origin, and sex. ensure fair treatment for employees of all ages.ensure fair treatment for employees of all ages. avoid discrimination against disabled individualsavoid discrimination against disabled individuals

Point of the laws is to stop discriminatory practices.Point of the laws is to stop discriminatory practices.• EEO Legislation Attempts to:EEO Legislation Attempts to: balance the pay given to men and women.balance the pay given to men and women. provide employment opportunities without regard provide employment opportunities without regard

to race, religion, national origin, and sex.to race, religion, national origin, and sex. ensure fair treatment for employees of all ages.ensure fair treatment for employees of all ages. avoid discrimination against disabled individualsavoid discrimination against disabled individuals


Minimum Wage = $7.10. OT = 40+ hrs Minimum Wage = $7.10. OT = 40+ hrs Equal Pay in same job = same payEqual Pay in same job = same pay Employing MinorsEmploying Minors Anti-discrimination LawsAnti-discrimination Laws Americans with Disabilities ActAmericans with Disabilities Act Immigration Law – and the I-9Immigration Law – and the I-9

Laws Governing Employment PracticesLaws Governing Employment Practices


Withholding RequirementsWithholding Requirements


Federal Unemployment (FUTA) State Unemployment Taxes **

** Employer pays based on experience rating.

Social Security and Medicare (FICA) Federal Income Tax Withholding Workman’s Compensation (L&I) **

Developing an Effective WorkforceDeveloping an Effective Workforce

• Orientation TrainingOrientation Training

• On the Job TrainingOn the Job Training

It is cheaper, less disruptive, and a better motivator to It is cheaper, less disruptive, and a better motivator to train current staff rather than to find new employees.train current staff rather than to find new employees.

• Classroom TrainingClassroom Training

• Cross TrainingCross Training

• SeminarsSeminars

• OtherOther


Performance AppraisalPerformance Appraisal

HRM professionals concentrate on two things: HRM professionals concentrate on two things: The accurate assessment of performance.The accurate assessment of performance.Training managers to effectively use the Training managers to effectively use the

performance appraisal interview.performance appraisal interview.

HRM professionals concentrate on two things: HRM professionals concentrate on two things: The accurate assessment of performance.The accurate assessment of performance.Training managers to effectively use the Training managers to effectively use the

performance appraisal interview.performance appraisal interview.

An opportunity to assess the performance of the employee, give An opportunity to assess the performance of the employee, give feedback, and to performfeedback, and to perform Job Analysis. Job Analysis.


Assessing Performance AccuratelyAssessing Performance Accurately

360-degree feedback360-degree feedback: uses multiple raters to : uses multiple raters to appraise employee performance. appraise employee performance. “Self rating.”“Self rating.”

Halo errorHalo error: error that occurs when an : error that occurs when an employee receives the same rating on all employee receives the same rating on all dimensions. No action steps emerge.dimensions. No action steps emerge.

HomogeneityHomogeneity: rating error that occurs when a : rating error that occurs when a rater gives all employees a similar rating.rater gives all employees a similar rating.

““Three is good!”Three is good!”

360-degree feedback360-degree feedback: uses multiple raters to : uses multiple raters to appraise employee performance. appraise employee performance. “Self rating.”“Self rating.”

Halo errorHalo error: error that occurs when an : error that occurs when an employee receives the same rating on all employee receives the same rating on all dimensions. No action steps emerge.dimensions. No action steps emerge.

HomogeneityHomogeneity: rating error that occurs when a : rating error that occurs when a rater gives all employees a similar rating.rater gives all employees a similar rating.

““Three is good!”Three is good!”


Performance Expectations & Feedback Review

Employee’s Name Reviewing Manager’s Name

Guide to rating and performance codes5 - Outstanding - Consistently exceeds requirements of position. Clearly superior performance which is recognized by all.

Demonstrates special capabilities & willingness to perform at the highest possible level..4 - Consistently Exceeds - Frequently exceeds job requirements.3 - Satisfactory - Consistently meets job requirements and is doing what is expected of a good performer.2 - Needs Improvement - Meets jobs requirements some of the time; needs noticeable improvement to achieve an overall

acceptable level of performance and meet expectations1 - Serious Problem - Does not meet job requirements; immediate and significant improvements needed to stay on the job.

Performance Expectations & Feedback Review

Employee’s Name Reviewing Manager’s Name

Guide to rating and performance codes5 - Outstanding - Consistently exceeds requirements of position. Clearly superior performance which is recognized by all.

Demonstrates special capabilities & willingness to perform at the highest possible level..4 - Consistently Exceeds - Frequently exceeds job requirements.3 - Satisfactory - Consistently meets job requirements and is doing what is expected of a good performer.2 - Needs Improvement - Meets jobs requirements some of the time; needs noticeable improvement to achieve an overall

acceptable level of performance and meet expectations1 - Serious Problem - Does not meet job requirements; immediate and significant improvements needed to stay on the job.

Points-based Rating ScalePoints-based Rating Scale


Behaviorally Anchored Rating ScaleBehaviorally Anchored Rating Scale

Maintaining an Effective WorkforceMaintaining an Effective Workforce

• CompensationCompensation

• Wage and salary structureWage and salary structure

• BenefitsBenefits

• When necessary, terminationsWhen necessary, terminations

• CompensationCompensation

• Wage and salary structureWage and salary structure

• BenefitsBenefits

• When necessary, terminationsWhen necessary, terminations


Human Resource Management GoalsHuman Resource Management Goals

Developing–keep‘em up to speed?Developing–keep‘em up to speed?



Maintaining –how do we keep them?Maintaining –how do we keep them?





Attracting – how do we get them?Planning – what people will we need?Planning – what people will we need?



principles of management chapter 8 human resource management

Documents

human resource planning

work productivity

human resource strategy

scarce job

good recruiting

work activities

current labor market

benefits job enrichment