Ch. 10 Outline
HR Management
Strategic HR Management
Workforce Development
Performance Appraisals
Designing Reward Systems
Labor Relations
Strategic Human Resources
• Human Resource Management deals with
formal systems for managing people at work
• Strategic Human Resources Management
– Creates Value
– Is Rare – people are a source of competitive
advantage when their skills, knowledge, and abilities
are not equally available to all competitors
– Is difficult to imitate
– Is organized
The HR Planning Process
• Meeting an organization’s staffing needs
requires strategic human resources planning
– An activity with a strategic purpose derived from the
organization’s plans
• The HR planning process occurs in three stages
– Planning
– Programming
– Evaluating
The HR Planning Process
• Demand Forecasts:
Determining how many and
what type of people are
needed to achieve
organizational goals is
perhaps the most difficult
part of HR planning
• Labor Supply Forecasts
estimate how many and
what types of employees the
organization will actually
Staffing the Organization
• Once the planning
phase has been
completed managers
will focus on staffing
the organization
• Staffing consists of
three activities
– Recruitment
– Selection
– Outplacement
• Recruitment activities help increase the
pool of candidates that might be selected
for a job
– Internal Recruiting
– External Recruiting
• Selection builds on the recruiting process and
involves decisions about whom to hire
• There are a number of selection instruments to chose
• Regardless of the method used to select employees
managers must ensure that the process is reliable and
– Reliability refers to the consistency of test scores every
time and across alternative measurements
– Validity refers to the degree to which a test actually
predicts or correlates with job performance
Selection Methods
Applications and resumes provide basic information to
prospective employers. Typically include information about
the applicant’s name, educational background, citizenship,
work experience, certifications, and the like.
Interviews are the most popular selection tool. Structured
interviews conduct the same interview with each applicant.
Situational interview focuses on hypothetical situations.
Behavioral description interview explores what
candidates have actually done in the past.
Selection Methods
3 Reference checks are another commonly
used screening device.
4 Personality tests are less popular for
employee selection, largely because they are
hard to defend in court.
5 Drug testing is done by 80% of U.S. Firms
Genetic testing is among the most
controversial screening instruments.
6 Genetic testing (for diseases) is among the
most controversial screening instruments.
Selection Methods
7. Cognitive ability tests measure a range of
intellectual abilities, including verbal
comprehension and numerical aptitude. (See
Figure 10.3)
8. Performance tests are procedures in
which the test taker performs a sample of the
9. Integrity tests are used to assess job
candidate’s honesty. Two forms are
polygraphs and paper-and-pencil honesty
Workforce Reductions: Layoffs
• Layoffs have occurred in
organizations because of
mergers and
acquisitions, divestiture,
and increased
• When laying off
employees some firms
have tried to help people
find employment
elsewhere through
outplacement programs
Workforce Reductions:
• People sometimes ‘get fired’ for poor
performance or other reasons
– Employment-at-will is the legal concept that an
employee may be terminated for any reason
• To avoid pitfalls associated with dismissal
employers should develop a progressive and
positive disciplinary procedure
• A termination interview is a discussion between
a manager and an employee about the
employee’s dismissal
Termination Advice
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 his
or her termination from a manager,
not a colleague
Express appreciation for what the
employee has contributed, if
Don’t leave room for confusion when
firing; Tell the individual in the first
sentence that he or she 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,
like the 25th anniversary of their
employment or the day their mother
Don’t fire employees when they are
on vacation or have just returned
Training and Development
• Training usually refers to teaching lower-level
employees how to perform their present jobs
• Development involves teaching managers and
professional employees broader skills needed for
their present and future jobs
• Training is generally a four step process
Assess the need
Design the training program based upon the need
Decide which training method should be used
Evaluate the training program’s effectiveness
Types of Training
• Orientation training is designed to introduce new
employees to the company and familiarize them
with policies, procedures, culture, and the like
• 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
manage a diversified workforce
Designing Reward Systems
• Traditionally pay has been the primary
monetary reward considered (regardless of its
• In recent years benefits have received increased
– Benefits currently make up a far greater percentage
of the total payroll than they did in the past
– The typical employer today pays nearly 40% of
payroll costs in benefits
Designing Reward Systems
• Reward systems serve the strategic
purposes of attracting, motivating, and
retaining people
Designing Reward Systems
• Three types of decisions are crucial
– Pay level refers to the choice of whether to be
a high-, average-, or low-paying company
– Pay structure is the choice of how to price
different jobs within the organization
– Individual pay decisions concern different pay
rates for jobs of similar worth within the same
Designing Reward Systems
• Individual incentive plans are the most common
type of incentive plan and is based on the
employee’s performance
• Gain-sharing plan concentrate on rewarding
employees for increasing productivity or saving
money in areas under their direct control
• Profit-sharing plans are usually implemented in
the division or organization as a whole,
• Merit Pay Systems are based on the judgmental
merit rating they receive from their boss
Designing Reward Systems
• Individual Incentive plans are the most
common type of incentive plan and is
based on the individual employee’s
• Group Incentive Plans are based on group
performance. They are becoming more
Designing Reward Systems
Types of Group Incentive Plans
• Gain-sharing plan concentrate on
rewarding employees for increasing
productivity or saving money in areas
under their direct control
• Profit-sharing plans are usually
implemented in the division or
organization as a whole,
Employee Benefits
• Three basic required benefits
– Workers’ Compensation provides financial support to
employees suffering a work-related injury
– Social Security provides financial support to retirees
– Unemployment Insurance provides financial support to
employees who are laid off for reasons they cannot
• Because of the wide variety of possible benefits and
the considerable differences in employee
preferences and needs companies often use cafeteria
or flexible benefit programs

Ch. 10 Outline HR Management