10-1
Chapter
10
Human Resources Management
McGraw-Hill/Irwin
Management, 7/e
Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
10-3
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.
How unions influence human resources management.
How the legal system influences human resources
management.
10-4
Strategic Human Resources Management
 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
10-5
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
10-6
The HR Planning Process
10-7
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
have
10-8
The HR Planning Process
 Reconciling Supply and Demand occurs when
managers decide what must be done to ensure
that the right amount of labor will be available to
the organization when needed
 Job Analysis is a tool for determining what is
done on a given job and what should be done on
that job
 Job descriptions will provide the manager with
essential tasks, duties, and responsibilities
involved in performing the job
 Job specifications will describe the skills,
knowledge, abilities, and other characteristics
needed to perform the job
10-9
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
10-10
Recruitment
 Recruitment activities help increase the pool
of candidates that might be selected for a job
 Internal Recruiting
 External Recruiting
10-11
Selection
 Selection builds on the recruiting process and
involves decisions about whom to hire
 There are a number of selesction instruments
from which to chose
 Regardless of the method used to select
employees managers must ensure that the
process is reliable and valid
 Reliability refers to the consistency of test scores
over time and across alternative measurements
 Validity refers to the degree to which a test
actually predicts or correlates with job
performance
10-12
Workforce Reductions
 Managers will at times need to make
decisions to terminate an individual’s
employment
 The demand for certain types of employees
rises and falls as organizations and markets
change
 Some employees simply do not perform at a
level required to justify continued employment
10-13
Workforce Reductions: Layoffs
 Layoffs have occurred
in organizations
because of mergers and
acquisitions,
divestiture, and
increased competition
 When laying off
employees some firms
have tried to help
people find employment
elsewhere through
outplacement programs
10-14
Workforce Reductions: Termination
 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
10-15
Termination Advice
 Do
 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
appropriate
 Don’t
 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 died
 Don’t fire employees when they
are on vacation or have just
returned
10-16
Legal Issues
 Many laws have been passed
governing employment decisions
and practices
 Failure to comply with any these
laws may expose the organization
to charges of unfair practices,
expensive lawsuits, and
civil/criminal penalties
 One common reasons employers
are sued is due to adverse impact
 An adverse impact occurs when
a seemingly neutral employment
practice has a disproportionately
negative effect on a group
protected by the Civil Rights Act
10-17
Developing the Workforce
 US businesses spend more than $50 billion to
provide each of their employees with an
average of 26 hours of formal training
annually
 The American Society for Training and
Development has argued that as a percentage
of total payroll, the average organizational
investment in training is too small
10-18
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
10-19
Methods of Training
10-20
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
10-21
Performance Appraisal
 Performance appraisal is the assessment of an
employee’s job performance
 The performance appraisal has two basic purposes
 Administrative purpose: it provides managers with
the information they need to make salary,
promotion, and dismissal decisions
 Developmental purpose: the information gathered
can be used to identify and plan additional
training, learning, experience, or other areas of
improvement
10-22
Performance Appraisal
 There are three basic categories of performance
appraisals
 Trait appraisals involve subjective judgments
about employee performance and include
dimensions such as initiative, leadership, and
attitude
 Behavioral appraisals focus on observable aspects
of performance
 Results appraisals tend to be more objective and
can focus on production data such s sales volume,
units produced, profits, etc.
10-23
Performance Appraisal
 Seven guidelines to choosing a system
 Base performance standards on job analysis
 Communicate performance standards to employees
 Evaluate employees on specific performance-




related behaviors rather than on a single global or
overall measure.
Document the PA process carefully
If possible, use more than one rater
Develop a formal appeal process
Always take legal considerations into account
10-24
Performance Appraisal
 Who should conduct the
Performance Appraisal?
 Managers and supervisors
 Peers
 Customers
 360 Degree Appraisal is a
process that uses multiple
sources of appraisal to gain
a comprehensive
perspective on one’s
performance
10-25
How to Give Feedback
 Appraisal feedback works best when it is
 Specific and constructive
 Related to clear goals or behaviors
 Intended to help the employee
 When giving negative feedback
 Summarize the employee’s specific performance
 Describe the expectations and standards, and be specific
 Determine the causes for the low performance; get the




employee’s input
Discuss solutions to the problem, and have the employee
play a major role in the process
Agree to a solution. As a supervisor, you have input into
the solution. Raise issues and questions, but also provide
support
Agree to a timetable for improvement
Document the meeting
10-26
Designing Reward Systems
 Traditionally pay has been the primary
monetary reward considered
 In recent years benefits have received
increased attention
 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
10-27
Designing Reward Systems
 Reward systems serve the strategic purposes
of attracting, motivating, and retaining
people
 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
family
10-28
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
10-29
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 control
 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
10-30
Legal Issues
 The Equal Pay Act of 1963prohibts unequal
pay for equal work
 Comparable-worth doctrine implies that
women who perform different jobs of equal
worth as those performed by men should be
paid the same wage
 The Pregnancy Discrimination Act states that
pregnancy is a disability and qualifies a
woman to receive the same benefits that she
would with any other disability
10-31
Legal Issues
 The Employee Retirement Income Security
Act of 1974 protects private pension
programs from mismanagement
 The Occupational Safety and health Act of
1970 requires employers to pursue workplace
safety
10-32
Labor Relations
 Labor relations is the system of relations
between workers and management
 The National Labor Relations Act ushered in
an era of rapid unionization
 Declaring labor organizations legal
 Establishing five unfair employer labor
practices
 Creating a National Labor Relations Board
10-33
Labor Relations
 Why do employees unionize?
 Economic Factors are important – unions attempt
to raise the average wage rate for members
 Job dissatisfaction – poor supervisory practices,
favoritism, lack of communication, etc
 A belief that the union can obtain desired benefits
 The image of the union
10-34
Collective Bargaining
 A process of negotiating an agreement over
wages, hours, and working conditions
 Two types of disputes can arise during the
process
 Prior to the agreement being reached, the
workers may go on strike to compel agreement
on their terms
 After the agreement is signed management
and the union sometimes disagree over the
interpretation of the agreement
10-35
Collective Bargaining
 To settle a dispute organizations will use the
process of arbitration
 Arbitration is the use of a neutral third party to
resolve the dispute
 Collective bargaining agreement will normally
specify if the organization is
 Union Shop is an organization with a union and a
union security clause specifying that workers must
join the union after a set period of time
 Right-to-Work is legislation that allows employees
to work without having to join a union
10-36
Looking Ahead
 Chapter 11 Managing the Diverse Workforce
 How changes in the U.S. workforce make diversity




a critical organizational and managerial issue.
The distinction between affirmative action and
managing diversity.
How managers can gain a competitive edge by
managing diversity effectively.
What challenges a manager is likely to encounter
with a diverse workforce.
How managers and their organizations can take
steps to cultivate diversity
10-37
Selection Instruments
 Applications and Resumes
 Interviews
 Reference checks
 Background checks
 Personality tests
 Drug testing
 Cognitive ability tests
 Performance tests
 Integrity tests
Return
10-38
Employment Laws
Return