Chapter 10
Human Resource Management and
Labor Relations
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Learning Objectives
• Define human resource management and explain how managers plan for their organization’s
human resource needs.
• Identify the tasks in staffing a company and discuss ways in which organizations select new
employees.
• Describe how managers develop the workforce in their organization through training and
performance appraisal.
• Describe the main components of a compensation system and describe some of the key legal
issues involved in hiring, compensating, and managing workers in today’s workplace.
• Discuss the legal context of human resource management and identify the contemporary legal
issues.
• Discuss workforce diversity, the management of knowledge workers, and the use of a contingent
workforce as important changes in the contemporary workplace.
• Explain why workers organize into labor unions.
• Describe the collective bargaining process.
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Foundations of Human
Resource Management (HRM)
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What is HRM
• Human Resource Management (HRM) is a set of organizational
activities directed at attracting, developing, and maintaining an
effective workforce.
• Human has a great impact on a firm’s bottom-line performance.
• Many firms are developing strategic HR plans that are integrated with
other strategic planning activities.
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HR Planning
• The starting point in attracting qualified human resources is planning.
• HR planning involves job analysis and forecasting the demand for,
and supply of, labor.
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Job analysis
• Job analysis is a systematic analysis of jobs within an organization.
• A job analysis results in two things:
1. Job Description: is the list of the duties and responsibilities of a job, its
working conditions, and the tools, materials, equipment, and information used
to perform it.
2. Job Specification: is the list of the skills, abilities, and other credentials and
Qualifications required by a job.
• Job analysis information is used in many HR activities:
• Using appropriate selection methods.
• creating performance appraisal systems.
• setting compensation rates.
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Forecasting HR Demand and Supply
• The manager starts forecasting by assessing:
- Trends in past HR usage.
- Future organizational plans.
- And general economic trends.
• Forecasting 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.
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Important HR Planning Techniques
• Replacement Chart is a list of each management position, who
occupies it, how long that person will likely stay in the job, and who is
qualified as a replacement.
• It is a technique commonly used to plan for specific positions at higher
organizational level.
• Skills Inventories (Employee Information Systems): is a computerized
systems that contain information on each employee’s education,
skills, work experience, and career aspirations.
• How can we forecast the external supply?
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Matching HR Supply and 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, or labor-saving or productivity-enhancing systems
can be installed.
• If overstaffing is expected:
• Options are transferring the extra employees, not replacing individuals who
quit, encouraging early retirement, and laying off workers.
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Staffing the Organization
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• When managers have determined that new employees are needed,
they must then turn their attention to recruiting and hiring the right
mix of people.
• This involves two processes:
• Acquiring staff from outside the company (External staffing)
• Promoting staff from within (Internal staffing).
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Recruiting Human Resources
• Recruiting: is the process of attracting qualified persons to apply for
jobs an organization is seeking to fill.
• There are two types of recruiting:
• Internal Recruiting: is considering present employees as candidates for
openings. Methods include:
• Promotions
• Skill inventory system
• External Recruiting: is attracting persons outside the organization to apply for
jobs. Methods include:
• Posting jobs on the company website or other job sites (e.g. Monster.com).
• Campus interviews.
• Employment agencies.
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Selecting Human Resources
• The intent of the selection process is to gather from applicants the
information that will predict job success and then to hire the
candidates likely to be most successful.
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Selections Devices include
• Application Forms: is an efficient way of gathering information about the
applicant’s work history, education, and other demographic data.
• Tests: Tests of ability, skills, aptitude, or knowledge relevant to a particular
job are usually the best predictors of job success, although tests of general
intelligence or personality are occasionally useful as well.
• Interviews:
• Structured interview, questions are written in advance, and all interviewees follow
the same question list with each candidate.
• Unstructured interview, questions are asked at random.
• Other Techniques: Organizations often require applicants to take physical
exams and drug tests. Some organizations also run credit checks on
prospective employees.
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Developing the Workforce
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Training
• Training is a necessary practice if the organization wants to maintain a
qualified and effective workforce.
• On-the-Job Training: Training, sometimes informal, conducted while
an employee is at work.
• Off-the-Job Training: Training conducted in a controlled environment
away from the work site.
• Vestibule Training: off-the-job training conducted in a simulated
environment.
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Performance appraisals
• Performance Appraisal: is the evaluation of an employee’s job
performance in order to determine the degree to which the employee
is performing effectively.
• The appraisal process begins when a manager defines performance
standards for an employee. The manager then observes the
employee’s performance.
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Performance Evaluation Form
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Compensation and Benefits
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• Compensation System: is the total package of rewards that
organizations provide to Individuals in return for their work.
• Finding the right combination of compensation elements is always
complicated by the need to make employees feel valued, while
holding down company costs.
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Wages and Salaries
• Wages compensation in the form of money paid for time worked.
• Salary compensation in the form of money paid for performing of a
job.
• In setting wage and salary levels, a company may start by looking at
its competitors’ levels. Firms must also decide how their internal
wage and salary levels will compare for different jobs.
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Incentive Programs
• Incentive Program is a special compensation program designed to
motivate high performance.
• There are two types of incentive programs:
1. Individual Incentives.
2. Companywide Incentives.
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1. Individual Incentives
• Examples could be:
• Sales bonus
• Merit salary systems: link pay raises to performance levels in nonsales jobs.
• Stock options: Executives commonly receive Stocks as incentives
• Pay for Performance (or variable pay) in which middle managers
are rewarded for especially productive output.
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2. Companywide Incentives
Are incentive programs apply to all the employees in a firm.
• Profit-sharing plans: Profits earned above a certain level are
distributed to employees.
• Gain sharing plans: Distribute bonuses to Employees when a
company’s costs are reduced through greater work efficiency.
• Pay for Knowledge plans: Pay workers to learn new skills and to
become proficient at different jobs.
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Benefits Programs
• Benefits: are compensation other than wages and salaries and other
incentives offered by a firm to its workers.
• Benefits examples could be:
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Health, life, and disability insurance.
On-site child-care centers.
Reduced membership fees at gyms and health clubs.
Retirement Plans or (pension plans)
• Cafeteria Benefits Plan benefit plan that sets limits on benefits per
employee, each of whom may choose from a variety of alternative
benefits.
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