Managing Human Resources Chapter 13 1. Explain the strategic importance of managing human resources effectively 2. Describe several important laws and government regulations that affect how organizations manage their human resources 3. Explain the objective of human resources planning and describe how organizations respond to the unpredictability of future business needs (continued) 4. Describe the hiring process 5. Describe several types of training and development programs 6. Describe several principles for improving the accuracy of managers’ appraisals of employee performance 7. Describe the basic elements of a monetary compensation package Strategic Importance Human resources management (HRM): the philosophies, policies, and practices that an organization uses to affect the behaviors of people who work for the organization Strategic use of HRM activities can improve organizational effectiveness Line Managers HR Professionals Include HR Stay informed of professionals in the latest the formulation technical and implementation principles for of business strategy managing human and discussions of resources its HR implications Employees Accept responsibility for managing their own behavior and careers in organizations Line Managers HR Professionals Help disseminate Develop a information about recruiting plan to open positions to all guarantee a potentially qualified diverse pool of internal applicants applicants Understand and abide by all legal regulations Employees Participate in recruiting by making referrals and answering questions about the organization Line Managers Work with employees to identify their training and development needs Provide on-the-job socialization and training HR Professionals Employees Develop and administer training and development programs Inform employees of opportunities for training and development Identify own training and development needs Actively seek out and participate in activities that help build own competencies Assist in socialization and training of other employees Line Managers HR Professionals Employees Develop Candidly appraise Help develop performance the performance of performance appraisal tools and others when asked measures to participate in Conduct performance train managers to use them 360-degree appraisals appraisals Train managers in how to conduct performance review sessions (cont’d) Line Managers HR Professionals Employees Monitor managers’ Seek and use Use performance decisions to be sure honest feedback to information to make they are improve own decisions about pay performance-based performance raises, promotions, firing etc Provide feedback to employees to help them improve future performance Line Managers Assist in developing incentive and bonus plans HR Professionals Employees Establish appropriate Develop an accurate rates of base pay in understanding of all compliance with legal elements of the requirements organization’s pay Work with managers practices to design and develop Be alert to incentives and bonus dysfunctional and plans possible unethical Work with accounting attempts to “game” and financial staff to performance-based monitor compensation pay practices costs Competitors must not be able to easily copy the company’s approach to HRM Employees must be “rare” or unique in some way Employees must be a source of added value Recruiting more managers from outside the company Hiring more employees from the countries where GE sells its products and services Setting goals for managers to develop creative new business ideas and tying compensation to meeting these goals Rewarding managers for revenue growth and customer satisfaction Urging people to stay in their jobs longer so they can develop deeper knowledge of their industry Social Consequences of HRM: Snapshot “Our aim is to treat our job candidates as well as we treat our customers, to do something memorable for them. You can’t treat people shabbily, especially in a world where there are far more open jobs than there is available talent to fill them. We strive to put the humanity back into the recruiting experience.” Jason S. Warner, Director of North American Recruiting, Starbucks Corporation Legal and Regulatory Environment: Equal Employment Opportunity [EEO] Job applicants and employees should be: 1. Judged on characteristics that are related to the work that they are being hired to do 2. Judged on their job performance after being hired 3. Protected from discrimination based on their personal background characteristics, such as gender, race, ethnicity, religion, and so forth Prohibits discrimination by employers, employment agencies, and unions with 15 or more employees on the basis of: Race Color Religion Sex National origin Pregnancy (Pregnancy Discrimination Act, 1978) Identifies pregnancy as a disability and entitles the woman to the same benefits as any other disability 1991 Amendment clarifies how cases brought under the act should proceed Makes rules to implement and interpret EEO laws Imposes sanctions Conducts investigations and may file lawsuits in federal courts Equal Employment Opportunity Commission (EEOC) Makes judgments about guilt, which may be appealed to federal courts EEO in the Global Arena: Who’s Protected Where by Legislation? Country Race or Color Sex Religion Age United States India No Canada China No United Kingdom No Mexico (continued) EEO in the Global Arena: Who’s Protected Where by Legislation? Country Disability Sexual Political National Marital or Orientation Ideology Origin Family Status United States No No No India No No No No Canada No China No No No No United Kingdom Mexico Fair Labor Standards Act (1938) Establishes a minimum wage, which may be raised by individual states Controls hours through premium pay for overtime Controls working hours for children Applies to most nonmanagerial employees in private industry Equal Pay Act (1963) Requires men and women to be paid equally when they are doing equal work (in terms of skill, effort, responsibility, and working conditions) in the same organization Some states extend the Equal Pay Act by requiring employers to assess the worth of all jobs and ensure that jobs of comparable worth are paid similarly Involves forecasting the organization’s human resources needs and developing the steps to be taken to meet them Contingent workers: employees who are hired by companies for specific tasks or short periods of time with the understanding that their employment may be ended at any time Layoffs: a strategy of last resort. Potential negative effects of layoffs: More gossip Lower morale More resignations Less employee loyalty More charges of discrimination More workplace violence Historical Trend in Growth Rate of the U.S. Workforce (adapted from Figure 13.1) Effects of Layoffs as Reported by Human Resource Managers in Companies That Reduce Their Workforce (adapted from Figure 13.2) More profits More gossip Lower morale More resignations Less employee loyalty More charges of discrimination More workplace violence -60 -40 -20 Percent reporting an increase or decrease after layoffs 0 Percent 20 40 60 Human Resource Planning (cont’d) Competency inventory: a detailed file maintained for each employee that lists level of education, training, experience, length of service, current job title and salary, and performance history Purpose of competency models To keep track of the talent in the organization so that it can be nurtured and used effectively Hiring Process Activities related to the recruitment of applicants to fill open positions in an organization and the selection of the best applicants for a position Vacancies stimulate the hiring process through:* Vacancies Stimulate the Hiring Process Organizational Growth Internal Movement •Promotion •Demotion •Transfer Exit from Organization (Turnover) (adapted from Figure 13.3) Vacancy Created Recruitment Selection Problems Encountered When Applying for Jobs on the Internet (adapted from Figure 13.4) Difficult to navigate site Difficult to use Wanted more personal contact Concerns about security of personal data Lack of relevant information about the company Not enough jobs listed to make it worth the effort Slow feedback and follow-up 0 10 20 30 Percent Percent reporting problems 40 50 60 Organization web site Announcements in newspapers, magazines, employment websites, etc. Internal job positions, paper-based and Intranet Common recruitment methods Employee referrals A process that involves deciding which of these recruits should actually be hired and for which positions Résumés Tests Reference checks Common information sources Interviews Competency Being Assessed: Teamwork 1. Sketch out two or three key strengths you have in working as part of a work team. Can you illustrate the first strength with a recent example? [repeat this question and the following probes for each strength]: Probes: When did this example take place? What possible negative outcomes were avoided by the way you handled the situation? How often do situations like this happen? What happened in the next time it came up? (continued) (cont’d) Competency Being Assessed: Teamwork 2. Tell me about a time when you used your teamwork competency to solve a problem with a customer Probes: Where did this take place? What did the customer say? What did you tell your teammates? Did the team have any problems dealing with the situations? Explain How did the customer respond? Training: activities that help employees overcome limitations and improve performance in their current jobs Orientation training E-learning Basic skills training Common training approaches Team training Development: practices that help employees gain the competencies they will need in the future in order to advance in their careers Career development Coaching Core development approaches Mentoring A formal, structured system for evaluating an employee’s job performance Common uses of performance appraisal To make decisions about who will be promoted, demoted, transferred, or dismissed To make decisions about pay raises To improve future performance of employees Managers and their subordinates meet to exchange performance information and discuss how to improve future performance Performance information increasingly includes: Employee’s own assessment of performance Assessment by teammates Information from customers Difficult for managers to accurately assess performance of subordinates Two approaches to improve accuracy: Use appropriate rating scales that provide specific descriptions of what each level of performance means Use multiple raters One example. 360-degree appraisal—measures performance by obtaining assessments of the employee from a variety of sources: supervisors, subordinates, colleagues inside the company, people outside the organization with whom the employee does business, and even a self-appraisal by the employee Some teams may have full responsibility for constructing and conducting their own performance appraisals of each other Team self-appraisal of each member is difficult Manager to whom the team reports is often responsible for collecting performance information from the team and discussing it with each team member privately Nonmonetary compensation: the many forms of social and psychological rewards, such as recognition and respect from others and opportunities for self-development Monetary compensation: the direct payments such as salary, wages, and bonuses, as well as benefits such as covering the costs of insurance plans bonus What people believe they deserve to be paid in relation to what others deserve to be paid However, compensation must be externally competitive to attract qualified applicants Components of pay system employees consider in evaluating fairness Base pay—perceived fairness increases if at or above market average Incentive pay—such as commissions, bonuses, and profit sharing Employee benefits—some required by law and others are voluntary Average Annual Monetary Benefits and Earnings (adapted from Figure 13.6) 7 14.5 9 68 2 Legally Required Benefits Voluntary Payments for Private Pensions, Insurance, etc. Paid Vacations, Breaks, and Rest Periods Other Pay for Actual Time Worked (w ages and salaries) Vacationing Around the World (adapted from Figure 13.7) Italy France Germany Brazil Britain Canada South Korea Japan U.S. 0 5 10 Average annual vacation days 15 20 25 Days 30 35 40 45